11/02/2013

Dear stakeholders,

I am pleased to confirm that InterContinental Hotels Group reaffirms its support of the Ten Principles of the United Nations Global Compact in the areas of Human Rights, Labour, Environment and Anti-Corruption.

In this annual Communication on Progress, we describe our actions to continually improve the integration of the Global Compact and its principles into our business strategy, culture and daily operations. We also commit to share this information with our stakeholders using our primary channels of communication, such as our online CR Report - www.ihg.com/responsibility

Sincerely yours,

Richard Solomons
Chief Executive, IHG

Key Human Rights achievements in 2011
- Developed a Human Rights policy
- Developed Human Rights training and commenced roll-out
- We endorse the United Nations Global Compact as a reflection of our policy
- We support the International Tourism Partnership (ITP) position statement on human trafficking
- Embedded Human Rights in our new hotel development approval process.

Key Human Rights objectives in 2012
- To deliver Human Rights training across the UK estate in advance of the London 2012 Olympic & Paralympic Games
- To participate in the International Tourism Partnership workshop on Human Trafficking.

At IHG we believe that strong ethics and good business are natural partners. We are committed to operating our company with integrity, working to the highest ethical standards. Our reputation is built on the trust and confidence of all our stakeholders, and is fundamental to our vision to make IHG one of the world's great companies.

View our Code of ethics and business conduct here:
http://www.ihgplc.com/index.asp?pageid=763

More and more of our stakeholders want reassurance that we provide decent working conditions for all of our employees, manage our risks with all our business partners and make sure the rights of the local people where we operate are protected. While we work towards covering these areas in our contract terms and conditions we accept we have much more to do.

In 2010 we signed up to the UN Global Compact, aligning our operations and strategies with the ten universal principles that include commitments to human rights and labour standards. In 2011 we put our support behind the International Tourism Partnership's position statement on human trafficking which aims to bring together the world's leading international hotel companies to reach collaborative solutions to address the issue of human trafficking.

Since 2008 we have been developing comprehensive methods to help us assess and respond to human rights issues. All members of the Executive Committee take responsibility for human rights on behalf of the Board.

IHG's Human Rights Policy
We support and protect human rights wherever we can. As a responsible company with operations in nearly 100 countries and territories, we believe that strong ethics and good business go hand in hand and we are committed to complying with the laws and regulations of the countries and jurisdictions in which we operate.

To demonstrate our commitment in this area we:

- support the protection of human rights, particularly those of our employees, the parties we do business with and the communities where we operate
- respect our employees' rights to voluntary freedom of association, under the law
- provide a safe and healthy working environment
- do not support forced and compulsory labour or the exploitation of children
- support the elimination of employment discrimination and promote diversity in the workplace
- provide our employees with remuneration and tools for growing their careers, and take their wellbeing into consideration
- promote fair competition and do not support corruption
- conduct our business with honesty and integrity in compliance with applicable laws
- develop and implement company procedures and processes to ensure we comply with this policy.

To view our Human Rights policy:
http://www.ihgplc.com/index.asp?pageid=733#humanrights

Our Human Rights objectives for 2013 will be published in our CR Report when we update it in April 2013.

How our employees can raise a grievance
We have a whistleblower line and let employees know about it through internal communications and a dedicated website
www.ihgethics.com

Responsible supply chain
Our terms and conditions for suppliers' Vendor Code of Conduct includes human rights criteria. The Supply Chain section gives further information on how we support our suppliers in this area.
Protecting local communities

Through Green Engage we provide hotels with some initial steps they can take to ensure they respect the rights of local communities. These include:

- undertaking a social impact assessment before carrying out any building work to minimise the impact of the work on communities
- engaging regularly with local leaders to identify and resolve any rights issues
- keeping our use of resources to a minimum and making sure we don't deplete existing community supplies
- following our Code of Conduct to guard against bribery and corruption
- following our Human Rights policy to avoid the unlawful exploitation of labour, women or children. Staff are expected to receive training on how to recognise and resolve these sensitive situations
- supporting cultural preservation projects through corporate donations or staff volunteering.

