True cost accounting pilot reveals hidden impacts of food, people
This study study calculated the cost of water pollution, pesticide exposure, greenhouse gas emissions and soil erosion for several types of produce.
Organic fruit specialist Eosta, The Netherlands, accounting firm EY (formerly Ernst & Young), New York, and other partners revealed the first results of a groundbreaking pilot program that demonstrates how organic fruit production has a positive economic impact on agriculture, the environment and consumer health.
The results of the pioneering True Cost Accounting pilot program found significant hidden benefits to consumer and producer health of buying organic fruits, including apples, pineapples, tomatoes, pears, citrus and bananas, due to the negative impact of pesticide residues. In fact, in the case of organic apples, the benefit to consumer health was calculated at €0.14 per kilo compared with conventional apples. For pineapples, the positive deficit was estimated at €0.06 per kilo. Adding in previous true cost calculations for the hidden cost impact on soil, climate and water of organic vs conventional, organic apples retained a positive financial advantage of €0.20 per kilo compared with production that uses agrochemicals.
Eosta is said to be the first participant in the “True Cost Accounting in Finance, Food and Farming” pilot program to be accounted on a company level with true cost accounting (TCA), up to and including the balance sheet and profit and loss account.
“Thanks to the fantastic work of UN departments such as FAO, but also WHO, UNEP and UNDP, we have access to monetization templates that help not only define the impact of food production on soil fertility, climate change, water quality, biodiversity and livelihoods, but also monetize the impact,” says Volkert Engelsman, chief executive officer for Eosta. “We’ve done that work on a farming and food level, and we will now move ahead and apply it to our balance sheets and profit and loss accounts, meaning as well as reporting to financial stakeholders, we will also report to natural and social capital stakeholders. As a small to medium-sized enterprise, we can move fast, but what we want to avoid is that this initiative dies in splendid isolation – we want it to be scaled up, which is why we have embedded it in the context of the Natural Capital Coalition’s Natural Capital Protocol. We hope to combine the change leadership power of small to medium-sized enterprises and banks, like Eosta and Triodos, with those players who have the ability to scale up the initiative once the first results have been delivered.”