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The True
Value of Food
A powerful aid to business
decision-making
Powered by
Contents
Context | 3
1 What is The True Value of Food | 4
2 Leaders must act now | 8
4 From theory into action | 11
The
The True
True Value
Value of
of Food
Food AA powerful
powerful aid
aid to
to business
business decision-making
decision-making 22
Context
Nothing is as fundamental True Value of Food (TVoF) is about the most effective path forward.
to human survival as food, applying the right incentives, In this paper we shed light on
but there is a problem. actors across food value chains what TVoF is, why it is important
The global food system can then work to bring down the to invest in TVoF now, which
humans have created is external costs and ensure that we decisions TVoF can support for
create real value for business and your company, and how to go
one of the largest sources
society in a sustainable way. about implementing TVoF in within
of greenhouse gas (GHG) your business.
emissions1 and biodiversity The journey for companies
loss. At the same time, our to meet their bold ambitions,
food system perpetuates maintain a sustainable business, True Cost, Price, or Value?
inequality, hunger, and and be productive participants The True Cost of Food (TCoF)
the health crises of over in the food system’s transition accounts for the production cost
and under-nutrition. That requires a series of decisions of food as well as all the hidden
the global food system is – many transformative – on natural, human, and social costs
under severe pressure is sourcing, supply chain, production, of producing food. If desirable,
product portfolio, innovation, policymakers can intervene in the
confirmed by increasing
marketing, and distribution. The market using taxes and incentives,
concerns regarding the adjusting the product price to
TVoF is a means to reveal these
state of the environment reflect its True Cost. This concept
hidden costs and benefits, and
(e.g., deforestation, forest it is an invaluable tool for the
is known as the True Price of
fires, species loss, soil corporations that have the most
Food (TPoF). The True Value of
erosion), economic costs Food (TVoF) accounts for the net
influence on our food systems to impact of food by also considering
of agricultural waste (e.g., maximize their positive impact. the value added – all the benefits
food waste, fertilizer This will be imperative in navigating – to consumers, society and
leakage), health risks (e.g., the coming food systems the environment in addition to
malnutrition and related non- transformation. the TCoF. For instance, nutrition
communicable diseases, components with a proven health
Many food players have started to benefit could have a higher value.
antimicrobial resistance)
act through different initiatives that Some assume that TVoF will result
and social costs (e.g., farmer in consumers being penalized with
poverty, underpaid workers, address environmental, social-
higher food prices (linking back to
economic, and health issues.
child and forced labour). TPoF); but the final price of a food
The discussions and plans for
A transformation in how we action in each area have, over time,
item results from a wide range
produce and consume food of policy and financial decisions.
widened into multi-issue agendas TVoF can be a powerful tool that
is an imperative to sustain for businesses. As a result, helps businesses, policy makers,
a global population of companies often have a wide and other actors efficiently make
8 to 11 billion people.2 This portfolio of individual initiatives decisions that make higher
transformation has already that are not easy to compare value, healthier, sustainable food
begun and will accelerate and coordinate. accessible to all.
over the next decade. The concept of TVoF is not just
TVoF provides a common relevant to policy decisions and
The Scientific Group of the UN language to identify hidden costs food and agri-businesses. Capital
Food Systems Summit estimated and benefits across all areas, markets have a significant interest
the hidden natural (environmental and a basis for assessing the in understanding the value creation
degradation) and social (diseases opportunities and risks of the potential and risk profiles of
related to diets such as obesity, emerging food transition. This businesses. There is consequently
hypertension, diabetes, heart holistic view of the full value of potential to integrate the TVoF into
a product — not only for the food and agri-business reporting
disease) capital costs of the food
consumer but for the planet and and investor communication,
system at 19.8 trillion USD, more
leveraging the influence of capital
than double the total financial society — will help companies
markets for promoting sustainable
value of food consumption.3 The make the right tradeoffs to define
food businesses and systems.
The
The True
True Value
Value of
of Food
Food AA powerful
powerful aid
aid to
to business
business decision-making
decision-making 33
1 What is The True Value
of Food?
The
The True
True Value
Value of
of Food
Food AA powerful
powerful aid
aid to
to business
business decision-making
decision-making 44
1 What is The True Value
of Food?