For more information visit: http://www.ihgplc.com/index.asp?pageid=763

Assessing stakeholder issues
We engage with our stakeholders to gain insight on key CR issues and how they are relevant to IHG. We analysed the issues our stakeholders said mattered to them and together with our own understanding of our business, we conducted a materiality assessment to prioritise the areas identified as having the highest impact for our stakeholders and the business. The issues identified as most significant, or material, form the focus of our CR strategy and approach. We continue to use stakeholder feedback to develop our CR strategy and stakeholder engagement programme.

To see our key issues matrix visit: http://www.ihgplc.com/index.asp?pageid=738

Key Human Rights achievements in 2011
- Developed a Human Rights policy
- Developed Human Rights training and commenced roll-out
- We endorse the United Nations Global Compact as a reflection of our policy
- We support the International Tourism Partnership (ITP) position statement on human trafficking
- Embedded Human Rights in our new hotel development approval process.

Key Human Rights objectives in 2012
- To deliver Human Rights training across the UK estate in advance of the London 2012 Olympic & Paralympic Games
- To participate in the International Tourism Partnership workshop on Human Trafficking.

Our Human Rights objectives for 2013 will be published in our CR Report when we update it in April 2013.

Governance
Responsibility for delivering the strategic priorities of the responsible business section of our core purpose, Great Hotels Guests Love, and determining the overall shape of our Corporate Responsibility strategy lies with our CR Board Committee. This formalises our approach of making CR a fully integrated part of our business, putting the needs of society and the environment at the heart of our business objectives and broader risk management programme. The Committee makes sure we have the right policies, management and measurement systems in place to deliver against our strategy.

For more information on our approach to Governance visit: http://www.ihgplc.com/index.asp?pageid=728

Code of Conduct
We believe that strong ethics and good business go hand in hand. We are committed to operating our company with integrity and according to the highest ethical standards. Our Code of Ethics and Business Conduct is publicly available on our website.

The Code consolidates and clarifies expected standards of behaviour and sets out the ethical values of the Group. It states clearly that IHG's reputation is built on the trust and confidence of our stakeholders and underpins our operations world-wide. We have a whistleblower line and communicate this through internal communications and a dedicated website; www.ihgethics.com.

The Code applies to all directors, officers and employees of IHG, and should be read together with the company's core values. We also provide conflict of interest training to key employees to ensure our ethical standards and the Group's overall best interests are maintained.

At IHG we believe that strong ethics and good business are natural partners. We are committed to operating our company with integrity, working to the highest ethical standards. Our reputation is built on the trust and confidence of all our stakeholders, and is fundamental to our vision to make IHG one of the world's great companies.

View our Code of ethics and business conduct here:
http://www.ihgplc.com/index.asp?pageid=763

More and more of our stakeholders want reassurance that we provide decent working conditions for all of our employees, manage our risks with all our business partners and make sure the rights of the local people where we operate are protected. While we work towards covering these areas in our contract terms and conditions we accept we have much more to do.

In 2010 we signed up to the UN Global Compact, aligning our operations and strategies with the ten universal principles that include commitments to human rights and labour standards. In 2011 we put our support behind the International Tourism Partnership's position statement on human trafficking which aims to bring together the world's leading international hotel companies to reach collaborative solutions to address the issue of human trafficking.

Since 2008 we have been developing comprehensive methods to help us assess and respond to human rights issues. All members of the Executive Committee take responsibility for human rights on behalf of the Board.

Working conditions
We respect and support our employees' rights to decent working conditions. Our employment policies are designed to comply with all local labour laws and also to create safe, healthy and fair conditions throughout the whole of IHG. We know that wages, working hours and job security can be challenges within our industry. To begin to mitigate these risks we put in place a Human Rights policy for IHG-owned and -operated properties and will expand this to include business partners in contract terms and conditions.

Labour unions
We recognise the importance of partnerships with labour unions that represent our employees. 'Room to be yourself' is the employer side of our deal with our employees. Through it, we support our employees' right to decide if they want to be part of a union or not, free from any outside pressure or intimidation. In order to make the process fair, personal and democratic we support our employees' right to a private, secret ballot election.

