MGM Resorts’ VP of Corporate Sustainability Yalmaz Siddiqui: Return on Sustainability

In corporate boardrooms around the world, there are lively debates about sustainability and how much a company’s investment in more sustainable practices will negatively impact its bottom line. Adopting more sustainable practices is mistakenly viewed as a trade-off — something an organization might be forced to do at some point, but without any type of positive benefits whatsoever. 

I recently spoke with Yalmaz Siddiqui, Vice President of Corporate Sustainability at MGM Resorts International to talk about what sustainability looks like in the hospitality industry and how a company can systematically initiate, integrate, and communicate its sustainability efforts to key stakeholders. 

Yalmaz walked me through how he approaches sustainability for the company, how and why they decide on specific programs, and some surprising insights for the future of sustainability which many companies may not realize. His key takeaways follow. 

• Sustainability at MGM Resorts International focuses on three key strategies — Initiate, Integrate, Communicate: Initiate a new thing that is good for people and planet that otherwise might not have happened. Integrate that new thing into the core functions whether it is facilities, fleet, procurement, the events team, or the hotel team. And then work with the various communications teams to ensure the stakeholders are interested in these matters and get awareness of the things we are doing in a format they prefer. (2:25)
• Recognize the case for sustainability varies for different aspects of the movement and with different stakeholders: Within environmental sustainability, the case for energy efficiency is economic. There is a lot to be gained when you become more energy efficient. Related to that is the case of investor interest in climate strategy. People who have significant investment capital are looking to invest it with companies interested in managing their carbon footprint. Travelers are also interested in the sustainable performance of a hotel and incorporate it into their decision making when they are choosing where to stay.  (3:54)
• Data is central to sustainability because you can only manage what you measure: The sustainability community consists of two types. One is a very narrative lead — all about the story. Others are very data centric. The future is both — depending on the stakeholder. It is crucial to find the right way to tell stories to the audiences that care about story and narrative while being even more data centric for the investor. If you’re going to disclose details, it is important to be able to show you met or didn’t meet a goal. Data is key, but it can’t only be data terms of telling your company’s performance and story. You need to combine data with storytelling to bring your programs to life.  (7:02)
• Measure progress in concrete metrics: The task is to identify the metrics you are going to focus on for your own organization and have those metrics be informed by the range of frameworks. Where are the carbon emissions generated in your operations and then implementing programs to reduce them and then measure and disclose how you are reducing them. For human capital it might be people of color in the workforce and people in leadership and what the gap is and the data point to deliver evident equal opportunity for people of color and women. (9:00)
• Initiatives can arise from anywhere in an organization: Ideas might arrive directly from a central social impact and sustainability team or they might have begun even before the sustainability team was in place by the functional team. Our chefs might have been interested in managing food waste differently and therefore initiated a sustainability program in their restaurants. To expand that program, our sustainability team would address composting, food donations, and integrating it into more parts of the business. There are a variety of different ways programs arrive. Sometimes someone in a function has an idea, but they need the power of a central team to help execute it. Other times we just find out about great environmental progressive stuff that is happening in some team and might connect them to communications or we might work to refine the program so it’s ready to share it with the public.  (11:50) 
• How MGM Resorts International achieved 2.3 million meals donated to reduce food waste: There’s been strong support in our company for managing food waste well — particularly when operating in a city like Las Vegas which has a negative reputation for food waste. MGM Resorts International and the city have been really very progressive in terms of managing food waste. There are a lot of barriers in hospitality and restaurants to donating food to help feed people in need. It is relatively easy to send unused food to landfill. There’s nothing to worry about, you just put it in the trash. It is more complex to send it to farms because then you need to develop a whole new process to divert food waste to a farm stream and it is equally complex to compost food waste because you need to keep quality in mind. You can’t have trash in the compost, so you need to be very careful. But food donations are another level of complexity overall because you don’t want to make people sick, so there is a lot of navigation that we have to do in the central team with our food safety partners, with legal, with the local health district, with the local charities, etc. to figure out a process and a safe method to get that done. But it is achievable. We started with donating 800 pounds of food from one event in 2016 and now we’re at 2.3 million meals donated. (14:10)
• Choosing how sustainability and social impact show up in your organization: Many people come to this space with the perception there is a tradeoff. If you’re going to adopt environmentally and socially progressive or beneficial programs, you are going to cause the economics of the enterprise of the organization to suffer. The truth is, you need to choose the range of things which drive value for your organization. And some of that could be significantly beneficial economic value. For example, we’re installing a 100 megawatt solar array. Someone hears that and they’re going to be worried about the massive increase in cost of energy. Actually, we are saving $27.7 million in net present value savings because we’ve chosen to go to renewable energy. This is just one example of where there are direct savings. Companies need to be open to the range of ideas. They don’t need to implement every idea. They don’t need to implement the ideas that don’t deliver a return. They can just be open and once you open the door, you find value. (16:54)
• Investors will be central to the future of corporate sustainability: In the last two years, there has been a seismic shift involving investors. Environmental social governance (ESG) investment flows forecast to be at 50% of all investments in 2025. Investors who want to acquire, invest in your company, or take equity positions are going to want to know what you’re doing regarding environmental social governance practices. If you want investment capital, if you want to lower the cost of capital ultimately, then you need to be focused on these things. ESG efforts will legitimize a lot more expenditure, a lot more strategy, and a lot more hiring because it’s going to enable capital. (18:34)

