TRUE PRICING CREATES TRANSPARENCY IN SUSTAINABLE PRODUCTION PROCESSES
Sustainability has been a hot topic for some time now and is playing an increasingly visible role in our daily lives: from the growing range of eco-friendly products to flight shame and plant-based foods. But there’s so much more that can be improved. That’s no secret to Michel Scholte, director of the Impact Institute and True Price. Named Minister of the New Economy this year, Scholte is working to accelerate the sustainable future in Holland. One part of that is true pricing. But what is true pricing, and why should we care? Michel Scholte and collaborative partner Henk Hofstede, Retail Sector banker with ABN AMRO, explain the concept and why it matters for a sustainable society.
Consumers are becoming ever-more mindful of how sustainable their purchases actually are. A study carried out by ABN AMRO in collaboration with Insights & Consultancy in August of last year showed that 48% of consumers care about sustainability. But there can be no fair and sustainable future without SUSTAINABILITY transparency in business processes, and no sustainable products without true pricing. That’s where True Price comes in. Michel explains: “True pricing is the market price of a product plus the social and environment costs across the whole value chain, so including things like underpayment of workers and groundwater and air pollution. To compensate those costs, you make a kilogram of, say, bananas, 15 eurocents more expensive.” Still, that doesn’t necessarily make a relatively ‘more expensive’ sustainable product the most attractive one. According to Henk, true pricing is the crucial next step towards attaining prices that are genuinely fair, by making ‘cheap’ options more expensive and so stimulating consumers to purchase sustainable products.
First step to a smaller footprint
To keep our planet habitable, taking that first step towards sustainability is key. This will raise awareness and appreciation among consumers for what’s at stake and bolster the circular transformation of waste back into raw materials. Amsterdam Impact and the DOEN Foundation are supporting the True Price ecosystem to help consumers and retail companies map and implement true pricing. “Take a joint study with the Impact Institute to look at the true price of a pair of jeans”, Henk says. “Here, our focus is on more efficient water management in cotton farming, paying a living wage in cotton farming, factories and promoting denim recycling in order to minimize the ecological footprint.” The retail chain Zeeman was one of the first to open production locations in Asia to audits by NGOs and trade unions. This input alone marks a step towards a sustainable production process and improved labour conditions. Another example, says Henk, is Lidl, “which recently piloted a new eco-score system to raise consumer awareness about products’ ecological impact, to then enable an informed choice. It’s a challenge to implement True Price due to the international law and it requires a total chain approach, but techniques such as blockchain make this possible”.
The basis for working towards a sustainable future is shared responsibility among government, industry and consumers, Henk concludes. “Government has to ensure a fair playing field, with extra incentives to get manufacturers to produce fairly and sustainably. Flanking that will be hard legislation on things like carbon pricing, child labour and paying a living wage, use of circular raw materials and waste reduction.” To get a taste of true pricing, says Michel, “Consumers have a responsibility as well. Always think about what you’re buying and if you need it. Look at the product information and buy non-toxic, eco and human friendly processed goods. You can already have a look in the world’s first true-price supermarket, De Aanzet, which is located on the Eerste Jacob van Campenstraat 10, And soon, you may also grab a bite in the Circl restaurant, which has developed a true-price menu in partnership with Vermaat”.