Approximately 20% of hotel-based employees in the United States and Canada are members of an organised labour union. There are no collective bargaining agreements in other regions. In the Europe, Middle East and Africa region, we set up a Works Council for employee representation.

We give employees and union representatives advance notice of material operational changes. Minimum notice periods may vary by location and we always seek to comply with local laws.

For more information visit:
http://www.ihgplc.com/index.asp?pageid=763

Human Rights Policy:
http://www.ihgplc.com/index.asp?pageid=733

Our people:
http://www.ihgplc.com/index.asp?pageid=758

Our approach to disversity and equality:
http://www.ihgplc.com/index.asp?pageid=762

How our employees can raise a grievance
We have a whistleblower line and let employees know about it through internal communications and a dedicated website: www.ihgethics.com.

IHG Vendor Code of Conduct
This IHG Vendor Code of Conduct sets out the requirements, principles and practices that IHG has adopted to promote ethical conduct in the workplace, safe working conditions in the supply chain, treatment of persons with respect and dignity, and environmentally responsible practices. These are the minimum standards under which IHG Vendors are expected to operate, and IHG encourages Vendors to exceed the requirements. To read our Vendor Code of Conduct visit: http://www.ihgplc.com/index.asp?pageid=733

Code of Ethics and Business Conduct
https://secure.ethicspoint.com/lrn/media/en/gui/20831/Code_of_Ethics_and_Business_Conduct.pdf

At IHG we believe that strong ethics and good business are natural partners. We are committed to operating our company with integrity, working to the highest ethical standards. Our reputation is built on the trust and confidence of all our stakeholders, and is fundamental to our vision to make IHG one of the world's great companies.

View our Code of ethics and business conduct here:
http://www.ihgplc.com/index.asp?pageid=763

More and more of our stakeholders want reassurance that we provide decent working conditions for all of our employees, manage our risks with all our business partners and make sure the rights of the local people where we operate are protected. While we work towards covering these areas in our contract terms and conditions we accept we have much more to do.

In 2010 we signed up to the UN Global Compact, aligning our operations and strategies with the ten universal principles that include commitments to human rights and labour standards. In 2011 we put our support behind the International Tourism Partnership's position statement on human trafficking which aims to bring together the world's leading international hotel companies to reach collaborative solutions to address the issue of human trafficking.

Since 2008 we have been developing comprehensive methods to help us assess and respond to human rights issues. All members of the Executive Committee take responsibility for human rights on behalf of the Board.

Diversity and equality
http://www.ihgplc.com/index.asp?pageid=762

The geographic and socio-economic diversity of our guests is reflected in our workforce, owners and business partners. We are proud of our rich cultural diversity across the globe and within our local hotel communities. It allows us to strengthen our understanding of and respond to the needs of our guests, and is reflected in our Winning Ways.

We are committed to diversity and inclusion across all aspects of our business. This includes hotel ownership, strategic sourcing relationships, recruitment, community relations, franchising and marketing. To achieve it we work to create working environments and establish business relationships where every group fits, feels accepted, has value and contributes.

For examples of our diversity and equality approach visit:
http://www.ihgplc.com/index.asp?pageid=762

For more information on 'Our people' visit:
http://www.ihgplc.com/index.asp?pageid=758

For more information on our 'Employee profile' visit:
http://www.ihgplc.com/index.asp?pageid=760

Our approach to CR
Corporate responsibility (CR) is central to the way we do business. Acting responsibly creates value for our brands while helping our hotels to manage costs, drive revenue and be prepared for the future. It also keeps us in tune with the thinking of our stakeholders, and supports our mission to champion and protect IHG's trusted reputation. Doing the right thing reinforces trust in our brands, builds competitive advantage and strengthens our corporate reputation.

With over 4,500 hotels worldwide and more than 1,000 in the pipeline, we have a tremendous opportunity to help make tourism responsible, from the energy we use, to the economic opportunities we create and the support we can provide to communities in times of disaster. To calculate the contribution made by IHG hotels, we asked Oxford Economics to analyse the impact of our operations in the US, UK and Brazilian economies. The report shows that our hotels support close to 2 million jobs globally. Furthermore, we know that each dollar spent at an IHG hotel multiplies through the economy six to seven times. This reinforces our conviction that behaving responsibly as a business is not just the right thing to do for our communities and the environment; it makes great business sense.

