True Cost Accounting can help make food systems more sustainable

“In short, TCA measures the effects on environment, people and animals,” says project leader Marieke Meeusen of Wageningen Social & Economic Research. “These can be the effects of individual products or entire assortments, but you can also use TCA to assess the sustainability of companies or even regions. In the Public-Private Partnership (PPP) True Price – from Insight to Action we explored, together with around thirty partners, how the method can help make the food system more sustainable.”

“We measure the effects of food production and related chain activities across four types of capital. Natural capital covers environmental impacts. Social capital, for example, relates to working conditions and child labour. Human capital mainly concerns public health. And then there is economic capital, which includes competitiveness and external costs of activities. With TCA, sustainability can be mapped throughout the entire food supply chain, from farmer to consumer.”

“The impact is translated into money. Let's take a product like a chocolate bar. With TCA you can calculate the impact of the production chain on environment, people and animals. Factors include CO2 emissions and land use, but also issues like underpayment of farmers. This impact is expressed in monetary terms and can be incorporated into the ‘true price’ of the product. The method is already quite applicable, especially when it is clearly indicated which factors are and are not measured. But there is still much to be done, and science is actively developing the methodology further. This is also happening within the EU project FOODCoST.”

“With the PPP we see several possible routes, some of which are already promising or even being implemented. Companies at the forefront are exploring whether TCA can be used to make products and assortments more sustainable. Companies participating in the PPP also estimate that TCA has strong potential in this regard. We see different applications. Some companies use TCA to phase out unsustainable products. Others reposition products on the shelf or engage suppliers to improve their sustainability score and thus reduce the true price. Companies also see TCA as a way to identify internal risks, partly with an eye on EU legislation. For financiers and investors, it offers a way to enhance the sustainability their portfolio.”

“Companies can also use TCA to help consumers make sustainable choices. For example, consumers could compare the ‘true’ prices of different food products, making it easier to consider sustainability in purchasing decisions.”

“Not necessarily. TCA can influence consumer behaviour in two ways. First, by providing information on the sustainability of products. Consumers can then use this information to decide whether or not to buy a product. Second, by paying a premium that is invested in sustainability improvements. Some shops already do this, such as supermarket De Aanzet in Amsterdam. Research into the second option shows, however, that consumers generally still have little confidence that this is an effective measure for sustainability.”

“Sustainability labels are often one-dimensional: they focus either on the environment, animal welfare, or social conditions. TCA can help assess th em against the full spectrum of sustainability. In addition, labels are currently granted when an organisation meets certain effort-based criteria. Increasingly, however, the key question is: what is the actual effect on people, nature and animals? TCA can help answer that as well.”

They can use TCA, for instance, to identify which issues within sectors require policy action. Should the focus be on labour conditions, manure management, or energy use? Another option is to use TCA to establish a baseline before introducing policies, and to assess whether the true costs of certain food products have changed over time.”

“Those who want to start working with it should realise that TCA is, above all, a method to engage in dialogue with others. Together you can explore how to make more sustainable choices. For the implementation of TCA, find a partner who is transparent about the assumptions and methodological choices underlying the results. Transparency is the key principle of TCA.”