MASTER THESIS
TRUE COST ACCOUNTING: AN APPLICATION IN THE HOTEL
INDUSTRY
Student: Eline Hakken S2512432 e.hakken@student.rug.nl Supervisor: J.S. Gusc Company Mentor: M. Vlek Wordcount: 12875MSc Business Administration - Organizational and Management Control Faculty of Economics and Business
2 ABSTRACT
Sustainability has been an important topic for the past couple of years. One industry where sustainability is still in its beginning phase is the hotel industry. Over the past decades, the hotel industry grew to one of the biggest industries in the world, with only 42 million tourists in the Netherlands every year. All these people have an enormous impact on the
environment. This research built and implemented a True Cost Accounting (TCA) Framework in a hotel. With this TCA the external environmental and social impacts are calculated to support sustainable decision making. There are four steps in the TCA
3 TABLE OF CONTENTS ABSTRACT ... 2 TABLE OF CONTENTS ... 3 INTRODUCTION ... 4 LITERATURE REVIEW ... 6
TCA ability to internalize externalities ... 7
Building True Cost Accounting Framework... 10
METHODOLOGY ... 15 Case company ... 16 Research stages ... 17 RESULTS ... 20 Step 1 - Total ... 20 Step 2 - Impact ... 21 Step 3 – Measurement ... 23 Step 4 – Management ... 31
DISCUSSION & CONCLUSION ... 34
APPENDIX A ... 48
APPENDIX B ... 53
APPENDIX C ... 64
4 INTRODUCTION
Sustainability has been an important topic for years. Since the 1990s more and more companies are willing to disclose their corporate social responsibility. This is typically done in voluntary reports (Dhaliwal, Li, Tsang, & Yang, 2011), but these reports tell little about the monetarized external impacts the company has socially or environmentally.
A method that can be used to create this monetarized overview of the external impacts is True Cost Accounting (TCA). TCA is an accounting system that allows companies to incorporate potential or actual costs and benefits to set the right price of a product (Bebbington, 2001). To set the right price companies should not only take the internal consequences of their business activities into account but also the external consequences. These external consequences are called externalities. Externalities include social and environmental costs and benefits. External costs appear when the activities of one group affect another group without compensation (CE Delft, 2008). A simple example of external costs is Co2 emission. Transportation companies are releasing the Co2, but are not directly paying for the costs that are coherent with this emission (European Union. European Commission. Directorate-General for Research, 2003). Costs that are coherent with Co2 emission are the costs of pollution, but also the future costs of health hazards. Currently, the idea is that external costs are indirectly recovered via taxation and excise. However, in most cases, the money received with these taxes and excises is not enough to cover all the external costs (Eriksen, 2000). The intention of internalizing the external costs with a True Cost Accounting is to correct market imperfections and provide incentives to reduce demands (European Environment Agency, 2008). By monetizing the externalities and having a better quality of comparable information available gives companies and consumers the opportunity to make better informed sustainable decisions (Antheaume, 2004).
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tried to implement sustainable development principles in their daily operations (Brazytė, Weber, & Schaffner, 2017), still 98% of the hoteliers believe that their activities have a negative impact on the environment (Bohdanowicz, 2005). This means that the measures that are being taken are not adequate enough. So, sustainability is getting more and more important for hoteliers due to increasing demand, increasing costs and more environmental and social impact (Bader, 2005), but the right tools to be successful are missing.
Here is where TCA can be used. Although, TCA has received some attention in academic accounting literature (Gray, 2010; Schaltegger, 1997), applications in the real world are still limited (Bebbington, Gray, Hibbitt, & Kirk, 2001). In research, there have been a few attempts to implement true cost accounting in practice (Antheaume, 2004; Bebbington et al., 2001). However, these attempts focus mainly on the experimental part of the research instead of the attitude of the company towards sustainability and the practicality of the TCA framework (Antheaume, 2004). Though, four insights emerged from these experiments. First, creating a TCA helped to gain better knowledge about the companies and helped change taken for granted ways of working. Second, companies do not have complete
influence on all the measures that would steer them towards being more sustainable. Third, external costs and benefits can have a significant impact on the company’s bottom line and can turn a profit into a loss. Fourth, external costs and benefits calculations cannot be compared with other companies, because of the difference in methods used to calculate the impacts and the variety in externalities (Antheaume, 2004). This study will extend on this knowledge, by focusing on the attitude of the company and the practicality of the TCA Framework. Previous research already showed that hotels have not yet implemented a TCA, even though this could be beneficial (Janković & Krivačić, 2014). The problem with current management accounting research is that it lacks having an impact on practice (Jansen, 2018), so therefore researchers advocate for more practice-oriented research (Baldvinsdottir, Mitchell, & Nørreklit, 2010). For that reason, this research will combine practice and theory to develop a True Cost Accounting.
Summarizing the above, by researching the implementation of a True Cost Accounting in the hotel industry, this research can further develop literature regarding true cost accounting implementations. By combining the desire of hotels to implement some sort of
6 LITERATURE REVIEW
This research aims to further develop the literature regarding the implementation of TCA frameworks in practice, and respond to the call for more practice-oriented research by creating a TCA framework for a case company. To create a practical framework, a better understanding of TCA, and it is concepts is needed. In this literature review, TCA and the different methods to determine the externalities are discussed.
Accounting is the language that communicates information of the organization to their stakeholders (Benn, Dunphy, & Griffiths, 2014). In traditional accounting, the main focus has been on the economic aspects of a company (Bebbington, Brown, & Frame, 2007). In recent years, stakeholders demand more information about environmental and social issues and to meet this demand sustainability accounting and reporting methods evolved (de Villiers & Maroun, 2018). While reporting methods have developed enormously, also due to the ranking drive, management accounting methods and their application seem to lag behind both in a number of techniques as well in coverage.
One of management accounting methods is True Cost Accounting (TCA). It allows
companies to incorporate potential and actual costs and benefits from environmental and social externalities to set “the right” prices for the product (Bebbington et al., 2001). Setting the right prices means that companies include all costs from internal operations, but also all costs that take place outside the company. These external costs are referred to as
externalities. Externalities can be defined as external effects that arise from operations without being taken into account by the company and causing damages or benefits to another party (Antheaume, 2004). In that it enables to cove broad (entire sustainability( perspectives and include multiple dimensions. This can be the costs of damaging the environment or costs of social impacts. In the academic literature, there have been a few attempts to calculate these costs. The earliest attempts can be traced back to mid-1970 (Abt, 1977; Estes, 1972). These attempts were at the time not successful, because calculating the costs of the environmental and social impacts was either too costly, too complicated or did not meet with current interests (Antheaume, 2004). Although these early attempts have not led to a successful implementation of TCA, it has led to creating more social and
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2012). TCA can provide insights to satisfy both external and internal interest. Therefore, it is important to keep developing TCA and look more in-depth in the application in companies.