We focus our innovation and collaboration activities on the areas that make most sense to our business, and where we believe we can make most difference, the Environment and Community, and in turn create shared value. We believe there is real competitive advantage in acting responsibly, which is playing a key role in our efforts to manage costs and drive revenue more effectively.

Our CR strategy has two pillars:

Environment – driving environmental sustainability through Green Engage and our three-year target to reduce energy consumption in our owned and managed estate by between 6 and 10% by the end of 2012.
Community – creating local economic opportunity particularly through the IHG Academy, and by providing disaster relief through The IHG Shelter in a Storm Programme.

Our approach to the Environment

Key environmental achievements in 2011
- Launched version 2.0 of Green Engage, our system-wide approach to environmental management
- Became the first hotel company to be aligned to LEED for an existing hotel programme, Green Engage
- Met our target to have 1,700 of our hotels enrolled in Green Engage by the end of 2011 and are continuing to drive engagement
- A community of almost 6,000 individual users, at our hotels, are now registered on Green Engage
- Joined President Obama’s partnership with the Department of Energy for the Better Buildings Challenge
- Enhanced our focus on water by launching a water benchmark in Green Engage
- Continued to lead the industry on a standard method for calculating carbon footprints.

Key environmental objectives for 2012
- Achieve energy savings of 6% to 10% in our owned and managed hotels over a three-year period (2010-2012) on a per available room night basis
- Continue to grow hotels enrolled in Green Engage to 50% of our estate
- Make Green Engage easier for hotels to use
- Develop Green Meetings offering
- To complete a content focused Usability Study for Green Engage in order to increase efficiency and impact
- Drive the development and use of global CO2 standards for hotels.

An update to our 2012 performance and 2013 objectives will be published when we update our CR Report in April 2013.

Climate change is having a major impact on the travel and hospitality industry. As the largest hotel chain in the world we know that the potential climate change costs to our business are huge. We want to continue to grow responsibly and that means reducing our energy, carbon and resource impacts. We are committed to doing this by seeking new ways to reduce and manage emissions across our hotel estate rather than through purchasing carbon offsets. This provides an opportunity to work closely with our partners to develop innovative technology and identify and implement practical, cost-efficient measures that are both sustainable and responsible.

With over 4,500 hotels and more than 1,000 in the pipeline we are in a strong position to advance the development of new 'green building' technologies and processes, and to use our critical mass to bring them to market. We have recommended that our Green Engage hotels look to create these opportunities for local suppliers.

All of our efforts reflect our ambition to lead the industry and the marketplace in sustainability. As thinking evolves in this area, so too does our vision of what a green hotel looks like and we constantly seek the input of internal and external stakeholders in order to find new and better ways to design, build and run hotels.

Environment Policy
We acknowledge our responsibility to respect the environment and manage our impacts for the benefit of the communities in which we operate, and we are committed to measuring and managing those impacts and finding innovative ways to reduce them. We will:

- implement sound environmental practices in the design, development and operation of our hotels
- encourage the development and integration of sustainable technologies
- endeavour to reduce our use of energy and water, and re-use and recycle the resources consumed by our business wherever practical
- engage our customers, colleagues, hotel owners, suppliers and contractors in our efforts to protect the environment
- provide the training and resources required to meet our objectives
- monitor, record and benchmark our environmental performance on a regular basis
- make business decisions that take these commitments into account
- communicate our policies, practices and programmes to all our stakeholders.

To view our Environment Policy visit:
www.ihgplc.com/index.asp?pageid=733

To read more on our response to Environmental Legislation visit:
http://www.ihgplc.com/index.asp?pageid=741

To read more on our approach to Climate and Carbon, visit:
http://www.ihgplc.com/index.asp?pageid=745

To read more on our approach to Energy, visit:
http://www.ihgplc.com/index.asp?pageid=749

To reach more on our approach to Water, visit:
http://www.ihgplc.com/index.asp?pageid=750

To reach more on our approach to Waste, visit:
http://www.ihgplc.com/index.asp?pageid=751

Our strategy is based on innovation and collaboration. Making sure we have the right policies, management and measurement systems in place to deliver against our strategy.

