The global food system generates hidden costs and unrecognized benefits due to the environmental, social and health impacts of food production and consumption. The costs of negative externalities and the value of positive externalities are not reflected in the current economic system. For example, the global food system is responsible for around a third of total greenhouse gas emissions and is a key driver of diet-related diseases such as type 2 diabetes, obesity and cardiovascular disease. At the same time, regeneratively managed soils make an important contribution to storing carbon, improving soil structure and increasing biodiversity. These hidden costs and unrecognized benefits are not accounted for in business balance sheets nor in the gross domestic product (GDP) of national economies. The result is market distortions and policy failures that create incentives for investors, producers and citizens to produce and consume food in unsustainable ways, putting food security and the economy at risk.

True Cost Accounting (TCA) is a methodology that aims to capture all costs and benefits associated with a product or service, including environmental, social and economic impacts. While TCA has gained increasing attention in recent years, there is still a lack of standardized approaches and tools to effectively implement it. Questions remain about how to integrate TCA into current reporting practices, how to support the internalization of externalities through policy, or how to promote sustainable finance. Due to the highly interdisciplinary and novel character of the TCA approach, effectively developing and implementing it will require a wide range of expertise from different scientific, financial and policy stakeholders.

The objective of the TCA Alliance is twofold:

1) to create a German (and European) network and multi-stakeholder platform to build a common understanding and vision of why a change in accounting is needed across all sectors; and

2) to raise awareness of the issue among policy makers, business leaders and consumers.

The TCA Alliance will actively research and innovate on how to extend current accounting and reporting practices and drive the operationalization of pilot projects to demonstrate and further develop the feasibility and utility of TCA in the private sector and for policy making. The aim is to develop concrete (implementation) proposals and recommendations for policy making that support sustainable financial and business practices. True cost accounting and sustainable performance accounting will be carried out in collaboration with project partners along the food value chain.

The project launched in 2024 and requires further funding. Please contact us if you are interested in supporting the initiative financially.