Towards the Impact Economy

Unprecedented change is needed to create a world that enables every one of us, now and in the future, to live a fulfilling life with dignity. Conventions such as the SDGs, the Paris Climate Agreement, and Human Rights give us direction as to what our goals are. To realize these goals, an impact economy is needed: an economy in which work, entrepreneurship, innovation, and technology lead to a better world.

Today, we are thrilled to announce that we have launched the Impact Institute. Our mission is to empower organizations and professionals to realize the impact economy. For this, we firstly develop the ‘language’ of the impact economy: open-source standards for impact measurement and valuation. Secondly, we develop technologies to measure and communicate impact with radically more accuracy and lower cost.

The Impact Institute is a social enterprise and a spin-off of True Price. True Price was founded in 2012 and has since developed various methods and tools to measure and monetize impact. In 2018, True Price decided it will focus fully on creating a platform that enables businesses and consumers to calculate and share the true price of the products they buy and make. The Impact Institute will continue all other activities of True Price related to impact measurement and valuation.

Key objectives of the Impact Institute are that

  • All organizations measure, disclose, and steer on their societal accounts (including an Integrated Profit & Loss) next to their financial accounts
  • The financial valuation of shareholder value should include long-term internalization risks and opportunities
  • Governments provide the required incentives to enable businesses to be transparent about and optimize their societal value creation
  • All businesses disclose and improve the societal effects of their products (e.g. through true pricing).

The Impact Institute both develops open-source methods and offers the tools—software, data, training, and strategy—to implement these objectives. This includes software tools, measurement & reporting, consultancy & research, and training & education.

Our areas of focus are the Integrated Profit & Loss; true pricing; Sustainable Development Goals; tailor-made impact frameworks and specific topics such as human rights, living wages and income, natural capital, circularity, carbon footprint, social impact and cultural impact.

Finally, we will organize an annual Impact Conference, for which we will update you soon.

More information can be found on www.impactinstitute.com. True Price can be found on www.trueprice.org. Do not hesitate to reach out to us with any questions, ideas or suggestions.

Kind regards,

                              

 

Adrian de Groot Ruiz, Director                                                    Michel Scholte, Director

The First Ever True Price of Bread

The True Price of bread

Bread is a basic element of diets across the world. Like many other agricultural products, production of grains leads to extraction of water, soil pollution, and the emission of Co2, all of which involve societal costs.

Together with Bakker van Vessem, True Price has now calculated the first true price of bread. Bakker van Vessem is a well-established bakery brand, running now for 111 years, with a consistent focus on creating unique and healthy baked goods. True Price compared their Harlemmer Meer Brood with a constructed average bread sold in Dutch supermarkets, with imported ingredients and conventional agricultural methods.

As shown in the image below, we found that the Haarlemmer Meer Brood from Bakker van Vessem had a true price of 17 eurocents, compared to 32 eurocents of conventional bread. The difference is explained by two main drivers: transport and chemical fertilizer use. Haarlemmer Meer Brood is produced and transported locally within the region thereby avoiding the higher impact of imported bread from other areas. Further, Bakker van Vessem use less manure fertilizer per hectare to keep the external cost low.

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Bakker van Vessem should be congratulated on their efforts to ensure that their bread reflects the true price of its production. While this is a huge improvement on the sector average, there is still work to be done. There are three key directions for improvement: increasing the use of organic fertilizer, compensation of Co2 emissions through certified remediation efforts such as tree planting, as well as the use of biogas in order to drive down societal energy costs.

The delicious line of bread by Bakker van Vessem is now available in 16 stores, and is the first bread that can be bought for the True Price. Find out if there is a bakery near you (website is in Dutch).

Landscape valuation: Why pricing shared land is necessary

True Price conducted an innovative natural capital valuation analysis on the different land uses in the Maasai steppe, Tanzania. The region is home to pastoralist herders and is famous for its ecosystems that attract tourists worldwide but it is undergoing a drastic change.

There is an increasing trend of agricultural land conversion that is leading to a loss of habitat for iconic animals and loss of grazing areas for pastoralist herders. A natural capital monetary valuation study shows that conversion of steppe into farmland will result in overall natural capital loss. If the agricultural land conversion is not slowed in the coming decades, it will result in a loss of 1.3 billion USD in terms of lost ecosystem benefits to the Tanzanian people. Ecosystem services affected include: milk, meat, tourism, raw materials, wild food and medicinal herbs, drinking water and tree products.

In the short term, agricultural land conversion increases food production and productivity. However, True Price’s research shows that in the long term this practice leads to a decline in agricultural productivity since the common form of agriculture in the region is not sustainable and land is degraded and abandoned.

