True Price is a social enterprise that aims to contribute to the creation of an economy that creates value for all. We do so by helping organizations quantify, value, and improve their impact on society. We assist multinationals, SMEs, NGOs, and governmental organizations with risk management and strategic decision making by providing insights into their impacts and their associated risks and opportunities.
Improving the True Price
A true price is a measure of the sustainability of products and services, as it accounts for all negative environmental and social externalities across its value chain. The true price of a product is the retail price plus by monetizing all hidden external costs. Externalities of production is priced by taking into account costs to comply with human rights conventions and principles of a circular economy. Companies can use this information to set specific targets and identify innovations and actions to reduce the true price gap. The image below shows a true price of a current product, and a ‘target price’ of a sustainable product. This framework is widely used to identify targeted sustainable interventions, for instance by rose growers in Kenya or a chocolate company in the Netherlands.
Impact measurement and valuation
The impacts businesses have on society and nature are becoming increasingly relevant to profitability. Stakeholders have higher expectations and businesses are becoming more dependent on scarce resources provided by society and nature. This leads companies to increasingly measure and value their impacts upon society and nature. For example, businesses conduct Life Cycle Assessments to measure the environmental impacts of their products.
A novel trend is that businesses are also expressing impacts as monetary benefits and costs. Valuation enables businesses to integrate impact information into core processes by translating impacts into a single currency which is also the lingua franca of business: money. Monetization facilitates decision making by allowing businesses to weigh the pros and cons of several options in terms of impact. In addition, monetized impact information allows businesses to better forecast the implications of their actions on their bottom lines. This can help businesses with managing their risk, innovation and reputation.
Impact valuation for (non-) governmental organizations
(Non-) governmental organizations play a central role in informing decision-makers about social and environmental impacts generated by economic activities. Knowledge of this external impact enables organizations to increase the effectiveness of programs, improve local impact and private sector management. True Price provide organizations with this information by quantifying and valuing their impact.
Reporting on impact
Stakeholders increasingly want to know how businesses and financial institutions impacts them and society at large. Investors, customers, citizens and regulators expect higher levels of transparency. As a result, reputation increasingly depends on the ability to be transparent and demonstrate a positive impact on society. Voluntary reporting initiatives such as the Global Reporting Initiative (GRI), the UN Global Compact and OECD Guidelines have mainstreamed impact reporting. Regulators have also stepped forward. In the US, the SEC requires disclosure of material issues, and standards have been developed for that (e.g. SASB). In 2014 the EU adopted a directive requiring large companies to report on their impact or ‘non-financial information’ (EU, 2014). The work of the International Integrated Reporting Council (IIRC) has enabled businesses to increasingly integrate impact information into their standard annual report.
Many harmonization efforts are underway in both the public and private sectors to address the multitude of approaches to impact measurement and valuation. On a global level, the United Nations established the System of Environmental-Economic Accounting (SEEA) initiative, to assist the production of “internationally comparable statistics on the environment and its relationship with the economy.” Non-governmental efforts include general reporting standards such as GRI, SASB and IIRC. Other important efforts are Accounting for Sustainability, the WBCSD, the Natural Capital Declaration, and the EU Business and Biodiversity Platform. True Price focuses efforts upon creating effective methodologies for valuation and monetization and contributes to many of these initiatives, in line with its mission to creating open source methodologies. Harmonization is expected first for Natural Capital, as key global players are jointly developing a Natural Capital Protocol.