The Brussels Development Briefing no. 44 on “Promoting responsible and sustainable sourcing through Fair Trade” took place on 22 June 2016 from 9:00 to 13:00, at the ACP Secretariat in Brussels, Belgium. This Briefings was co-organised by CTA, the European Commission / DEVCO, the ACP Secretariat, CONCORD and the Fair Trade Advocacy Office.

1. Copyright 2016 True Price. All rights reserved. Image: Plucking Tea, Kanan Devan Hills, Kerala, India by Julia Maudlin. Shared under the Creative Commons Attribution licence. Retrieved from:
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pebDv4-dJGVJu-cj5cYw-67YC3S-dJL2M6-5LrQfK-peJfdV-pcYdn9-oXvY4s-oXvfe7-tKF4E-oXvXfU-oXvhQE-peJeS4-saP8QQ-rg6Uu3-2UvpiB-9bhZuN-acp1s3-acmbFx-acmav2-acp26q-bVtoHv-bVtp22-wPQjr-9qHD1p-ccPM3C-pUq97-
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Copyright 2015 True Price. All rights reserved. Image: www.flickr.com/photos/44124383718@N01/359748552. Shared under the Creative Commons Attribution licence.
Brussels Rural Development briefing 44
Promoting responsible value chains and
sustainable sourcing through Fair Trade
CTA, ACP Secretariat, EU
Commission (DEVCO),
Concord and Fair Trade
Advocacy Office

2. Who? True Pricing Cases
01 02 03

3. Copyright 2015 True Price. All rights reserved.
01

4. Copyright 2015 True Price. All rights reserved.
Our mission is to make markets work for
sustainable development by helping
organizations measure, value and improve
their impact and developing open source
methods for impact measurement and
valuation.
We carry out research, make publications and
helps organizations with implementing and
communicating the outcomes of the research.
We help businesses make better products,
NGOs carry out stronger campaigns and
governments design more effective policies.
Selection of (service) partners:
Construction
Financial
services
Retail
Online media
Advisory
services
Food
production
Livestock
Horticulture
Apparel
Transportation
Chemicals
Crop
agriculture
Sectors we work in:

5. Copyright 2015 True Price. All rights reserved.
First method
worldwide
Applied to
key
products &
sectors
Rights
based
approach
Published
open source
principles
Linked
to
SDGs
Natural Capital Protocol
Part of consortium
developing NCP
Principles for Impact
Measurement and
Valuation
Open source version v2
to be published in 2016
Protocol for fair compensation
in land tenure changes
Started with Phase 1

6. Copyright 2015 True Price. All rights reserved.
02

7. Copyright 2016 True Price. All rights reserved.
Global trend
True pricing is part of a global trend
towards measuring, reporting and
internalizing externalities.
Trend to measure and report externalities among businesses (2010-2015)

8. Copyright 2015 True Price. All rights reserved.
There is a myth that climate
change action will cost heavily.
But I am telling you inaction will
cost much, much more.
Ban Ki-moon
Secretary-General United Nations
”
“
It cannot be about setting prices
without including those
externalities — whether it takes
the form of a good, solid
intelligent carbon tax, whether it’s
a good, solid intelligent cap and
trade system, or whether it is any
other device that can be put in
place in order to resist those
externalities by including them in
the price-setting.
Christine Lagarde
IMF Managing director
“
”
As long as production is increased,
little concern is given to whether it
is at the cost of future resources or
the health of the environment; as
long as the clearing of a forest
increases production, no one
calculates the losses entailed in the
desertification of the land, the
harm done to biodiversity or the
increased pollution. In a word,
businesses profit by calculating
and paying only a fraction of the
costs involved. Yet only when “the
economic and social costs of using
up shared environmental
resources are recognized with
transparency and fully borne by
those who incur them, not by
other peoples or future
generations”, can those actions be
considered ethical.
Pope Francis
Encyclical Laudato Si
“
”

9. Copyright 2015 True Price. All rights reserved.
The true price of a product is the
transaction price plus the unpaid
environmental and social costs. The aim
of calculating a true price is to create the
information needed to reduce the
external costs by producing in a more
sustainable manner.
Current
Product
True
Price
Retail
Price
Gap
Social
costs
Environ-
mental
costs
• Air
• Soil
• Water
• Waste
POLLUTION
RESOURCE USE
• Ecoystems
• Water
• Materials
• Energy
SOCIETY
WORKERS
• Income
• Rights at work
• Health & Safety
• Health consumers
• Local communities
• Legal requirements

10. Copyright 2015 True Price. All rights reserved.
The purpose of true pricing is not to
increase the retail price, but to decrease
the true price to the retail price.
Transparency about true pricing can
create the information and incentives
needed to internalize and reduce
negative externalities.
Current
Product
Target
Product
True
Price
Retail
Price
True
Price
Gap
Social
costs
Environ-
mental
costs