TCA ability to internalize externalities
TCA includes all sustainability dimensions so not only financial capital in accounting but also social and natural capital. It changes the classical perception of costs from internal to a broader more external view. There are multiple methods to decide which external costs and benefits have a connection with the company and should be included in the TCA Framework, and TCA does not prescribe any specific one. This research will look more in depth in three methods: The Sustainability Balanced Scorecard, the Phase Model and the Triple Bottom Line.
The Sustainability Balanced Scorecard (SBSC) is an adapted version of the Balanced Scorecard (BSC) from Kaplan and Norton. The traditional BSC is a performance
measurement and management framework with the focus on four performance perspectives financial, internal processes, customers and learning and growth (Kaplan & Norton, 1996). The SBSC not only focuses on the existing performance perspectives, but also focuses on all three dimensions of sustainability; economic, environmental and social (Figge, Hahn, Schaltegger, & Wagner, 2001). There are three possibilities in integrating the environmental and social aspect in the BSC. First, the environmental and social aspect can be integrated into the current four perspectives. This approach can mainly be used for companies that already are environmentally oriented. Second, an additional perspective for environmental and social issues can be used. Third, a separate environmental and social scorecard can be made (Figge, Hahn, Schaltegger, & Wagner, 2002).
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Figure 1: The Phase Model, based on (Benn et al., 2014).
The first wave consists of the rejection and non-responsiveness phase. Companies that are in these phases are mainly focusing on economic growth, social and environmental issues are taken for granted. These companies can be seen as value destroyers or value limiters. The second wave consists of compliance, efficiency and strategic proactivity. Companies that are in these phases are complying with the law, or a starting to implement a more sustainable business idea with the society and environment in mind. These companies can be seen as value conservers or value creators. The last wave consists of the sustaining corporation. Companies that are in this phase are leading in sustainability and are integrating renewing elements into their business. These companies are true sustainable businesses (Benn et al., 2014).
During the 1990s John Elkington proposed a new framework to measures sustainability in corporations. This framework is called the triple bottom line (TBL). The difference between traditional reporting frameworks and the TBL is the inclusion of economic, social, and environmental measures (Elkington, 1994), and goes beyond the traditional systems in measuring profits (Slaper & Hall, 2011). The economic variables in the TBL can consist of personal income, job growth, and the amount of taxes paid. The environmental variables include natural resources measurements; this can include air and water quality, energy usage, and waste. The social variables can include involvement in the community, and charitable contributions (Slaper & Hall, 2011). These costs are not only the costs the company makes internally but also the external costs of business. If all these variables are taken together, it creates a sustainable environment. A company should not only aim at a balance between the three sustainability dimensions now but also look at the balance in the future. To make sure that the current quality of life can also be guaranteed for future
generations (Elkington, 1998). By focusing on the interaction between the three elements of the TBL a company can move towards sustainability (Gray, 2010).
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few separate systems (Hansen & Schaltegger, 2016). The problem with this method is that aspects are only taken into account when they add value to the company. So, when an
externality is only a cost for the company and does not create value, it will not be considered. Since it is important for a True Cost Accounting to show the real costs and benefits of a company this method is not sufficient. Not all externalities add value to a company.
Therefore this method is not sufficient for internalizing the externalities and will not be used.
The Phase Model is a good model to show where a company is standing with their sustainability efforts. This is useful when a company is planning to make the next step in sustainability development. The model can also be used to examine the usage of human an natural resources, but the depth is lacking. All aspects of sustainability are only taken into account in the last step of the model where the company is already entirely sustainable. A TCA should not be something that is only used in true sustainable companies. For this reason, the Phase Model will also not be used to internalize the externalities.
The TBL looks at all the impacts the organization has based on the three sustainability dimensions and let the company take their accountability for these impacts. The TBL suggests that a TCA is needed for true sustainable development (Adams, Frost, & Webber, 2004), this makes integrating the TBL into a true cost accounting easier. The disadvantage of the TBL is that it is a very complex task to make a total TBL and it is not easily implemented in an organization and is therefore also never fully implemented in a company (Hubbard, 2009).
10 Figure 2: Aspects of sustainability
This means that the integration of a company’s sustainability performance will be done by looking at the three bottom lines: social, environmental and economical.
Building True Cost Accounting Framework
Bebbington, Gray, Hibbitt, and Krik (2001) formulated in their ‘Agenda for Action’ the four general steps to make when creating a TCA:
1. Define the cost objective
2. Specify the scope or limits of analysis 3. Identify and measure the external impact 4. Cost external impact
The first step is to determine the aim of the calculations for a true cost accounting. It can be to calculate it for a product, process, business activity, a whole organization, industry or country. The second step is to define the scope of the analysis to decide which externalities to include. It is important to determine how far to look into the externalities. For example, when looking at the externalities of electrical usage, one can first look at the externalities that are not accounted for that lie in the direct influence of the company. One can also look at the externalities that are generated from producing this electricity. This is not in the direct influence of the company, and by using this approach, everything can be connected with everything. The third step is to identify and measure the externalities. The final step is to monetize all the identified externalities.
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Similar to Bebbington’s framework is Total Impact Measurement & Management (TIMM) created by PwC (2013). This framework looks not only at all the relevant externalities and looks at the inputs and outputs of an organization, like the value chain analysis, but adds a step for managers to make better decisions.
The steps of TIMM are: 1. Total
2. Impact 3. Measurement 4. Management
The first step of TIMM is to look at the big picture. Where is the company currently standing socially, environmentally and economically. Since TIMM does not describe how to create this bigger picture, first a stakeholder analysis is performed. The way a company chooses and defines their stakeholders tells much about their relationship with their stakeholders and the influence the stakeholders have on their sustainable decision making (Epstein & Rejc
Buhovac, 2014). The levels of engagement a company has with their stakeholders can be in different stages. The schematically overview of these relationships can be found in figure 3. In the awareness stage, the stakeholders know that the company exists, but this is also where the relationship stops. There is little to no communication between the company and the stakeholders. In the knowledge stage, there is more communication between the company and the stakeholders. The stakeholders also start to understand the values, strategy, and mission of the company. In the admiration stage, the stakeholders and the company are committing to each other. In the action stage, the company is collaborating with their stakeholders. They both know that they perform better together (Epstein & Rejc Buhovac, 2014).