Watch the video or read the transcription below.

TRANSCRIPTION

Jennifer: Can tell me more about your role and responsibilities as the vice president of sustainability at MGM? 

Yalmaz: It begins actually with just thinking about the strategy overall about corporate sustainability and what it means to an organization such as ours and I break it down into 5 key ideas. So, setting a strategy for long term sustainability and social impact, that is where it starts. So, collaborating with a broader team on what the strategy is and within that, what are the focus areas? So, as you know, and probably many of your audience knows, sustainability is an extremely broad and comprehensive idea. You know, it includes environmental protection, but it goes way, way beyond [2:00] that to things like privacy and responsible supply chain, and human rights, and employee satisfactions, etcetera. It’s a very, very broad notion from its origins. It’s about helping keep people and the planet thriving for generations. And so out of that messy complexity, how do you organize the work? So that’s the strategy and focus areas. And I think the role is really to initiate, integrate, and work to communicate the effort that the company is taking on. So those are my three, sort of summaries of the role. Initiate, integrate, communicate. When I say initiate, initiate a new thing that is good for people and planet that otherwise might not have happened. Integrate that new thing into the core functions whether its facilities or fleet, or procurement, or the events team or the hotel team. And then communicate. Work with the various communications teams to ensure the stakeholders are interested in these matters and get awareness of the things we are doing in a way that way want. So, investors, for example, as you know are increasingly interested in this topic. Investors want information a very different way than the average hotel guest does. Communicating to right stakeholders I think is an important part of the role as well. 

Jennifer: Well that’s a very simple way to think about a comprehensive role. How does that tie to how MGM thinks about the value of sustainability? 

Yalmaz: Yeah, so it’s important to realize that the case is different for different aspects of sustainability. So, let’s start with just within [4:00] environmental sustainability. Within environmental sustainability, the case for energy and energy efficiency is economic. Right? There is a lot to be gained in terms of return on investment and cost savings when you become more energy efficient or in these days, when you adopt more renewable energy because the cost of the solar and wind has come down significantly such that it makes a lot of sense to be more efficient and pursue renewable energy. And then related to that there is the case of investor interest in climate and climate strategy because a lot of people who have significant investment capital are looking to invest it with companies that are interested in managing their carbon footprint and de-risking their supply chains and de-risking their operations because of climate change. So, there’s a very strong economic case. There’s also an economic example for some segments of the hotel market. So some leisure travelers are interested in the sustainable performance of a hotel and incorporate it into their decision making when they are choosing where to stay but I think that is less of a really significant portion than the convention clients. So, convention clients, people who have decision making power on where to host major events and conventions, they’re actually using this criteria. How sustainable is the company? How focused is it on social impact to make the decisions on where to house their, you know, events that might have, you know, five thousand, ten thousand, twenty thousand, hundred thousand people, right, then it matters a lot more. So, the case there is revenue. The case in terms of human capital policies is [6:00] employee loyalty and retention. The case in terms of air emissions and water emissions management is regulatory risk avoidance. So very valuable I think to unpack the drivers of value and then maybe the summary is when you express this work as part of the company’s values on aggregate, it drives value for the company. Economic value. 

Jennifer: I see that on your LinkedIn profile even, you mention that data transparency is very important to you. How does that show up in the sustainability market of MGM as well?