True Value of Food (TVoF) Illustrative example These hidden costs should
analyses incorporates the Defining the full TVoF on a not necessarily be borne by
direct and indirect positive product level can be complicated the consumer in higher prices.
and negative impacts as the maturity of calculation What they instead provide is an
associated with a product methodologies varies across opportunity for companies to
the externalities. However, using understand their portfolio with
from farm to fork.
simple analyses for selected a holistic social, economic, and
These impacts are generally drivers already shows the impact health value lens to support
viewed in four categories: of TVoF and can inform decision- portfolio decisions. Companies
Natural, Human, Social and making. Exhibit 1 provides a can then choose to mitigate
Economic (with the last two starting point for one product: some of the negative impacts
sometimes combined). a 70-gram chocolate-chip of a product, or even move
cookie, which in the example is towards a portfolio consisting of
The true value of a product consumed by a British consumer. inherently more sustainable and
is not only defined by its healthy products. For instance,
composition but also by where The retail price of the cookie
at the same value in the market
and how its ingredients are is ~USD $0.55. The price
produced and the ecosystems (USD $0.55) a business could
represents a combination of the
the product relies on — how produce the ingredients of a
“value” that the customer has
they were grown, transported, more locally sourced, nutritious,
placed on the product and is
and processed, as well as its oatmilk porridge. The bowl of
willing to pay for it and the brands
availability, accessibility and oats has cost of goods sold of
the characteristics of the final pricing strategy. This value that is
USD $0.36 and carries hidden
consumer of the product, the captured is likely a combination
costs of only USD $0.19.5 Of
way the products are consumed, not only of the caloric value,
course, a bowl of porridge is
and the outcomes from the but of the joy the cookie brings
intuitively healthier, but hidden
consumption. to the customer. But this value
costs are also reduced by
does not account for many
lower GHG emissions of certain
hidden costs. For instance, we
ingredients, local sourcing of
Examples of calculated six externalities: GHG
inputs, and the better support
externalities emissions, water scarcity, food
to farmers in these value chains
waste, health impacts from
1. Natural: natural capital than for cacao in Africa.
empty calories,4 air pollution, and
costs related to GHG
social costs. The environmental Ultimately, this is a starting point
emissions, land use,
externalities are borne by all illustration that only begins to
water, biodiversity
of us, the health costs by the get at some hidden costs, not
2. Human: malnutrition, individual and the broader fully to value. But we wish to
diet-related non- British society that pays for the demonstrate that even simple
communicable collective healthcare costs, and calculations can help a company
diseases such as the social costs by the cacao start to understand their
cardiovascular farmworkers who may not be portfolio with a new lens.
disease, diabetes earning a living wage. This simple
calculation adds USD $0.56
3. Social-Economic:
of hidden costs to the current
working conditions,
cost of production, USD $0.33.
forced or child labor,
A more holistic assessment of
fair pay, food loss and
value is needed.
waste, fertilizer leakage
The True Value of Food A powerful aid to business decision-making 5
The
The True
True Value
Value of
of Food
Food AA powerful
powerful aid
aid to
to business
business decision-making
decision-making 66
The
The True
True Value
Value of
of Food
Food AA powerful
powerful aid
aid to
to business
business decision-making
decision-making 772 Leaders must act now
The
The True
True Value
Value of
of Food
Food AA powerful
powerful aid
aid to
to business
business decision-making
decision-making 882 Leaders must act now
The food transition is booms.6 Negative stories about in health, environmental
underway. Although the products and companies that are and social issues. It can
pace and intensity will vary harming people and the planet provide leaders of R&D with
are quickly amplified, creating an accessible framework to
across value chains and reputational risks for companies. evaluate future portfolio moves.
geographies, every CEO Boycotts, which have long been It can support procurement
is experiencing direct or a means for consumers and food and supply chain teams to
indirect pressure leading to activists to call out high-profile understand the impact of
changes in current and new, brands, are becoming more different sources of supply on
common. the overall food system. And,
emerging profit pools. it can serve as a simplified
Your company is likely on the engagement model with the
For instance, in response to the move already, and like most board of directors. TVoF can
growing consumer segment others, probably has bold goals create a common internal
demanding sustainably and exciting initiatives underway currency to tackle a complex set
produced food, food and to respond to food system of priorities.
beverage companies now sustainability pressures. With
have stricter sustainability so many dimensions to work But where to start? We
requirements for their suppliers. across – economic, social, acknowledge that the best
Governments globally are rapidly environmental and health – it is outcome will be a globally
implementing regulations, mostly challenging for companies to aligned and recognized
on environmental and health make tradeoffs. framework. However, until a
externalities such as taxes on universal standard is developed,
CO2 emissions and sugar. The TVoF is a powerful way to there are ways for companies to
competitive landscape is also create an integrated view of the get going.