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For the current sustainability position of the company, the four stages of Hedstrom will be used (2015). According to Hedstrom companies can be divided into four stages of
sustainability, engaging, accelerating, leading or transforming. Engaging companies are complying with laws and regulations, have limited stakeholder engagement, and are mainly focusing on ‘safe’ ideas like reducing energy use. In figure 4 can be seen that most companies are in the engaging stage. Accelerating companies are focusing on building stakeholder partnerships and are building an open culture about their sustainability. However, most sustainable efforts are mainly CEO-driven. Leading companies have a clear environmental and social focus; sustainability is woven in every aspect of the company. Mostly a Chief Sustainability Officer (CSO) is introduced to make sure that sustainability is a part of most decisions made. Transforming companies are the leading companies in sustainability. They use 100% renewable energy or have closed-loop
manufacturing (Hedstrom, 2015). Very few companies are truly transforming companies. The difference between a leading and transforming company is that in transforming companies, sustainability is part of every employee not only the CEO or CSO. Everyone is responsible for the sustainability of the company.
Figure 4: Stages of sustainability (Hedstrom, 2015).
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Sauter-Sachs, 2002). Porter and Kramer (2011) also wrote that companies should focus on creating shared value. With this principle companies create economic value in a way that it also creates value for society. By this is not meant that companies share their already created value, like redistribution, but try to create more value.
An example of this is helping farmers to increase their crops by improving growing techniques or help in another way to increase the farmer's efficiency. Like true cost accounting the concept of shared value expands the concept of costs and recognizes that externalities can occur and should form an internal cost for the company (Porter & Kramer, 2011). A company should first know the harms and benefits to society of their products and services before they can create shared value.
The third step is to quantify and monetize these externalities. During this step, the
determined externalities will monetized at current prices. In this step the externalities will also be divided over the 17 developments goals set by the United Nations in 2015. These goals are developed to end poverty, inequality and climate change by 2030. In total there are 17 goals with 169 sub-targets (See figure 5). To be able to reach the sustainable development goals (SDGs) by 2030 companies should not only depend on the government but also take their responsibility (United Nations, 2015). By implementing the SDGs in the TCA
framework, not only the company’s and local interest are represented, but it also creates a connection with international objectives. So, it is more understandable for companies in which areas they are already contributing and which need more work.
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The last step of the TCA Framework is to evaluate the externalities. Evaluate what the company has done with the additional information. Does the information help to make better sustainable decisions or does it facilitate the company in another way.
15 METHODOLOGY
This research aims to bridge the gap between research and practice by creating a True Cost Accounting Framework. This research is interventional since the company was not using a prior True Cost Accounting system. During interventionist research are the researcher and members of the organization working together to solve organizational problems (ter Bogt & van Helden, 2011). The intervention that will take place during this research is the creation and implementation of a True Cost Accounting Framework.
Within interventionist research different streams exists. For this interventionist research action research is chosen. Action research is a research method that investigates and facilities people to find solutions for everyday problems (Stringer, 2013). According to Coughlan and Coghlan (2002), four characteristics define action research:
- Research in action, rather than research about action - Participative
- Concurrent with action
- A sequence of events and an approach to problem-solving
The setup for this research makes sure that all characteristics are taken into account. With creating a TCA Framework, there is action. There are collaborations between the researcher and the members of the company, what makes is participative. The research is concurrent with action. There is a continuous feedback loop between the researcher and the members of the case company regarding the progress. Gathered data is evaluated, and future actions are based on this data.
To guarantee the quality of the action research, Bradburry-Huang (2010) set up five quality factors:
Factors literature In this research
Proceeds from a praxis of participation There is collaboration between researcher and practitioners from the case company. This will be done by attending meetings, presentations, receiving feedback, e-mails and phone calls.
Is guided by practitioners’ concerns for practicality
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The practicality of the framework is one of the most important concerns.
Is inclusive of stakeholders’ ways of knowing
The stakeholders are taken into account in this study. Stakeholders for the case study are guests, employees, suppliers, local community and municipality. All externalities are linked with the corresponding stakeholders. Helps to build capacity for ongoing change
efforts
By creating the TCA Framework, the company receives a management
accounting tool that can be used for future decision making and can be adapted to their needs. For example, the calculations about recycling can be used to reconsider certain decisions.
Choose to engage with those issues people might consider significant for the
flourishing of people, their communities and the broader ecology
By implementing the Triple Bottom Line in the TCA Framework. In this way, the environment and local community are also taken into account, instead of just normal operations.
Figure 7: Quality Factors (Bradbury-Huang, 2010)
This research will comply with these quality factors to guarantee solid action research.
Case company
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Figure 8: Landgoed De Holtweijde (Landgoed De Holtweijde, 2018)
Holtweijde is part of the hospitality company Hoscom. Hoscom is not a hotel chain, all five hotels are independent, and all have their own look and feel.
In figure 9, an overview of Hoscom is presented.
Figure 9: Overview Hoscom (HOSCOM, 2018) Research stages
The research will take place between September and December 2018. The case study
18 Stage 1. Initial contact with the case company
The initial contact with the company will be made through an intermediary. The director of Landgoed De Holtweijde and the intermediary know each other for a while, and according to the intermediary, this company was exactly what is needed for this research.
Stage 2. Creating the True Cost Accounting Framework
The second stage is building the True Cost Accounting Framework for the hotel. The creation of the framework will start by developing the theoretical framework. After the creation of the theoretical framework and different meetings the first draft of the externalities will be made. This will be called a longlist. These externalities are based on literature, company
information and secondary information in the form of student ideas from the course Management Accounting Techniques. This initial list of externalities will receive feedback from the company.
The presentation of the ideas and feedback will take place in meetings where the owner will always be present. Also, interviews will be conducted with various stakeholders. These stakeholders include employees, suppliers, and the municipality. The participants of the interviews will be selected through purposeful sampling. With purposeful sampling
individuals that are knowledgeable or experienced were selected (Cresswell & Plano Clark, 2011). Also, the availability and willingness to participate in the interview was taken into account (Bernard, 2017; Palinkas et al., 2015). With this method, the part-time employees and employees without a fixed contract will be excluded from the sample. The assumption is that these employees are less knowledgeable or experienced and therefore cannot provide the right or useful information. The departments will also be taken into account. It is preferred to interview employees from operational departments who come in contact with sustainability or can develop their sustainability.
After determining the relevant externalities, they will be measured and monetarized. The financial employee of the hotel will guide this process. The monetized externalities will be discussed and adapted during meetings with the director. To set the right values for the relevant externalities input from different sources of information will be taken into account. This can be information from the company, stakeholders or secondary information. The complete step-by-step overview of creating the TCA framework and type of information needed can be found in figure 10.