Yalmaz: Well, data is central because you can only manage what you measure and, in the past, I think the sustainability community has kind of been two kinds. One is a very narrative lead. So, it’s all about the story. Has been maybe steeped in frameworks like GRI and SASB and others, very data centric, and I think the future is really both. And finding the right way. Sorry…both, depending on the stakeholder. So, finding the right way and the creative way to tell stories to the audiences that care about story and narrative and being even more data centric for the investor and the sustainability wonks, if you want to call them that, who are very technical and want to know the numbers. So, sort of talking about disclosure, [8:00]  but ultimately disclosure of environmental, social metrics connect performance. So, if you’re going to disclose a lot, there is a great impotence to perform better because you know at a point it is going to go out to the public domain and you want to be able to show that you met or didn’t meet a goal. And so, you’re data central but it can’t be only data that you focus on in terms of telling your company’s performance and story. You need to combine using data to improve with story telling to bring your programs to life publicly. 

Jennifer: Sure. And one thing that you mention is performance. How do you measure sustainability progress, so those milestones, against performance, especially across so many different avenues where some might be more short term goals and wins and some might be multi-year, longer term bets that you’re making? 

Yalmaz: So, you measure progress really in terms of being very concrete on the metric. So, for, you know, for climate change, it is really for scope 1 and scope 2 and then slowly scope 3 emissions and calculating them, and then working down. Working to reduce them by focusing on the hot spots, or where is the carbon in your operation. Where are the carbon emissions generated in your operations and then implementing programs to reduce them and then measure and disclose how you are reducing them. For scope 3, which is more about supply chain, it is a lot more complex but still, you can do it and you can use that insight to drive significant reduction. In different aspects, again, it’s different data. So, for human capital with a focus on DNI for example, [10:00] it would be relative…could the split in our company in terms of women in management and women in leadership. So, women in the workforce, women in the leadership. People of color in the workforce and people in leadership and what the gap is and the data point, performance we’re trying to improve is to reduce the delta to deliver, you know, evident equal opportunity for people of color and women. So that’s part of the human capital dimension of social impact and sustainability and measured in a different way. So, the task is to identify the metrics that you’re going to focus on for your own organization and have those metrics be informed by the range of frameworks. As you know them, GRI, SASB, CDP, many many others. So, knowing what those frameworks want and making sure what they want are reflected in your metrics and ultimately your programs, it is a big part of the measurement work. 

Jennifer: How does the execution actually happen for some of these programs, especially when they’re so cross functional? What does the execution look like across the entire company of resorts? 

Yalmaz: Let me take you back to the framing. Initiate, integrate, and communicate. So initiative is really about new things. So those new things might arrive directly from a central social impact and sustainability team such as, for example, we’re developing [12:00] 100 megawatt solar array as we speak just outside Las Vegas and that program was initiated directly from the central team and then we actually, you know, working with the facilities partners and finance helped execute that. So, we had a very strong hand in that. Then there are other programs like our food programs. So, there is, you know, we’re a major operator of hotels and restaurants. We have over 400 restaurants just in Las Vegas. People don’t realize that. And so, food waste management programs might have begun in, you know, early 2000s when there wasn’t even a sustainability team. So, chefs might have just been interested in managing food waste differently, and sending it to farms, etc. So that program might have arisen within an FMB function but in terms of the overall programmatic layer and expanding that food waste program to all different types of food waste and thinking about composting, thinking about food donations, out sustainability would have worked with food and beverage to expand that program and integrate it into more parts of the business, into more restaurants, into banquet, into warehouse. So, all our food waste management but there’s a connection between the central team and the functional team. And there’s a different way programs arrive. Sometimes someone in a function has an idea that they need that power and impotence of a central team to help bring it to the, you know, bring in. Other times we just find out about great, you know, environmental progressive stuff that is happening in some team and then just might connect them to communications and, you know, that is communicated or we might work to refine that program so it’s more, you know, ready for public sharing. 

Jennifer: [14:00] What is one of the most recent programs that was function or employee led? 

