CORPORATE�RESPONSIBILITY�REPORT ENVIRONMENTAL SUSTAINABLE INNOVATION COLLABORATION SUSTAINABILITY COMMUNITIES Last updated April 2013 / www.ihg.com/cr Corporate Responsibility Report Chief Executive message Grounding corporate responsibility in the way we do business I'm often asked to talk about why IHG places such importance on corporate responsibility (CR). The answer is that we believe embedding CR in our business strategy and operations is vital in the long term, both for our business and the travel and tourism sector. Being a responsible business underpins our vision to become one of the world's great companies by creating Great Hotels Guests Love. Quite simply, the way IHG and our hotels act in our communities and towards the environment is inseparable from our business priorities of preferred brands, talented people and best in class delivery. When it comes to acting on our beliefs, one of the many benefits of being a leading hotel company is our size and scale. We have more rooms than any other hotel company in the world, spread over 100 countries and territories. That gives us an unrivalled opportunity to bring about positive change, both at a local and global level. Each one of our 4,600 hotels around the world is a central part of its local community. Locally, each and every one has an important role to play, creating jobs and stimulating economic opportunity, managing their environmental impacts in a responsible way and providing shelter in times of need. Globally, we harness those efforts to achieve our CR mission, which is to transform hospitality for more sustainable communities and better lives. That means developing new and better ways to build and run our hotels, which create sustainable value for our brands, business and stakeholders as well as addressing our social and environmental challenges. To translate our aims into action we run three core programmes – Green Engage, the IHG Academy and the IHG Shelter in a Storm Programme. Green Engage When we launched our pioneering environmental management platform Green Engage in 2009, we set a three year target to reduce energy use in our owned and managed estate by between 6 – 10%. I'm delighted to say that in 2012 we exceeded that target with a reduction of 11.7%. It's equally gratifying to report that our latest carbon footprint assessment showed significant progress, especially in our owned and managed hotels where we reduced our carbon footprint by 19% per occupied room between 2010 and 2011. On the matter of bringing about change at a global level, we played a lead role in the International Tourism Partnership (ITP)/World Travel and Tourism Council (WTTC) working group, the Hotel Carbon Measurement Initiative (HCMI), which led to the launch of a global carbon standard for hotels in 2012. As well as being a big step for our industry this is a good example of the way we work with leading organisations and industry peers to find solutions to the pressing issues of our times. IHG Academy The IHG Academy goes from strength to strength with 100 new programmes added during 2012. We now have over 150 IHG Academy programmes in 37 countries. This unique collaboration sees hotels joining forces with local schools, colleges and community organisations to help people develop the skills they need to secure a job in today's hotel sector, often with one of our hotels. While the IHG Academy operates within a global framework each programme is distinctive, reflecting local needs. Through the IHG Academy we're able to build skills and raise aspirations across hundreds of communities and we will continue to develop the programme, enhancing the opportunities of more people in the places where we operate. IHG Shelter in a Storm Programme Just as the IHG Academy built on and formalised the partnerships many hotels had already forged with local organisations, so the IHG Shelter in a Storm Programme developed out of one of the roles hotels have long played in society – providing shelter and vital assistance when disaster strikes. In 2012, we allocated funds from the IHG Shelter Fund to support 10 disasters across six countries, providing our guests, employees and local communities with financial support, essential supplies and accommodation. The disasters we supported included severe flooding and a cyclone in Fiji, Superstorm Sandy on the US East Coast, flooding in Manila and the UK, wildfires in Colorado, and Hurricane Isaac on the US Gulf Coast. This report details our CR approach, priorities and achievements in these programmes and more. We're proud of everything we've achieved, but acknowledge that our journey to embed corporate responsibility across IHG is an ongoing one. Therefore we will continue to set standards and expand our activities in the only way that makes sense to us – by making our CR aims and activities a fundamental element of our overall business vision and strategy. For us it's not a question of whether you