Stage 3. Analyzing the True Cost Accounting Framework
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Step Information needed Type of information From who/where
Total Information about
stakeholders and relationship to stakeholders.
Information about the current state of sustainability. - Interviews - Literature - Interviews with stakeholders - Interviews with director - Literature about stakeholders and sustainability Impact Information about
processes of the company. Where do they add value and what is important for them.
- Interviews - Literature
- Interviews with director
- Industry information
Measurement Information about the impact. How high is the impact, has it a positive or negative influence. - Interviews - Literature - Prices - Interviews with director - Interviews with stakeholders Management What is done with the
information received about the company’s impact and the measurement about these impacts.
- Interviews - Information about the implementation
20 RESULTS
In this section, the creation of the TCA Framework as described in the literature section will be elaborated for Holtweijde.
Step 1 - Total
The initial idea was to brainstorm about all the stakeholders of the company and give a value to them. However, the director already had a very clear idea about their stakeholders and how important they are for the company. This was already documented in their vision document. Their most important stakeholders are their guests and their employees, but also the suppliers and the local community are important. From the observations and interviews with the employees these stakeholders can be confirmed. The relationships with the
stakeholders show different levels of engagement (see Figure 11). The relationships between the hotel, its suppliers and employees are the most advanced and therefore can be
categorized in the action phase. The director of the company initiated and implemented jointly a collective distribution network with 9 of its local suppliers. This shows that the company is closely working with their suppliers and new initiatives are developed together. The employees from all departments can give input for better and efficient working. They have the authority to make autonomous decision, and this is also encouraged by
management.
Holtweijde has a high percentage of returning guests, and roughly 25% of their revenue comes from returning customers. The employees and directors work hard to create a personal connection with the guest to make sure that the guest also feels connected to the hotel but do not engage them in their sustainability ambitions yet. Therefore with their guests Holtweijde is currently in the admiration stage. With the municipality, they are in the knowledge stage. They both know what they are doing, and the information is shared
between the municipality and the hotel. However, after contact with the municipality, the conclusion is that the relationship is not deeper than this. There is a mutual appreciation, but nothing more.
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To describe where Holtweijde is currently standing with their sustainability efforts Hedstrom sustainability stage model is used (2015). According to Hedstrom, a company can be engaging, accelerating, leading or transforming in sustainability. In figure 12 the stages of Landgoed De Holtweijde are visualized. Holtweijde is already past the engaging stage. They already have done the no regret actions like lowering their energy and gas usage. Of course, they comply with laws and local regulations. Currently, they are in the accelerating stage. During meetings with employees and the director of the company, it became clear that the director initiates most sustainability efforts. The company is building relationships and partnerships with their different stakeholders, also on sustainability. A key indicator of the accelerating stage is that the company has a leading role in the industry. Holtweijde has this leading role with the installation of their Biomass power plant in 2011. This is their first step in eliminating gas usage. They even received the Misset Horeca Innovatie Award for this project (Misset Horeca, 2012). Holtweijde is not yet in stage 3 and 4. Before they can be leading or transforming, sustainability should be the core of their business and should be fully integrated into their business processes, and this is not the case.
Figure 12: Stages of sustainability Holtweijde adapted from (Hedstrom, 2015) Step 2 - Impact
The second step in creating the TCA Framework is to decide which impacts of the company have to be considered. This is done by creating a long list. This long list is based on the value the company creates or destroys and is drawn up after the first consultation with the
22 Figure 13: Long list externalities
After an evaluation of the long list, a few externalities are removed, and some are added. These changes are based on the stakeholder analysis, interviews, and newly gained
knowledge after the first few meetings. The main focus of the short list is on the environment since this aligns with the company’s interests. Aligning the short list with the interest of the company will possibly help with the implementation of the TCA. For the social impacts, the focus is more on measurable externalities. In the short list all externalities are included that will be monetized during this research.
Stakeholder Value Impact (+/-) Category Materiality
Guests Customer satisfaction + Social Qualitative
Personal approach staff + Social Qualitative
Multiple outlets for electric cars + Environment Qualitative
Price per stay - Economical Quantitative
Supplier tour + Social Qualitative
Cost price - Economical Quantitative
Profit margin - Economical Quantitative
Environment Co2 emission from transportation - Environment Quantitative
Co2 emission from
BioWarmteCentrale (houtkachel) neutral Environment Quantitative
Co2 emission from fireplace - Environment Quantitative
Food KM travelled - Environment Quantitative
Usage of woodchips for
BioWarmteCentrale + Environment Quantitative
Waste production - Environment Quantitative
Only driving electric on own terrain + Environment Qualitative
Recycling + Environment Qualitative
Reduction of electricity costs + Economical Quantitative
Land use - Environment Quantitative
Water consumption - Environment Quantitative
Society Sponsoring + Social Qualitative
Usage of local products + Social Qualitative
23 Figure 14: Short list externalities
Step 3 – Measurement
The third step in creating the TCA Framework is to measure and monetize all relevant impacts. This section is divided into environmental, social, and economic impacts. The measurements and monetarization are conducted for one year and per m2. The 76 rooms
have a combined surface of 3.504. By doing this, the hotel can easily translate the costs and benefits to the different sizes of the hotel rooms. The environmental, social and economic externalities are also divided into The Social Development Goals. During this research the focus will be on five SDG:
Figure 15: SDGs used in combination with externalities
These SDGs are chosen because they complement the sustainability goals of the company. The company is trying to contribute to a better environment, have responsible consumption, be a good neighbor for the local community, and also be a good employee. The combination of SDG with their corresponding externalities will be further explained with their
monetization.
Stakeholder Value Impact (+/-) Category Materiality
Guests Profit + Economical Quantitative
Cost price + Economical Quantitative
Noise and light pollution + Social Qualitative
Environment Co2 emission Environment Quantitative
Transportation +/- Environment Quantitative
Transport guest - Environment Quantitative
BioWarmteCentrale + Environment Quantitative
Fireplace - Environment Quantitative
NOx emission Environment Quantitative
Transportation suppliers - Environment Quantitative
Fireplace - Environment Quantitative
Food waste - Environment Quantitative
Recycling + Environment Quantitative
Land use - Environment Quantitative
Water consumption - Environment Quantitative
Society Sponsoring + Social Qualitative
Usage of swimming pool for lessons + Social Qualitative
24 Economic impacts
In this section, the focus will be on the economic impacts of Holtweijde. The economic impacts are connected with SDG 8, decent work and economic growth. The targets of this SDG are to sustain economic growth in accordance with national circumstances, be more productive, and promote sustainable tourism that creates jobs and promotes local culture and products (United Nations, 2015). Just like every other organization, it is important for Holtweijde to perform economically well and show economic growth. They promote local producers by using local products, promote local culture by sponsoring local events, and therefore contribute to sustainable tourism. The economic variables of
Holtweijde, like revenue and cost price, are included in the total TCA model in figure 18. For these prices, the revenue and costs price for hotel rooms, food & beverage, and leisure is used. Hall rentals and others are not included, because of the small part of revenue (3%), and the focus of this research is on the externalities from overnight stays and the food and
beverages.