The following figure demonstrates the internal natural capital value of the Maasai Steppe, representing the discounted value of present and future benefits of alternative scenarios in USD.

internal natural capital value

Figure 1: Value of natural capital in the Maasai steppe in 3 scenarios of land conversion from glassland to farmland.

Economic benefits can be protected by slowing down the pace of land conversion from grasslands to farmland. Our livestock study with UNEP TEEB identifies options to facilitate a transtion towards more sustainable agricultural practices. A suggested mechanism to encourage this is to financially incentivise pastoralists to protect their land, to be paid for by other ecosystem beneficiaries, in the case of the steppe this is tourism operations. This economic mechanism would facilitate the internatlization of positive externalities, and gives hope to the future shared natural capital value of the Maasai steppe.

Find the full report for UNEP TEEB on their TEEBAgriFood page, created by True Price, Trucost and Wageningen University

 

SDG Food Initiative

It is widely known that transformation of the agri-food system is crucial to achieve the Sustainable Development Goals (SDGs). This point is stressed by the Food and Agriculture Organization (FAO) of the United Nations. The Director General, José Graziano da Silva states: ‘The SDGs are interlinked and interdependent. But SDGs 1 [poverty] and 2 [hunger] are particularly central to achieving the overall agenda. Many of the goals, such as health and education, cannot be achieved without Zero Hunger’. Hans Eenhoorn of Worldconnectors, former vice President of Unilever (Foods) and member of the United Nations Task Force on Hunger puts it as: ‘We cannot accept a world in which one billion wealthy people are getting sick from over-consumption (obesity, diabetes, cardiovascular diseases etc.) whilst simultaneously one billion people are starving from food shortages, rendering so many physically and mentally incapacitated’.

 

Table: an overview of the food related SDG’s.

SDG table
The Dutch government, private sector and civil society have taken many initiatives to work towards making the food sector more sustainable. The Dutch government highlights the need to address methane emissions and obesity in a CBS report  and its efforts for food security and nutrition in a recent report. The private sector has taken dozens of initiatives, as shown in a report (in Dutch) by food business association FNLI. Civil society, organizations such as Hivos and Fairtrade International are working internationally to tackle hunger, poverty and agricultural sustainability, creating a Food Change Lab and Living Wage Benchmarks respectively.

The need for a Dutch SDG Food Roadmap

Whilst ambitions are high we lack a clear policy vision. This includes a roadmap, an overview of initiatives, and a clear monitoring system. The roadmap should give active food sector parties a clear idea of what actions should be taken, when and by whom. An overview of initiatives should show the gaps or successes and prevent complacency. A monitoring system should track progress and stimulate new activity where needed. A fine example of a roadmap for the energy sector for 2030 is Het Nationale Energie Akkoord. Without a policy vision, the Netherlands holds a short-sighted agenda to tackle the global food related SDGs.

The launch of the SDG Food Initiative (SFI)

HAS Hogeschool, True Price, the SDG Charter and Worldconnectors aim to contribute to the development of an SDG 2 (and 12.3) policy vision using their expertise and leverage through the SDG Food Initiative (SFI). At the end of 2016, 40 food sector representatives stressed the need for this initiative at Transform Your World. Now the SFI is being carried forward by discussion between sector representatives on creating the policy vision. There are multiple ways to become involved:

Create a profile and upload your food related initiatives on the SDG Gateway: a ‘go to’ environment where Dutch SDG initiatives can be promoted and discovered.

Join the SDG Charter Event on September 25 for a workshop surrounding the SFI: Tickets here

Support initiatives or seek sector expertise, reach out to Rosalie de Bruijn through rosalie@sdgcharter.nl.

Visit the Worldconnectors’ website to keep track of recent updates of de SDG Food Initiative’s activities.

 

 

 

Rose farming in Kenya

Although great progress is being made on sustainability in the rose sector in Kenya, worker’s wages need to double or even triple for them to sufficiently provide for themselves and their families, as suggested in the P+magazine article. The results communicated in this article is sourced from a True Price study made in partnership with the NGO Hivos. This article also describes the vulnerability of women workers to gender discrimination and sexual violations, often trust is abused when depending on overtime and other in-kind benefits. A key CSR study cites that sexual harassment and intimidation occurs in half the Kenyan rose farms assessed.

LWRoses.2

This infographic gives an impression of an actual wage and the gap to reach a living wage for single and double parent households. True Price’s Living Wage study finds that over half of women working in Kenyan Rose farms are single mothers and are the sole provider for their families.

Read our report on the business case for a living wage in Kenyan rose farming. This was an assignment comissioned by the international NGO Hivos.

Follow us @TruePrice to find out how else we contribute to the case for a Living Wage.