True Cost – From Costs to Benefits in Food and Farming

Developing an impact accounting methodology for the agrifood sector

Launching guidelines in Spring 2022

What is
True Cost Accounting?

True Cost Accounting (TCA) is a new way of identifying the real costs of a specific product or service. TCA calculates not only the direct costs like raw materials and labour, but also the effects on the natural and social environment in which a company operates.

We are already paying in hidden ways

The predominant approaches to food production, distribution, retail and consumption are causing significant damage to the environment (soil, water, biodiversity, climate) as well as to rural communities and to public health.

We pay for this damage in both hidden and visible ways, for instance through water charges which include the cost of removing pesticides in drinking water, or taxes which fund misdirected agricultural subsidies and environmental clean-up costs, including many of those related to flooding.

These costs are often deferred to future generations or other countries, as is currently the case with climate change, soil degradation, rainforest destruction and species extinction. We are also paying the costs of diet-related diseases.



Although food appears to have never been cheaper, when we look beneath the surface we are actually paying far more for it than we might possibly imagine





How does TCA work?




TCA not only looks at a company’s usual financial figures, but also calculates its impact on the entire environment in which it operates. These effects are calculated in monetary terms so the amounts can be incorporated in the True Cost books of a company. The “hidden costs” of production, which in the old system were externalised, are made visible and internalised.

Until now there have only been high level, mostly theoretical frameworks for TCA which consist mainly of process descriptions with no suggestions for indicators and data. These lack consistency as well as the ability to compare the underlying metrics. Hence the information on sustainability cannot be integrated with businesses’ financial data.

 

 

 




We are solving these problems by creating internationally applicable reporting guidelines. The “True Cost – From Costs to Benefits in Food and Farming” project group develops guidelines for an innovative methodology for businesses in food production to calculate the true costs of food products. Our pilot projects show that there is a holistic and practical way to account for the social and environmental impacts of food production.

How to uncover the true cost?

The “True Cost – From Costs to Benefits in Food and Farming” initiative was founded in 2019

It brings together a broad network comprising businesses, non-governmental organisations, auditing firms, and scientists. The project group participants generate technical guidelines for calculating the true costs of food and agricultural products.

Initiative coordinated by

In cooperation with

Meet our partners

Do you have any questions about the project?

True Cost – From Costs to Benefits in Food and Farming

Developing an impact accounting methodology for the agrifood sector

Launching guildelines in Spring 2022

True Cost Accounting?

True Cost Accounting (TCA) is a new way of identifying the real costs of a specific product or service. TCA calculates not only the direct costs like raw materials and labour, but also the effects on the natural and social environment in which a company operates.

We are already paying in hidden ways

The predominant approaches to food production, distribution, retail and consumption are causing significant damage to the environment (soil, water, biodiversity, climate) as well as to rural communities and to public health.

We pay for this damage in both hidden and visible ways, for instance through water charges which include the cost of removing pesticides in drinking water, or taxes which fund misdirected agricultural subsidies and environmental clean-up costs, including many of those related to flooding.

These costs are often deferred to future generations or other countries, as is currently the case with climate change, soil degradation, rainforest destruction and species extinction. We are also paying the costs of diet-related diseases.

So although food appears to have never been cheaper, when we look beneath the surface we are actually paying far more for it than we might possibly imagine

How does TCA work?

TCA not only looks at a company’s usual financial figures, but also calculates its impact on the entire environment in which it operates. These effects are calculated in monetary terms so the amounts can be incorporated in the True Cost books of a company. The “hidden costs” of production, which in the old system were externalised, are made visible and internalised.

Until now there have only been high level, mostly theoretical frameworks for TCA which consist mainly of process descriptions with no suggestions for indicators and data. These lack consistency as well as the ability to compare the underlying metrics. Hence the information on sustainability cannot be integrated with businesses’ financial data.

We are solving these problems by creating internationally applicable reporting guidelines. The “True Cost – From Costs to Benefits in Food and Farming” project group develops guidelines for a innovative methodology for businesses in food production to calculate the true costs of food products. Our pilot projects show that there is a holistic and practical way to account for the social and environmental impacts of food production.

How to uncover the true cost?

The “True Cost – From Costs to Benefits in Food and Farming” initiative was founded in 2019

It brings together a broad network comprising businesses, non-governmental organisations, auditing firms, and scientists. The project group participants generate technical guidelines for calculating the true costs of food and agricultural products.

Initiative coordinated by

In cooperation with

Meet our partners

Do you have any questions about the project?