Environmental impacts
In this section, the environmental costs and benefits from hotel operations are measured and monetized. The environmental impacts are connected with SDG 3, 7 and 12. The main
environmental externality for Landgoed De Holtweijde is Co2 Emission. This emission is caused by the transportation of goods from suppliers, electricity and gas usage. Co2 emission can is classified by goal 7, affordable and clean energy. The United Nations have the target to substantially increase the share of renewable energy in the global energy mix by 2030
(United Nations, 2015).
Co2 emission is not the only environmental impact from transportation and energy
generating, but also NOx emission. This emission affects the health of people. The SDG that fits with this externality is 3, good health and well-being. The target of the United Nations is to substantially reduce the number of deaths and illnesses from hazardous chemicals, and air, water, and soil pollution and contamination by 2030 (United Nations, 2015).
The last environmental impacts are food waste, recycling, land use, and water consumption. All these externalities can is categorized under goal 12, responsible consumption and
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their release to air, water and soil in order to minimize their adverse impacts on human health and the environment. For recycling the target of the United Nations is, substantially reduce waste generation through prevention, reduction, recycling and reuse (United Nations, 2015).
Most costs available for the monetization of the environmental impacts are not from 2018, so to convert the prices to 2018 a HICP sheet is created.
Figure 16: HICP sheet
Co2 emission from energy usage
Gas was used to heat the hotel, cottages and land houses, tap water and the swimming pool. In 2011 the company installed a wood burning installation. This installation burns wood chips (biomass), to create steam. This steam can be used to heat buildings, swimming pools, and tap water. The wood chips that are burned by this installation come from necessary maintenance of the forests from Staatsbosbeheer. This means that there are no unnecessary trees cut down. According to BeGreenEnergy and Staatsbosbeheer is generating energy through a woodburning installation Co2 neutral (BeGreenEnergy, 2018; Staatsbosbeheer, 2017). Although, there is controversy about the Co2 neutrality of burning wood for energy purpose. The idea is that trees are renewable when one tree is burned another can be planted to compensate for the Co2 emission. This is not a short-term process so on the short term Co2 neutrality is not true (Harvey & Heikkinen, 2018). However, the woodchips for the woodburning installation of Holtweijde come from regular forest
maintenance. Because the woodchips are a residual flow (Staatsbosbeheer, 2017), the energy
generated by this installation is Co2 neutral. By installing this woodburning installation, the company reduced their Co2 emission by 320 ton per year (APPENDIX C).
The woodburning installation cannot be used for heating the cottages and cooking. This means that there is still a significant amount of gas used, in 2017 this was 75.224 m3. Per m3
1,88KG Co2 is released into the air (Klimaatplein, 2018). The total electricity usage in 2017 was 684.105 kWh. The conversion rate that can be used for this is 0,355 Co2 emission per kWh.
Year HICP in % Year HICP in %
26 Co2 emission from transportation
To keep the hotel operating the hotel needs supplies. Suppliers deliver the goods by truck or by van, and this generates Co2 emission. To decide how much Co2 is emitted, the location of the suppliers is taken into account and how many times these suppliers deliver to the hotel. The hotel owner has set up a transportation collective between 9 suppliers in the region of Lattrop. These 9 suppliers supply to the hotel with one truck instead of 9 different trucks, so this will reduce the Co2 emission. The total amount KM that suppliers drive to and from Holtweijde is 177.774KM. Co2 emission per driven KM is 0.650 kg Co2 (Verbeek, van Zyl, Grinsven, & Essen, 2014).
To reduce the Co2 emission on their terrain, the hotel uses a 100% little electric truck. This truck is mainly used by housekeeping to drive to the different houses. The assumption is that the total amount driven per year is 5475 KM or 15 KM per day. Normal Co2 emission per KM will be 0.190 KG Co2/KM (Verbeek et al., 2014).
Co2 emission from the fireplace
Holtweijde is known as a romantic destination in the countryside. To create a matching ambiance, a fireplace cannot be missed. This fireplace burns the whole day and almost 365 days a year, except for days warmer than 25°C. In a year they burn approximately 35.000KG wood. When wood is burned, all carbon stored inside is released. For 1 KG of wood, it is roughly 1,43KG Co2 emission (Lacoma, 2018; Leys, 2018).
Monetization
There are many prices available to monetize the costs of Co2 emission. According to a research of CE Delft, the costs per kg C02 are something between €0,014 and €0,045 (CE Delft, 2018). CE Delft uses a special price for Co2 to meet the 2°C maximum global warming of the United Nations Climate Change Conference of 2015. This price is €0,06 per KG. Researchers of Stanford value Co2 much higher. They value C02 at $0,22 per kg or €0,19. This value is much higher because the environmental damages are higher in the model that is used, and the slower economic growth, due to climate change, leads to a lower discount rate (Moore & Diaz, 2015). For this research, the prices of CE Delft that meet the climate change agreements are used.
Figure 17: Monetization overview Co2 emission in kg per year
Co2 Emission Reduction Price Emission Price Reduction Price per m2
Biomass powerplant 320.000 € 19.867,38 € 5,67
Transportation (suppliers) 115.553 2.738 € 7.174,18 € 169,98 € 2,00
Transportation (own terrain) 1.387 € 86,11 € 0,02
Fireplace 50.050 € 3.107,38 € 0,89
Gas 141.421 € 8.780,21 € 2,51
Electricity 205.916 € 12.784,38 € 3,65
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NOx emission from transportation and fireplace
With transportation is not only Co2 emitted but also NOx. NOx pollutes not only the air but also has a negative effect on people’s health. For transportation with trucks, the emission per KM is 0,00037. For small delivery vans and passenger vehicles, this amount is a little lower with 0,00002 per KM (Verbeek et al., 2014). When wood is burned for the fireplace NOx is also emitted. A fireplace has 0,0021KG NOx emission per KG of wood burned (Koppejan, 2010).
