Sustainability is big business in the tourism industry. Travellers have become increasingly concerned about the environmental and social impact of their holiday experiences and are therefore keener than ever to ensure their choice of hotel is in tune with these values.

For hoteliers, customers are not the only audience they need to display their green credentials to: there are growing demands from shareholders and potential investors to see clear evidence that hotel groups are walking the walk, rather than just talking the talk, when it comes to operating in as sustainable a manner as possible.

Chris Davis, senior director of the investor network at Ceres, an organisation aimed at promoting responsible investment, says larger companies are starting to realise that sustainability should be a central part of their corporate strategy.

“There’s an increasing amount of data from academic studies that shows sustainable business practices really matter,” he explains. “A report that examined more than 100 academic studies showed, in virtually all cases, that companies with high ratings for sustainability had a superior performance financially and a lower cost of capital in terms of raising debt and equity.

“Increasingly, institutional investors are starting to demand that the companies and other assets they invest in pay attention to environmental and social factors.”

One of the issues that companies of all types face when adopting a more sustainable approach to running their business is how to measure its effectiveness and communicate this to investors and the wider public.

In recent years, this has led to the rise in popularity of a process that’s sometimes referred to as triple-bottom-line accounting. As well as financial performance (the bottom line of its profit and loss account), it measures the social responsibility of the business (the bottom line of its impact on people) and its environmental responsibility (the bottom line of its impact on people). Coined by John Elkington, founder of the consultancy SustainAbility, it is often abbreviated as the ‘three Ps’: profit, people and planet.

Caroline Escott, policy lead for defined benefits and investment at the Pension and Lifetime Savings Association, says: “I think that, as with a lot of things in the impact investment space, we haven’t quite bottomed out the definition of triple-bottom-line accounting.

“But anything that provides any kind of framework for people to think about and account for and monitor their ESG [environment, social and governance] investment approaches is a good thing.

“We’re seeing more and more companies, even small firms, thinking about doing a separate sustainability report. But I’m in two minds about that: I think sometimes it’s nice to have what you’re doing on sustainability or how you’re adding social value integrated throughout the annual report. But certainly we’re seeing more mentions of social value being used in company reporting.”

James Lamb, VP, strategy and intelligence, at Mövenpick Hotels & Resorts, says the Swiss-based chain has seen significant operational benefits after transitioning to a more sustainable approach. “Clearly, trying to use less water and fewer towels, and trying to throw less food away – these things serve a double purpose, which is the less waste you have, the more efficient your operation and the more profitable you are,” he says.

“So on the financial side, there are clear benefits, and on the social side we’ve seen an increase in employee engagement. This is another key aspect and it’s why our employee retention rate is so high.”

While some hotel groups may specifically include social and environmental accounting information in their annual reports or other investor communications, others take an approach that separates this kind of metric from traditional accounting practices. For example, Mövenpick is in partnership with a sustainability accreditation scheme called Green Globe, which certifies the environmental and social performance of the hotels in its group. “More than 50% of our hotels have gold status with Green Globe,” explains Lamb. “This is an important marketing aspect for some of our guests, and there’s a decent amount of demand for our hotels based on the fact we are Green Globe certified.

“There is certainly a cost associated with applying for this kind of certification: each hotel has to have a yearly audit. But what we say to potential owners when we are signing hotels with them is: what you’re getting here is a Swiss commitment to quality and attention to detail, but at the same time our focus is on the environment. Typically, though, this is very well received.”

One issue with any kind of triple-bottom-line approach is sustainability can be difficult to measure in an objective or comparable way – for instance, in terms of cash. Lamb says his organisation is currently exploring how it can provide “more tangible” key performance indicators (KPIs).

“So, for example, we may look at it in terms of how many people we can put through a particular programme,” he says.

Alfred Fabri, company secretary of the Corinthia hotel chain, says his organisation has decided to take a sustainable approach in areas ranging from the local community, procurement and food safety to energy and water consumption because it’s “the right and correct approach”.

He adds: “Creating value isn’t limited to our shareholders and sustainable long-term decisions but is also about our guests and the community by ensuring that our operations are delivered in a sustainable way,” Fabri explains. “We don’t do this solely with the aim of attracting people or organisations that are trying to invest in more sustainable businesses, but hopefully this approach also manages to attract such investors.”

Corinthia’s triple-bottom-line accounting focuses primarily on water and energy consumption. “All operations report on their energy and water performance on a regular basis,” says Fabri.

Another reporting option relies on a framework known as sustainable development goals (SDGs). Says Caroline Escott: “It’s certainly being used as a way of articulating investors’ approach to impact investing. But we’re also seeing more companies talk about using the SDGs as a hook for their reporting – although I expect it will take some time for that to filter down further.”

She adds: “I could see that companies might take a more sustainable approach in terms of their business operations in order to attract funding, but it really depends on what kind of investment they’re hoping to attract: you have to bear in mind that people invest in an ESG way for a variety of reasons.”

What is clear is hotels that do use the triple bottom line approach in order to take full account of the cost of being in business are benefiting from the transparency of their reporting, with a proven positive relationship between corporate responsibility and financial performance.