11. Copyright 2016 True Price. All rights reserved.
The True Price
A lack of the right incentives for
sustainability has led to the fact that
production and consumption generally is
associated with social and environmental
externalities.
Social externalities in the true price relate
to issues such as the costs of
underpayment, gender discrimination and
health and safety infringements. In
addition, the true price considers
environmental externalities such as
climate change, water pollution and use of
toxicities.
Key sectors
In sectors with high externalities, such as
the food, agriculture, apparel, energy,
chemicals and construction sectors, true
pricing can help with finding the key
challenges and the right solutions.
In the food and agriculture sector, for
example, most externalities occur at farm
level. Producers, often smallholders, are
very vulnerable. This can lead to under
earning and limited means to invest in
improvement programs that reduce
externalities
The true price as part of the solution
The true price can help small and large
businesses to find a solution. The true
price can be used in business planning, by
projecting the impact of improvement
programs for example. Innovations that
lower the true price often turn out to be
directly profitable just as well. It can also
be used to credibly communicate about
the impact of products.
Providing an action perspective
Calculating the true price of products
enables stakeholders to identify the key
challenges by showing the hotspots of
externalities: areas where production with
the highest externalities. In addition, in
this way it provides the information
required to find the most impactful
solutions to such challenges.
Businesses, governments, NGOs and
consumers all have the ability to take
action and as such reduce externalities
and lower the true price. For instance, if
consumers know what milk has the lowest
true price, this can guide their purchase.
€5.00
Product 1
€3.07
€3.00
Product 2
€2.50

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03

13. Copyright 2016 True Price. All rights reserved.
Cert Cert Cert Cert
Source image:Plucking Tea Leaves by Ashwin Kamath. Shared under the Creative Commons Attribution licence.

14. Copyright 2015 True Price. All rights reserved. 13 13
A modal employee family consists of a
single mother and 2-3 children.
We focused on T-hybrid roses that are sold at
Dutch florists of around 25-30 grams.
65% of employees are women.
We looked at flower growing region
Lake Naivasha in Kenya. The area
produces 50-70 % of annual
floriculture production in Kenya. In 2012, the floriculture industry
exported 123,511 tons of flowers
(42.9 billion KES)
SOURCE: TP analysis; Kenya Flower Council
Average output per ha: 40 tons/ha
Average labor input per hectare: 25 FTE
2
1
4
5
We focused on medium and large farms,
which have on average 30 hectares of land.
3
We compared three types of farms
Average farms have policies in place to improve environmental and/or social impact
Best Practice farms have embedded policies to improve environmental and/or social impact
Target farms have implemented innovative projects to improve impact

15. Copyright 2015 True Price. All rights reserved. 14
Income
Energy
Mainly due to transport
Income
Social security
Health and Safety
Discrimination
Freedom of association
Land use
Water pollution
Air pollution
Energy use
Water use
Material use
€0.70
€0.95

16. Copyright 2015 True Price. All rights reserved. 15
Profit &
Loss per
ha (€)
0
4000
5
10
15
20
0
Average
Farm
In-kind
Wages
Training
(I)
Gender
Committee
50%
IPM
Small
Scale
Solar
Drip
Irrigation,
Bore Holes,
Rain Water
Basic
Living
Wage
More
Effective
Gender
Committee
Training
(II)
100%
IPM
Sea
Freight
Solar
Powered
GH
Closed-loop
hydroponics
& coco peat
Target
Farm
Profit
Loss
Social
Environmental
Social
and
environ
mental
costs
per rose
(€ cents)
Existing initiatives25 Innovative projects
2000
8000
6000
12,000
10,000
16,000
14,000

17. Copyright 2015 True Price. All rights reserved. 16
True Price scenarios
- €
0.10 €
0.20 €
0.30 €
0.40 €
0.50 €
0.60 €
0.70 €
0.80 €
0.90 €
1.00 €
True price (Average) True price (Target) True price (Target
consumers)
Margin Environmental Social
Retail price
Farm price

18. Copyright 2016 True Price. All rights reserved.
Fully sustainable in five years
Chocolate company Tony’s Chocolonely
produces chocolate and sources from
Ghana and Ivory Coast. This company aims
to produce sustainable and fair chocolate
without underpayment and forced labor.
Based on a true price analysis, they have
committed to source cocoa with zero
social and environmental costs in five yeas
and devised a strategy to realize that.

19. Copyright 2016 True Price. All rights reserved.
Global banana study
True Price, Trucost and Fairtrade
International are conducting a global study
into the external costs of banana
production. The primary aim of the study
is to identify most important external
costs to shape strategies to support
producer organizations. Another aim is to
identify differences of Fairtrade and non-
Fairtrade production.
Dominican
Republic
Colombia
Peru
Ecuador
Environmental impacts
• Climate change
• Air pollution
• Land and water pollution
• Water depletion
• Land use
• Waste generation
Social Impacts
• Health and safety
• Income and social security
• Child labour
• Forced labour
• Harassment
• Overtime
• Discrimination

20. Copyright 2015 True Price. All rights reserved. Image: www.flickr.com/photos/58066274@N00/217955538. Shared under the Creative Commons Attribution licence.
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