NOx emission from electricity and gas
NOx emission is also linked with the consumption of gas and electricity. These emission costs also need to be taken into account for the TCA. In 2017 684.104 kWh electricity was used. Per kWh 0,00049 NOx is emitted (CE Delft, 2015). In 2017 a total of 75.224 m3 was
used, per m3 0,00058 NOx is emitted (Kroon, Bakker, & de Wilde, 2005).
Monetization
The price of a KG NOx lies between €10,40 and €22,20 (CE Delft, 2018). For this research, the highest value of €22,20 will be used to calculate the health costs of NOx.
Food waste
There are two types of food waste: pre-consumer food waste and post-consumer food waste. Pre-post-consumer food waste is caused by
overproduction, spoilage, expiration and food preparation (Shakman, 2013). Post-consumer food waste is caused by guests by not eating everything on their plate (Baldwin, Shakman, & Turenne, 2012). Both types of waste happen in Holtweijde. The direct external impacts of food waste are air pollution, land occupation, water use, biodiversity loss and deforestation (FAO, 2014).
According to the FAO, the global costs of food waste is annual $750 billion for 1.6 billion tons of food (FAO, 2014). This is $0,517 per KG or €0,474 in 2018. The average waste per meal is 125 gram and an average of 100KG waste per week (Sundt, 2012).
NOx Emission Reduction Price Emission Price Reduction Price per m2
Transportation (suppliers) 65,8 1,6 € 1.510,99 € 35,80 € 0,42
Transportation (own terrain) 0,110 € 2,52 € 0,00
Fireplace € 1.688,42 € 0,48
Gas 43,6 € 1.002,25 € 0,29
Electricity 335,2 € 7.700,36 € 2,20
Total costs/benefits NOx emission € -11.863,71 € -3,39
28 Recycling
Employees of Holtweijde indicate that eliminating waste should start at wholesalers and suppliers. Now hotels have to deal with the consequences of individual packaging products instead of the initiators. Four waste stream can be identified for the hotel: paper, glass, solid waste and plastic. At this moment paper and glass are recycled, but plastic is not. Holtweijde uses for the recycling of paper two containers of 3m3 and 5m3. These containers can hold up
to 8000 liters or 8000KG and are emptied 26 times per year. However, the containers do not hold 8000KG of paper and cardboard when they are emptied, because of empty spaces between the cardboard. Therefore, the assumption is that only 40% of the total 8000KG paper and cardboard is recycled every other week.
For glass, Holtweijde has an underground container of 3m3. This container is also emptied
26 times a year. The container can hold 3000KG. However the same as with the paper, not all glass will break with entering the container. Therefore, there will be empty spaces in the container. The assumption here is that 50% of the total 3000KG glass is recycled every other week.
Plastic is currently not recycled at Holtweijde. To estimate how much plastic could be recycled every year, other hotels are consulted. Only the Corendon City Hotel Amsterdam has information about plastic recycling available. According to their website, 1KG of plastic per room is recycled every month (Corendonhotels, 2018). The assumption made for the rest of the hotel is an additional 3KG per room of plastic can be recycled.
Monetization
There is little described about the actual costs and benefits of recycling. Therefore, for the monetization of the recycling benefits, a New Zeeland’s research of the ministry for the Environment of 2007 is used. The prices from this report are adapted from New Zealand Dollar’s to Euro’s, and the prices are adapted to euro prices of 2018 with the HICP sheet from figure 16. The external costs for the recycled products consist of avoided costs for not going to landfills, avoided CO2, and consumer benefits of recycling. The total external costs for glass are €0,014 per KG, paper €0,064 per KG, and plastic €0,084 per KG (COVEC, 2007).
Recycling Costs Benefits Price per m2
Glass € 556,37 € 0,16
Paper € 5.341,17 € 1,52
Plastic € 307,92 € 0,09
29 Water consumption
Because of climate change, drinking water is scarce. Therefore we need to be responsibly dealing with our water consumption. There is no information available about the real costs of water, that is why here is made the comparison with an ‘average’ hotel. Per guest, Holtweijde uses approximately 0,6135 m3 water. An average hotel uses 0,620 m3 water (Tuppen, 2013).
With approximately 29.000 guests each year, Holtweijde uses 17.791m3 water and the
average hotel 17.980m3 water per year. The current price of water in the Netherlands is
€0,562 (Vitens, 2018).
Land use
The total amount of land that belongs to the hotel is 13ha, 5ha is used for the hotel and the cottages (See APPENDIX D, for map). However, not the whole 5ha is completely built. When the trees between the cottages are excluded, approximately 3,5ha is built upon. Google maps are used to calculate the build area. The price that is used to monetize land use is €0,026 this is the central value of the Dutch average (CE Delft, 2018).
Social impacts
In this section, the social costs and benefits from hotel operations are measured and monetized. The social impacts are connected with SDG 17, partnerships for the goals. One of the targets of this SDG is to encourage and promote public-private and civil society partnerships (United Nations, 2015). This fits with the ideas of Holtweijde. They want to give back to the community with among other things sponsoring local events. In Twente, this is called ‘naoberschap’ a sort of local community help.
Sponsoring
It is important for the hotel to be connected with to the local community. One way they do this is by sponsoring local events and sports clubs. Every year they sponsor for €6.000. This is their way to give back to the local community. To determine if this is more or less than other local companies, the municipality Dinkelland is contacted. However, they could not provide more information about this, because they do not have this kind of information
Water consumption Price per m2
Total cost water consumption average hotel € 10.104,76 € 2,88
Total cost water consumption Holtweijde € 9.998,82 € 2,85
Total costs/benefits water consumption € 105,94 € 0,03
Land use Price per m2
Total costs/benefits land not used € 2.555,86 € 0,73
Total costs/benefits land used € 941,63 € 0,27
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available. They know that sponsoring happens and are very pleased that it takes place, but they have no information available how often it happens and how high the amounts are.
Swimming lessons
On Monday’s and Tuesday’s from 17.00-19.00, the swimming pool is closed for the guests. In these hours the local kids receive swimming lessons from a certified lifeguard. A maximum of 10 children at the time are allowed in the classes. It is important for a community to have a swimming pool, for children to learn to swim. Especially now when less and less school offer school swimming and 14% of all children only receive a swimming certificate through these school lessons (Visser, 2017). So offering local classes has a positive effect on the local community. To calculate the value of the swimming lessons the hourly rate is used, €11.25 (Zwemschool De Walvis, 2018). There are 40 school weeks in a year, and the assumption is that 10 children a week make use of the lessons. This makes the total value of the swimming lessons €9.000.