being changed by investors in sustainability agenda. A common
new or improved food solutions language can help CFOs to make
as the Food Tech industry decisions on investments
The True Value of Food A powerful aid to business decision-making 9Case studies of companies leveraging TVoF in their businesses in different ways
Product portfolio and Transparency across business Partnerships to get started,
Innovation Olam, a food and agri-business learn and accelerate impact
Royal DSM, a Dutch science- supplier of food ingredients, Danone has three divisions:
driven company specializing in feeds and fibres, developed the Essential Dairy and Plant-
nutrition health and sustainable Integrated Impact Statement Based Products, Waters and
living, collaborated with the (IIS) as a decision-making Specialized Nutrition. Today,
consultancy, True Price, to do tool at profit-center level that Danone is advancing in its
a study on DSM’s product, provides business units and journey to reach net zero
OatWell® The study quantified finance teams with a holistic emissions on its full value
the true value of the product monetary perspective of the chain by 2050, peaking its
by assessing its impact on the True Value of the product in easy full-scope emissions in 2019.
environment, society and health to understand formats similar to This progress comes from
across the value chain.7 Profit & Loss and Balance Sheet. over a decade of actions and
Olam uses this to understand collaboration with key partners.
OatWell® is an oat bran powder
related risks / opportunities and To initiate their action against
high in oat beta-glucan.
it drives decision making to keep climate change, in 2008 Danone
Produced by milling whole oat
operations and impact within partnered with the Ramsar
kernels, OatWell® contains a
their intended environmental Convention on Wetlands and
natural combination of oat beta-
boundaries. the International Union for
glucan and insoluble fibers as
Conservation of Nature (IUCN)
well as large quantities of protein, Using data from the IIS Olam
to form the Danone Fund for
unsaturated fatty acids plus was able to quantify and
Nature (DFN). The first pilot
vitamins and minerals. demonstrate the progress on
project intended to offer Danone
natural capital. The IIS results
The outcome of the study solutions to compensate for
showed reduction of natural
showed that: carbon emissions through the
capital costs associated with
1. The environmental and preservation and restoration
the processing and growing of
social benefits are greater of wetlands. DFN funded the
a metric ton of cocoa beans
than the environmental Senegalese NGO Océanium
by 20% and 5% respectively
costs associated with to plant mangroves to restore
from year 2018 to 2019. These
OatWell®’s value chain, shrinking forests. The success
reductions were achieved
especially as a substitute for of this pilot (the world’s largest
by investing in clean energy
wheat. mangrove restoration project to
across their processing
date) prompted Danone to open
2. As people eat considerably facilities (i.e., switching from
the fund to new investors. Thus,
less when OatWell® is fossil fuel generated electricity
DFN evolved into the Livelihoods
a part of a healthy diet, to green electricity, boilers
Carbon Fund in 2011, with
environmental costs are fueled by cocoa shells) and
nine other investor companies
reduced further owing to assisting farmers to apply Good
including Schneider Electric,
the decrease in overall Agricultural Practices (e.g.,
Crédit Agricole, Michelin and
food consumption and pruning, planting shade trees,
Hermès. In June 2021, Danone
production. using fertilizer efficiently, and
joined 13 other companies and
composting crop residues).
3. The oat beta-glucan found financial investors to launch a
in OatWell® reduces the risk The transparency related to 3rd Livelihoods Carbon Fund
of cardiovascular diseases natural capital externality costs (LCF3), totaling 150 million euros,
by 20%. assists in decisions related to which aims to improve the lives
relocating investments and of 2 million people and deliver
These insights were used for the
activities to lower societal and up to 30 million carbon offsets.
product value propositions, as
environmental impact. Livelihoods is part of Danone’s
well as internal encouragement
to quantify environmental, social strategy to activate nature-
and health impacts for other based solutions on a large scale,
products/activities. Furthermore, driving systemic change in and
it further steered the direction of beyond its value chain.8
the innovation portfolio towards
increased positive societal
impact.
