Rosanna Crawford, TCA Accelerator Outreach and Communications Coordinator

“It’s a critical time to double down on some of the methods, tools and processes by which we can help businesses maintain this ambition, keep this holistic lens, and really reduce some of that burden…I’m really hopeful that TCA offers an opportunity for the private sector to be good advocates alongside governments and consumers, and create that enabling space and enabling environment that we all need to meet our sustainability goals”.

On November 26, we held our second workshop in the True Cost Accounting Dialogue Series, bringing together people who work in and with the private sector to discuss how to scale up the application of True Cost Accounting (TCA). 

This workshop followed several weeks of fractious global fora: COP16 in Cali, Colombia, and COP29 in Baku, Azerbaijan. Governments and businesses are struggling to deliver, and in some cases rowing back on, climate and nature commitments. Each year, more evidence emerges on businesses’ (largely unrecognized) dependence on natural resources (WBCSD, Heather Clancy in Trellis), while GHG emissions continue to rise.

At the beginning of November, the UN’s Food and Agriculture Organization (FAO) released its State of Food and Agriculture report, the second in a two-part series on TCA. FAO confirmed that each year, our agrifood system totals almost $12 trillion in hidden costs. Of these costs, 70% come from non-communicable diseases such as strokes, heart attacks and cancer. 

The imperative for action seems clear, but as our workshop participants explained, driving change in the private sector is far from simple. They highlighted issues such as:

• A perceived lack of relevance for incorporating TCA into internal decision making
• An unsupportive external environment
• Weak investor interest in TCA
• Insufficient data and a lack of standardization

This blog will summarize the highlights of the discussion. A blog post will be published after each workshop in the Dialogue Series; it is important to us that knowledge and learning shared at the workshops is made available to the wider TCA community. Unless otherwise noted, this summary reflects the perspectives and comments of individual participants.

Tackling an Unsupportive External Environment
The last few years have seen a wave of sustainability reporting regulation introduced. Workshop participants shared that many businesses feel overwhelmed by reporting requirements, and that incorporating TCA was perceived as too burdensome. However, it was acknowledged that COP16 in Cali (the ‘biodiversity COP’) had highlighted business dependencies on nature, climate and labor, and that TCA could illuminate these long term resilience issues.

“Businesses should be all over this, because this could really undermine how they sell products everyday…this was a really strong message at COP16 that we should reflect on.”
Workshop Participant 

As people around the world feel squeezed by rising costs of living, participants noted that the association of True Cost Accounting with higher food prices was also a disincentive to adoption. In this price-conscious environment, where sustainable products are often more expensive, compromising on affordability was not felt to be an option. 

However, with the advent of increased regulation, this is an opportunity to engage companies on streamlining reporting, and potentially embedding TCA beyond reporting processes. This would also help to address associations with higher prices, reinforcing the message that TCA is a decision-making tool that illuminates hidden costs and benefits.

Addressing a Perceived Lack of Relevance
Despite growing evidence showing the fundamental interdependence of our economy and nature, participants working in industry reported difficulties in communicating why TCA should be incorporated into business strategy, and why it was relevant for internal decision making. 

This was echoed at the investor level: investors are not interested in these approaches and do not see them as a priority, and this can be a significant barrier to adoption.

It was acknowledged that investor attitudes are slowly changing, but there is a clear need for effective engagement of investors and company boards, demonstrating how TCA is material and relevant. A key lever for action is the incorporation of TCA into business models, therefore generating buy-in amongst these stakeholders is essential in order to scale up TCA. 

“If we are able to show at the board and the company level, basically, the financial materiality of doing all of this, then we’re good to go”.
Workshop Participant

Facing the Data Challenge
As in our previous workshop on Global Policy and Action, other important themes that emerged were the issues of data quality, collection and analysis. 

Participants wanted to use the best data available for decision making, but collecting this data is complex, resource-intensive and time pressured. In large companies it requires coordination across departments and investment in technology to streamline these processes. 

One participant also raised the issue that many employees don’t have the experience or expertise required to collect this data, nor to conduct TCA analysis. It’s important to find the balance between utilizing an effective tool to ensure the business is heading in the right direction, or creating a burdensome process that is cost prohibitive. 

Addressing these issues would require greater collaboration between industry, policymakers and academia, and also embracing new technologies, including AI, to assist in data collection.

A Question of Standardization
Another solution to the issues of data collection and analysis was increased standardization of TCA methodologies. There is an abundance of tools, frameworks and methodologies, and as one participant put it:
“So now, even for me as an expert in the field, I’m still confused on where the initiatives converge, data wise, solution wise, tool wise. How can we build on this information, and the data already built by other people, other groups, and converge into one initiative?”

In a similar vein, another participant pointed out the need to know the impacts of the products they sell. This means receiving data from the producers, and ideally that data would be standardized to simplify their own accounting processes.  

Reflecting on challenges in data collection and methodology selection, one participant reminded everyone of the importance of “not letting the perfect be the enemy of the good.”

Next Steps
In the face of these barriers to scaling TCA application, some clear themes emerged. Businesses need to embrace smarter scoping, ensuring data collection and analysis are a progress enabler, rather than a resource intensive burden.

This in turn would be facilitated by the harmonization, or standardization of TCA methodologies. The community collaborating on a common framework and a common language for TCA could also enable the approach to be adopted more easily at different scales: company, local, national.  

A common language could lead to more effective communication to investors and boards on the financial materiality of this approach, and its relevance for businesses’ long term sustainability and resilience. 

Thank You
We are very thankful to our workshop participants and our track leads, Priya Motupalli (IKEA Foundation) and Martine van Weelden (Capitals Coalition), for their time and thoughtful insights. 

Scaling Implementation workshops are continuing into February 2025, covering barriers and opportunities to our goal of dramatically scaling TCA by 2030 within the themes of private sector implementation, finance and investment, research, communications and advocacy, and movement integration. We will also hold regional workshops, as well as public facing, interactive sessions in the lead up to an in-person TCA Summit in April. We will post information on our socials (Twitter/X, LinkedIn, and now, BlueSky) and our event site.