choose to make returns for shareholders or support the community – great companies do both and that's what we are committed to doing, now and in the future. Richard Solomons Chief Executive © InterContinental Hotels Group PLC 2013 Corporate Responsibility Report CR approach Jennifer Laing, a Non- Executive Director, is the Chairman of IHG's Corporate Responsibility Committee. Read Jennifer's biography Key CR achievements in 2012 Exceeded our three year target (2010-2012) to reduce energy per available room by between 6 and 10% in our managed and owned estate with a reduction of 11.7% Met our target to have 50% of our hotels (2,250 based on January 2012 hotel figures), using Green Engage on 14 January 2013. Over 2,270 hotels are now enrolled Launched a global carbon standard for hotels and added a new carbon calculator in Green Engage that our hotels could start applying immediately Expanded our IHG Academy to 157 programmes – with 100 new programmes added during 2012 Raised $545,000 compared to our target of $150,000 for our IHG Shelter Fund enabling us to respond quickly to disasters Supported 10 disasters across six countries through the IHG Shelter in a Storm Programme, providing over $240,000 in disaster relief funding Launched the IHG CR Innovation Fund, awarding the 2012 grant to a social enterprise in East London, UK Continued to engage with our stakeholders through our refined stakeholder engagement process and channels Exceeded our IHG Planet CR Facebook fans target of 6,000-10,000, with over 20,000 fans by the end of 2012 Launched a new e-Platform for government relations for US-based owners and general managers Key CR objectives for 2013 Launch a set of externally facing targets to report against across our three core programmes – IHG Academy, Green Engage and the IHG Shelter in a Storm Programme To drive environmental sustainability To have a positive impact on the local community and drive economic opportunity To engage stakeholders to champion and protect IHG's trusted reputation and deliver against public affairs policy. Corporate responsibility (CR) is central to the way we do business and is a key part of our responsible business practices. We treat it as a strategic business issue, believing CR only makes sense if it aligns to our vision of becoming one of the world's great companies by creating Great Hotels Guests Love. We believe that incorporating societal and environmental factors in our business strategy and operations will play a vital role in the long-term viability of our business and the travel and tourism sector. Whilst tourism plays a large role in the world economy and is an important source of wealth for many countries, our industry faces increasing pressure to balance its economic performance with its social and environmental impacts. As a leading hotel company, we are in a particularly strong position to help make tourism increasingly responsible. That's why, for IHG, responsible business underpins all of our strategic priorities. Our CR ambition is to transform hospitality for more sustainable communities and better lives. To achieve this ambition we have to start by acknowledging that every stage of a hotel’s lifecycle, from developing and building hotels to sourcing goods and services, feeds into our environmental, social and economic footprint. At the same time, our hotels support economic development by creating stable sources of income and providing opportunities for both local employment and local businesses, notably as employees of and suppliers to the hotel. Only by making sure we find innovative ways to build and run hotels in a responsible way that tackles our environmental and social challenges and fulfils our brand promises at the same time will we create a truly sustainable business that generates shared value for IHG and our stakeholders. © InterContinental Hotels Group PLC 2013 Corporate Responsibility Report The Story Behind IHG's Footprint Design & Development How we design and develop innovative hotels that will transform for more sustainable communities and better lives. Procurement How our hotels source goods and services in a responsible and sustainable way. Build & Operations How we build and operate our hotels in innovative ways to manage our environmental impacts and enhance local economic opportunity. Marketing How we differentiate IHG and its brands by delivering responsible hotels our guests want now, and in the future. © InterContinental Hotels Group PLC 2013 Corporate Responsibility Report Sales & Distribution How we manage key relationships in the business-to- business, transient, leisure, and specialty markets to drive sustainably minded guests to our hotels. Renewal How our hotels renew, recycle and reuse materials in their next phase of development. To calculate the economic contribution made by IHG hotels, we asked Oxford Economics to analyse the impact of our operations in the US, UK and Brazilian economies.