Yalmaz: Well, I’d say the food waste program that I’ll come back to. In the past there’s been strong support in our company for managing food waste well. Which is a real surprise for people when they think about Las Vegas and they think negatively about food waste in Las Vegas. But the truth is the company and the city have been really very progressive in terms of managing food waste and so our food waste programs then began with our food and beverage teams wanting to manage food waste better and whether that’s with technology or with process, or with thinking about the destination, there has been an interest. But our team collaborated, I think, most effectively with food and beverage on food donations. So, there’s a lot of barriers in hospitality and restaurants to donating food to help feed people in need, right. Its relatively easy to send unused food to landfill. There’s nothing to worry about, you just put it in the trash. Its more complex to send it to farms because then you need to develop a whole new process to divert food waste to a farm stream and its equally complex to compost food waste because you need to keep, you know, quality in mind. You can’t have all the trash in the compost, so you need to be very careful. But food donations is another level of complexity overall because you don’t want to make people sick so there is a lot of navigation that we have to do in the central team with our food safety partners, with legal, with the local health district, with the local charities [16:00] to figure out a process and a safe method to get that done. Now we, you know, from one event we kept the food from in 2016, you know, I remember it very visibly, you know, 800 pounds from one event and now we’re at 2.3 million meals donated. 

Jennifer: What do you think it’s going to take for more companies to make larger investments in sustainability? It’s clear that MGM has a huge investment across the different programs and even having you join the team back in 2016, for other companies that are making a larger investment, what do you think it’s going to take for that to happen? 

Yalmaz: Well, I’d say many people come to this space with the perception that there is a tradeoff. That if you’re going to adopt, you know, environmentally and socially progressive or beneficial programs that you’re going to necessarily cause the economics of the enterprise of the organization to suffer and the truth is, just like any other decision, you need to choose how sustainability or social impact shows up in your organization. And choose the range of things that drive value for your organization. And some of that could be, you know, significantly beneficial economic value. For example, we’re installing a 100 megawatt solar array. Someone thinks that and they’re going to be worried, you know, about the massive increase in cost of energy. Well we’re saving 27.7 million dollars in net present value savings because we’ve chosen to go to renewable [18:00] energy, okay? But that’s one example of where there is direct savings. There are other examples that we’re willing to pay for because it’s good for reputation or good for customer loyalty or our employees want it. So first, companies need to just be open to this and be open to the range of ideas. They don’t need to implement every idea. They don’t need to implement the ideas that don’t deliver a return. They can just be open, open the door and then you find value. The second thing I’d say is that the investor is central to the future of corporate sustainability because literally in the last two years, there has been a very very, very significant upswing in interest by investors, the folk who, you know, have the funds that goes into or does not go into companies in terms of capital. And there has just been a seismic shift. I read a stat that ESG, or environmental social governance linked investment is going to match, from a tiny base a few years ago, very little relative terms of capital going in to ESG linked investments to 50% of all investments in 2025. In the hundreds and trillions are going to be ESG linked. Meaning investors who want to acquire or invest in your company, or take equity positions are going to want to know what you’re doing because of the environmental social governance practices. And so, if you want investment capital, if you want to lower the cost of capital ultimately, then you need to be focused on these things. And then that legitimizes a lot more expenditure, a lot more strategy, a lot more hiring for this because you know it’s going to enable capital. [20:00]

Jennifer: I love those viewpoints. It’s almost like you have seen my documents at Convoy about how we think about sustainability as well. For me, nothing is more frustrating than hearing business leaders think that there is a tradeoff with sustainability because you’re so right, there doesn’t have to be. Often times it’s beneficial for your business in some way. So just, last question for you today. What is one thing that most people, maybe consumers or someone who walks into one of your resorts doesn’t know about sustainability at MGM? 

Yalmaz: That’s a great question to close. Thank you. MGM is surprisingly sustainable from an environmental standpoint. People do not know that you might think that everything is wasted. There is only one type of bin. Basically, trash bins. But back of house, all the waste is hand sorted to pick out recyclables and there’s a separate stream for food so that is kept separate. So, you might think of, you know, resorts in Las Vegas as being highly wasteful but we have a material diversion rate of nearly 50% reach is far, far greater than almost any hotel that you might go to anywhere in the world. We capture more divert, more materials for donation, or composting, or recycling than the vast majority of hotels and resorts in the world. So that’s a surprise I think for many and I hope…

Jennifer: That’s amazing. That’s a huge investment. Thank you for doing that. 

Yalmaz: You’re welcome. 

Jennifer: Awesome. Well, thank you so much, Yalmaz. I had a really great time. Excited for everyone also to hear this interview today. 

Yalmaz: You’re more than welcome. Thank you and have a great Thanksgiving.