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How Paying the True Cost of Food Supports Social and Environmental Sustainability
Rising prices at the grocery store have many of us paying more attention to the cost of our food, and how systems that feel outside of our control influence those prices. Many food businesses maintain a focus on maximizing their profit margins, but some companies are realizing the implications of their actions and adopting practices to protect the future of the planet and people.
To help these companies better understand the social and environmental externalities of their production, Michel Scholte co-founded True Price, a Netherlands-based organization that aims to reduce food insecurity and shape a sustainable global economy through a pricing system that incorporates the cost of negative social and environmental impacts.
As part of my research on purpose-driven business, I talked with Scholte about the motivations behind True Price, how the organization conveys its message in partnership with others, and how it continues to develop and share open-source methodology with a broader goal to help advance global systems change. Below are some of the key points from my recent Forbes article on the topic that highlights the work of True Price:
Scholte describes his vision for a true-price economy. “You have fair prices in a way, and in a good way, in a way that you respect entrepreneurship. You can go bankrupt in a true price economy, but you can also be very successful. It enables individuals to make choices, to find innovations.”, Scholte says. “It’s not a centralized plan-based economic model, but it’s really a kind of information infrastructure. It’s a safe living space for corporate endeavor and sustainable production and consumption.”
True price uses a human-right-based approach to determine what is needed to live with dignity, which is not limited to basic needs like housing, food, water but includes freedom from toxins, unhealthy food and exploitation. Scholte explains, “We use detailed descriptions of what we consider acceptable labor, as well as the health and safety of labor, and if you infringe upon those then you infringe on those rights.”
Scholte shares the company’s open-sourced method for price estimation. “First of all, you need to map, trace, and identify the location of production activities, the consequence of these activities for human and natural conditions. Then determine the harms in volumes, in toxic ingredients, labor or the emissions, such as carbon and carbon equivalencies. Finally, we calculate what it costs to remediate these damages.”.
The company has been partnering with Tony’s Chocoloney to eliminate slavery and child labor in the cocoa industry. “Poverty drives a lot of issues in the cocoa market, where the big chocolate companies purchase the vast majority of cocoa. Prices are often too low for the farmers.”, Scholte says, “Another problem in the cocoa market is that you see a lot of enslavement of people, even children, who are traded and sold. There’s such poverty that parents who have maybe several children will sell one of their children to middlemen, who then rents labor to farmers.”
While Scholte believes in the value of offering a true price option to consumers, he also recognizes the challenges faced by people with lower income. “It is about providing the transparency about what the true prices of products are.”, Scholte says, “We then need to design markets in a way in which basic sustainable and healthy goods such as food, housing, transportation, stay accessible and affordable for all.”
The company has also been working to raise the awareness of consumers and policymakers. “On the one hand we work on a movement where we use prices are actually implemented by supermarkets and brands. By showing it in practice, we hope to build this out to a global community of consumers everywhere”, Scholte says, “We also contributed to policy changes and discussions in the Netherlands, Europe, the United States, and the United Nations… In the U.S., we contributed to the Rockefeller report that showed the true cost of the U.S. food systems. The White House now plans an official conference on food sustainability and nutrition.”
By offering consumers the choice of paying for the external cost that is often overlooked, True Price offers unique solutions to understanding income disparity problems that are invisible to consumers and may appear unsolvable. While there is significant distance to go before True Price can globalize its approach, Scholte believes the process will be “faster than we think.”