Innovation
We develop innovative concepts and technologies, and we work closely with our partners to find creative solutions to the challenges we face. Instead of purchasing carbon offsets, for example, we have chosen to develop innovative technologies, such as Green Engage, and implement practical measures to make real carbon and energy reductions across our hotel estate.

We also develop innovative concepts like our online Innovation Hotel website which helps us to create what future hotels could look like and how they might operate. The site allows online guests to tell us what they think of the latest sustainable hotel ideas. We launched a new version of the Innovation Hotel in 2011. The refreshed site now showcases real IHG hotel case studies and makes it even easier for guests to join the conversation.

We are committed to designing, building and operating more sustainable hotels through innovation. By choosing to develop programmes like Green Engage, we provide our hotel owners with guest-focused guidelines for more sustainable hotels.

Collaboration
Our stakeholders play a key role in helping us identify and tackle our priorities. They include guests and corporate clients, hotel owners and franchise holders, local communities, employees, shareholders, suppliers, academic institutions, non-government organisations, governments and industry-specific institutions. We engage with them through forums, meetings, individual interviews, surveys and our award-winning online Innovation Hotel, where stakeholders propose ideas that contribute to the way we design, build and operate more responsible hotels.

Our approach to the environment through:
Innovation - http://www.ihgplc.com/index.asp?pageid=719
Collaboration - http://www.ihgplc.com/index.asp?pageid=720

To reach more on our Environment approach, visit
http://www.ihgplc.com/index.asp?pageid=740

To reach more about Green Engage, our online environmental managment platform, visit
http://www.ihgplc.com/index.asp?pageid=742

To learn more about our governance approach, visit:
http://www.ihgplc.com/index.asp?pageid=728

To read about Green Engage and how it aligns with LEED, visit
http://www.ihgplc.com/index.asp?PageID=116&NewsID=2568

Key environmental achievements in 2011
- Launched version 2.0 of Green Engage, our system-wide approach to environmental management
- Became the first hotel company to be aligned to LEED for an existing hotel programme, Green Engage
- Met our target to have 1,700 of our hotels enrolled in Green Engage by the end of 2011 and are continuing to drive engagement
- A community of almost 6,000 individual users, at our hotels, are now registered on Green Engage
- Joined President Obama’s partnership with the Department of Energy for the Better Buildings Challenge
- Enhanced our focus on water by launching a water benchmark in Green Engage
- Continued to lead the industry on a standard method for calculating carbon footprints.

Key environmental objectives for 2012
- Achieve energy savings of 6% to 10% in our owned and managed hotels over a three-year period (2010-2012) on a per available room night basis
- Continue to grow hotels enrolled in Green Engage to 50% of our estate
- Make Green Engage easier for hotels to use
- Develop Green Meetings offering
- To complete a content focused Usability Study for Green Engage in order to increase efficiency and impact
- Drive the development and use of global CO2 standards for hotels.

An update to our 2012 performance and 2013 objectives will be published when we update our CR Report in April 2013.

To read case studies on how our hotels are using Green Engage to minimise their environmental impacts, visit:
http://www.ihgplc.com/index.asp?pageid=721

To read more on our approach to Climate and Carbon, visit:
http://www.ihgplc.com/index.asp?pageid=745

To read more on our approach to Energy, visit:
http://www.ihgplc.com/index.asp?pageid=749

To reach more on our approach to Water, visit:
http://www.ihgplc.com/index.asp?pageid=750

To reach more on our approach to Waste, visit:
http://www.ihgplc.com/index.asp?pageid=751

To read about IHG's involvement in the Hotel Measurement of Carbon Initiative (HMCI) visit:
http://www.ihgplc.com/index.asp?PageID=116&NewsID=2680
http://www.ihgplc.com/index.asp?pageid=745

CR Index Results
http://www.ihgplc.com/index.asp?PageID=116&NewsID=2635

Green Engage and CDP Score
http://www.ihgplc.com/index.asp?PageID=116&NewsID=2701

At IHG we believe that strong ethics and good business are natural partners. We are committed to operating our company with integrity, working to the highest ethical standards. Our reputation is built on the trust and confidence of all our stakeholders, and is fundamental to our vision to make IHG one of the world's great companies.