Noise
As a hotel Holtweijde is located in a rural area, this means that it is still very little noise. For the guests this a real added value to get every good night of rest. To monetize the lack of noise the difference between the average noise complaints and the local noise complaints is taken. The Dutch average for noise disturbance is 8,6% the local noise disturbance is 5% (Bosatlas, 2017). For Holtweijde 1.450 (29.000 * 5%) guest can experience noise
disturbance for the average of the Netherlands 2.494 (29.000 * 8,6%) guests can experience noise disturbance. To monetize noise disturbance a price of €0,142 per person per year is used (CE Delft, 2018).
Employment
Every company adds the value of creating jobs for the community. However, the unemployment rates in Twente are higher than the rest of the Netherlands. In the last quarter of 2017 unemployment rates for Twente were 5,6% (Kennispunt Twente, 2018). Average unemployment in the rest of the Netherlands were 4,4%. Therefore creating jobs in Twente has more value than the rest of the Netherlands. For the municipality of Amsterdam, the total benefits of employment are calculated. Per person this is €39.746. This price
consists of the costs of unemployment payment, social assistance benefit, loss of income tax, debt assistance, and social care are included (Noorda en Co, 2014). To monetize the added value of employment, the following calculation is used:
Noise Price per m2
Total costs noise average hotel € 367,66 € 0,10
Total costs noise Holtweijde € 213,76 € 0,06
31 (Employers (102) * unemployment rate) * €39.746.
The difference between the Dutch average and Twente is the employment benefit Holtweijde creates.
Non-monetizable externalities
Besides monetizable externalities, there are also externalities that cannot be expressed in money. This may be because there is not a good way to measure and monetize the
externalities. For Holtweijde two non-monetizable externalities are determined. The first is the recycling of the Styrofoam fish packaging. For the organization there is not a possibility to recycle the packages, so the company decided to give the packaging back to the supplier. By doing this, the supplier can recycle the packages for new orders, and Holtweijde is limiting their waste. Another non-monetizable externality for Holtweijde is the lack of light pollution. The hotel is located in a rural area with no direct traffic routes. This means that there are no streetlights or lights from a nearby city that pollute the sky. Therefore, when it is dark, it is still actual dark. At this point, there is not a measurement to calculate the health benefits of living and sleeping in an environment where it is still dark at night.
Step 4 – Management
The final step of creating the TCA Framework is to assess the usability of the framework. Since the company did not use TCA for an extensive period, it is hard to tell if the framework is difficult to work with and what they will do with it in the future. What can be said about the framework is that it created a new impulse in the sustainable developments at
Holtweijde. After different meetings the company decided to start looking in opportunities to start recycling plastic. Even though, recycling plastic has not the biggest impact on the TCA, here lies a good potential for the hotel. The calculations on plastic recycling are based on assumption, so potentially a lot more environmental profit can be made when this is executed well. Recycling plastic is also in line with the guest's expectations of green businesses. In the future, the company also wants to abandon gas completely and will transfer to an alternative. By using the Biomass powerplant a significant amount of Co2 is not emitted. However, the biomass cannot be used for the cottages and cooking. The plans for the future are to switch to induction for the cooking and looking for a biomass alternative for the cottages. By doing this the Co2 emission and NOx emission of gas will be zero, an environmental cost reduction of €9782,46 each year.
Employment Price per m2
Total costs/benefits employment Netherlands € 178.380,64 € 50,91
Total costs/benefits employment Twente € 227.029,91 € 64,79
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From the different meetings with the company and the presentation of the TCA Framework, it became clear that the focus of the company is mainly on the environmental part of the TCA, and especially on Co2 reduction. Eliminating Co2 is currently a much discussed environmental theme. Holtweijde wants to participate in this discussion by showing their guests a reduction in their Co2 emission. Their idea is that Co2 can be the core of the communication with their stakeholders, in this case, their guests. It also became clear that sustainability divides the management team. One part is focusing on eliminating Co2 emission and updating systems to create a more balanced organization. Another part does not have a clear position in sustainability and is only focussing on sustainability when there is time, and it benefits their department. The last one is the F&B manager who is willing to go the extra mile, especially in waste management. He gets almost all freedom to implement the measures he needs and makes his staff also responsible. However, from the interview, it became clear that it bothers him that not everyone is equally passionate about the topic as he is.
On the social aspect, the company had less information available. Therefore, it was more difficult to monetize these aspects. The company self was only able to think about sponsoring as their influence on the community. However, after some research and interviews, it became clear that the company has a bigger impact. By conducting this TCA Framework and
calculating the social impact the hotel has on the community it gave Holtweijde insight into their positive impact.
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Figure 18: TCA Framework calculations
Revenue Price per m2
Total € 1.350,79
Costprice* Price per m2
Total € -659,23
Co2 Emission Reduction Price Emission Price Reduction Price per m2
Biomass powerplant 320.000 € 19.867,38 € 5,67 Transportation (suppliers) 115.553 2.738 € 7.174,18 € 169,98 € 2,00
Transportation (own terrain) 694 € 43,06 € 0,01 Fireplace 50.050 € 3.107,38 € 0,89
Gas 141.421 € 8.780,21 € 2,51
Electricity 205.916 € 12.784,38 € 3,65 Total costs/benefits Co2 emission € -11.765,74 € -3,36 NOx Emission Reduction Price Emission Price Reduction Price per m2
Transportation (suppliers) 65,8 1,6 € 1.510,99 € 35,80 € 0,42
Transportation (own terrain) 0,073 € 1,68 € 0,00
Fireplace € 1.688,42 € 0,48
Gas 43,6 € 1.002,25 € 0,29
Electricity 335,2 € 7.700,36 € 2,20 Total costs/benefits NOx emission € -11.864,54 € -3,39
Food waste Price per m2
Total costs/benefits Food waste € -2.463,44 € -0,70 Recycling Costs Benefits Price per m2
Glass € 556,37 € 0,16
Paper € 5.341,17 € 1,52
Plastic € 307,92 € 0,09
Total costs/benefits recycling € 5.589,62 € 1,60
Water consumption Price per m2
Total cost water consumption average hotel € 10.104,76 € 2,88 Total cost water consumption Holtweijde € 9.998,82 € 2,85
Total costs/benefits water consumption € 105,94 € 0,03
Land use Price per m2
Total costs/benefits land not used € 2.555,86 € 0,73 Total costs/benefits land used € 941,63 € 0,27
Total costs/benefits Land use € 1.614,22 € 0,46
Noise Price per m2
Total costs noise average hotel € 367,66 € 0,10 Total costs noise Holtweijde € 213,76 € 0,06
Total costs/benefits Noise € 153,90 € 0,04
Employment Price per m2
Total costs/benefits employment Netherlands € 178.380,64 € 50,91 Total costs/benefits employment Twente € 227.029,91 € 64,79
Total costs/benefits Employment € 48.649,27 € 13,88
Sponsoring Price per m2
Total costs/benefits Sponsoring € 6.000,00 € 1,71
Swimming Lessons Price per m2
Total costs/benefits Swimming lessons € 9.000,00 € 2,57 Total 'profit' € 704,41
34 DISCUSSION & CONCLUSION
This research investigates how a True Cost Accounting Framework can be implemented in the hotel industry. This industry was selected because the tourism industry is an industry with an enormous impact on the environment (Bader, 2005; GhulamRabbany et al., 2013), so the implementation of a TCA framework can show the real impacts of the hotel. Previous research already showed that a TCA could be beneficial for hotels (Janković & Krivačić, 2014). However no one has implemented it yet. This research contributes to the current literature by creating a TCA Framework together with a hotel. Simultaneously, this research tried to respond to the call for more practice-oriented research by doing action research (Baldvinsdottir et al., 2010; Jansen, 2018).
In this research, the process of creating a True Cost Accounting framework for a case company is described. The goal of this research was to further develop current literature about TCA and the implementation in practice to answer the following research question:
“How can TCA adoption advance hotel’s sustainable decision making?”
To answer this research question a True Cost Accounting Framework for a hotel is created. Antheaume (2004) already calculated the TCA in experimental research design and focussed on the TCA as a research framework for sustainability effort. However, this study goes one step further and shows the implementation of the TCA. For that purpose, the selection of the company, truly interested in sustainability and willing to take the next step in sustainability, was a crucial aspect of success.
The TCA Framework that is developed during this research is inspired by the TIMM framework created by PWC (2013). The steps of the framework are total, impact,
measurement, and management. The first step is used to look at the current position of the company. In this step, the company’s stakeholders and current sustainability position are assessed.
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difficulties as the BSC to direct focus in all four performance dimensions instead of only the financial dimension (Anand, Sahay & Saha, 2005; Ittner & Larcker, 2003).
In the third step the research incorporated the SDG perspectives for grouping the
externalities from the short list, monetized the externalities, and presented the outcomes. The economic values are based on existing literature and externalities handbooks of CE Delft (2018) and are valued at current prices. In this step, the combination between externalities and SDGs is also made. To be able to reach these 17 goals by 2030 not only the government should be held accountable but also the companies should contribute (United Nations, 2015). For this research, the focus has been on five SDGs. Those SDGs were based on company goals and interests. By solely focussing on SDGs that are already corresponding with the company goals limits the objective to broaden the organization’s sustainability horizon. Currently, there are very few companies that include all the SDGs in their
sustainable efforts (Danone, 2017; PepsiCo, 2017) or include a selection of SDGs (Vattenfall, 2017). Current research addresses this problem by calling for an overall incorporating of all SDGs in the organization’s strategy (Busco, Fiori, Frigo, & Riccaboni, 2017). All companies should take their responsibility for all the goals by not only focusing on the global impacts of the SDGs but on the impacts they can have on their local environment.
The last step is to evaluate the TCA Framework. During this research, the main focus has been on creating a framework that can be used in practice. Therefore the TCA framework is created as simple as possible. To make sure that the company can retrieve right and useful information from the framework. The company was most interested in the information about Co2. This is possibly related to the attention Co2 emission receives in the media. The
familiarity makes it easier to talk about. Small companies hardly make use of SDGs and are not that familiar with them. By including the SDGs in the TCA Framework, a company can be more aware of their role in the worldwide goals. The SDGs did not add value to the case company, because of the lack of interest and knowledge about the SDGs.
In the end, the company has not used the framework as much as anticipated. The framework did create more room for dialogue about sustainability. They have new ideas for their
sustainable future and are even considering to take part in a company collective about reconsidering current costs and prices. However, the framework will not be used as their main management accounting tool.
To return to the research question. “How can TCA adoption advance hotel’s sustainable decision making?” TCA can contribute to a more focused sustainability strategy. By
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employees to have an opinion about environmental and social impacts and consider whether the current situation is desirable.
This research has shown that there are four requirements for the implementation of a TCA. First, the implementation should be demand driven. The company should have a genuine interest in implementing TCA. Second, they should create knowledge about TCA and the implementation in their company. The company should be able to define their externalities and monetize these externalities. Third, there should be a need to depart from standardized tests and audits and create tailormade tools, that are aligned with the company’s mission and vision. There is not one best method to implement TCA in a company. However, it is
essential to create a TCA together with the company and to take the three requirements into account.
Even the best tailormade TCA Framework cannot move the company to a higher level of sustainability if the companies falls short with the execution of the TCA. It is important to look at the level of engagement with the stakeholders. If the company has no stakeholders in the action stage (Epstein & Rejc Buhovac, 2014), there is no collaboration and there are no new initiatives and knowledge created. This can be a problem to move forward in
sustainability. It is the same for the sustainability stages. If a company is only engaging in sustainability and is not progressing (Hedstrom, 2015), then the created knowledge from TCA cannot help the company. It is important to realize that TCA is a means to perform better in sustainability not the end goal.
By looking at a higher level for implementation of TCA in the hotel industry, it would be beneficiary to focus on the supply chain. TCA as a sustainable mindset starts at the
wholesalers and suppliers. Hotels can have a sustainable interest and try to have a limited footprint, while the wholesalers and suppliers are packaging every individual product in plastic for transport. Employees from the case company were very clear that change should start at the top, and true prices should start at the suppliers Then there will be a much bigger impact. This corresponds with the second insight Antheaume gained from his TCA
experiments (2004). Companies are not always able to influence all aspects that would stimulate a more sustainable operation. Therefore it is important to make the right
companies aware of the conflict to find together the best solutions. To do this, the company has to have a good relationship with its stakeholders.
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The research has several limitations. Firstly, the research took place in a relative limited time period of four months. Following the efforts of the company for a longer period and being able to intervene in a longer time span would allow for information about long-term use of the framework. This could have led to adjustments in the TCA Framework and more time spend with the stakeholders. What would benefit the results of the research. Secondly, it is not possible to take all externalities into account. The company and its environment are constantly changing. Therefore the list of externalities will constantly change and need continuous adjustments. Lastly, there is much subjectivity involved with measuring and monetizing the environmental and social impacts. The monetization is difficult because there are a lot of different prices available. For example for Co2 emission there are many different prices. To choose price for this research the 2°C maximum global warming of the United Nations Climate Change Conference of 2015 is used. The Netherlands agreed to meet the goals from this conference so it was rational to go with that price.
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