View our Code of ethics and business conduct here:
http://www.ihgplc.com/index.asp?pageid=763

More and more of our stakeholders want reassurance that we provide decent working conditions for all of our employees, manage our risks with all our business partners and make sure the rights of the local people where we operate are protected. While we work towards covering these areas in our contract terms and conditions we accept we have much more to do.

In 2010 we signed up to the UN Global Compact, aligning our operations and strategies with the ten universal principles that include commitments to human rights and labour standards. In 2011 we put our support behind the International Tourism Partnership's position statement on human trafficking which aims to bring together the world's leading international hotel companies to reach collaborative solutions to address the issue of human trafficking.

Since 2008 we have been developing comprehensive methods to help us assess and respond to human rights issues. All members of the Executive Committee take responsibility for human rights on behalf of the Board.

IHG's Anti-Bribery Commitment
IHG is committed to carrying out business with integrity and in accordance with the highest ethical standards. IHG does not support or condone bribery or corruption.

We have in place a Bribery and Anti-Corruption Policy and a Gifts and Entertainment Policy which apply to all IHG employees and in all our owned and managed hotels. We include appropriate language in relevant agreements (including Hotel Management Agreements and Franchise Agreements) and we have launched a bribery training programme for our employees. Our financial control, risk management and internal audit processes also take into account bribery legislation to raise awareness of regulations and compliance with our policies.

IHG Vendor Code of Conduct policy
http://www.ihgplc.com/index.asp?pageid=733

At IHG, we believe that we should always “Do the right thing” and abiding by our Code of Ethics and Business Conduct is a core part of this commitment. Whilst we must all uphold our responsibility to behave ethically and protect the reputation of our company, it is possible that a small minority of our staff may act in a way which conflicts with these standards. We hope that staff will feel able to report any ethical concerns directly to their line managers, HR, or to another member of management at their hotel or office if appropriate. However, IHG also offers a confidential reporting channel to report such incidents, should employees prefer.

The IHG “Confidential Disclosure Channel” provides employees with the mechanism to confidentially report ethical concerns by telephone or online via www.ihgethics.com or by clicking on the Contact the Ethics Line box to the right. Additional information on the confidential reporting channel can be found by clicking the Frequently Asked Questions box to the right.

www.ihgethics.com

Anti-Bribery and Corruption training
IHG's eLearning section contains all of the eLearning course offerings. The listing includes courses developed by IHG and courses offered by our third-party partners which are endorsed by IHG. Bribery and Anti-Corruption training is offered as a course through the eLearning intranet portal.

At IHG we believe that strong ethics and good business are natural partners. We are committed to operating our company with integrity, working to the highest ethical standards. Our reputation is built on the trust and confidence of all our stakeholders, and is fundamental to our vision to make IHG one of the world's great companies.

View our Code of ethics and business conduct - http://www.ihgplc.com/index.asp?pageid=244

More and more of our stakeholders want reassurance that we provide decent working conditions for all of our employees, manage our risks with all our business partners and make sure the rights of the local people where we operate are protected. While we work towards covering these areas in our contract terms and conditions we accept we have much more to do.

In 2010 we signed up to the Global Compact, aligning our operations and strategies with the ten universal principles that include commitments to human rights and labour standards.

Since 2008 we have been developing comprehensive methods to help us assess and respond to human rights issues. All members of the Executive Committee take responsibility for human rights on behalf of the Board.

www.ihgethics.com

Anti-Bribery and Corruption training
IHG's eLearning section contains all of the eLearning course offerings. The listing includes courses developed by IHG and courses offered by our third-party partners which are endorsed by IHG. Bribery and Anti-Corruption training is offered as a course through the eLearning intranet portal.

https://secure.ethicspoint.com/lrn/media/en/gui/20831/faq.html