The True Value of Food A powerful aid to business decision-making 103 From theory into action
The
The True
True Value
Value of
of Food
Food AA powerful
powerful aid
aid to
to business
business decision-making
decision-making 11
113 From theory into action
We share a pragmatic three- c. Customer retention and create incentives to
step guide to action here, Segments where (lack of) source more locally where
developed through discussions sustainability leads to direct possible
with executives and experts. customer retention risks
d. Supply chain and
This is a guide for CEOs and d. Motivated internal manufacturing
their executive teams, as they leadership Optimize transportation type,
shape conversations in their Leadership that is motivated delivery routes, storage,
organizations, incorporate and engaged to think about inventory, and revisit/revamp
the TVoF into their decision- the next evolution of the by-products
making, and optimize the business
impact of concrete actions. e. Product marketing
e. Strategic relevance Include in shelve-space
CEOs should work together
Representative of enough / promotion / price
with their management teams, of the business that with negotiations
especially CFOs and Chief this lighthouse you have
Sustainability Officers, to make meaningful evidence to start f. Product information
this happen. to build towards the rest of Educate and build awareness
the portfolio with consumers by adjusting
1. How to get started multi-channel labeling –
f. Risk mitigation potential e.g., through adding eco or
Reflect on the impact of external Target business lines that nutrition labels / sourcing
drivers on your business. have identified significant locations or include advice
Consider your latest materiality sustainability risks which on ‘consumption per day’ to
assessment and your current could be better understood packaging
business across the portfolio, and mitigated through such
value chain, and geography an assessment g. M&A and partnerships
matrix. What opportunities and Include in M&A decision
risks do they create for your 2. How to activate making as ‘extra’ criteria or
business and where could you minimum requirement to find
Define which business decisions the right partner to boost
have the most impact?
should be influenced by the internal capabilities and
Start with a lighthouse to test, incorporation of the TVoF accelerate
learn, and see impact fast (this approach. There are seven types
can be at product, business unit, of business decisions that can For each of the above action
or market level). Set yourself be influenced (either individually paths, measurability and
up for success and select a or in parallel): transparency are a prerequisite
lighthouse (or lighthouses) where to understand, evaluate, and
a. Composition of the existing actively steer discussions and
you expect to have significant
portfolio decisions. There are good
impact across meaningful parts
Evaluate and adjust (parts of) measurement frameworks
of your business. Six criteria to
the existing product portfolio publicly available such as
help define a good lighthouse:
using ‘Avoid – Reduce the Doughnut of Social
a. Engaged consumers – Substitute – Add’ to and Planetary Boundaries9
A market segment in which improve individual products Framework by Kate Raworth, the
consumers are increasingly by changing ingredient Capital Coalitions Protocols10
interested and looking composition and Sector Guides and the
for (more) healthy and/or Value Balancing Alliance
b. Investment in your future
sustainable alternatives, methodology,11 each of which
portfolio
creating new profit pools can be used directly or adjusted
Include in R&D pipeline for
product innovations and new to the organization and pathway
b. Strong competitive to action. Many tools providing
position product launches
guidance for implementing TVoF
A market in which you can in business can be found on the
c. Sourcing
leverage a strong market Natural Capital Toolkit, hosted by
Choose sourcing
position and/or see M&A MIT Shift.12
conditions on suppliers,
opportunities
promote sustainable
product practices (e.g.,
no-till farming),invest in
transparency,
The True Value of Food A powerful aid to business decision-making 123. How to create the most Find strong partners
value and scale? Work together with other
‘shapers’ of the context
To scale and add more value keep to accelerate impact (e.g.,
the following principles in mind: governments, industry peers,
Incorporate at key decision start-ups, policy makers,
points investors). Also consider
Explicitly embed the true value reporting your baseline,
measurement into decision progress and plans to interested
making processes (e.g., making stakeholders, seeking feedback
it a requirement to clear product and further engagement.
design or internal investment The food transition is well on its
hurdles, assessing a portfolio in way with sustainability-focused
annual budget cycles). disruptive and transformative
Establish a direct feedback- players stepping up while
loop multinationals are innovating
Being successful requires across their product portfolios. In
a mindset and capability of the coming years all organizations
continuous improvement. that are a part of the food system
Impact needs to be measurable, will be further confronted with
transparent, and evaluated to a constantly changing context.
successfully define the next step It is up to the executive teams
– this is a muscle that needs to be to determine the role they aim
developed and trained especially to play. Will your team shape
for teams starting to define their the future or merely react and
approach and first steps. compete as changes happen? It’s
your choice to make.
Align incentives
KPIs must be aligned and
transparent across the
organization to reinforce changes
to decision-making (e.g., include
sustainability indicators in KPIs of
procurement or R&D team).
Plan for scale
Design for initiatives to be scaled
across the portfolio, estimating
the costs and impact of doing so,
starting with design of pilots.
Be dedicated
Commitment across the
executive team with a clear
C-level sponsor (e.g., the CEO
or CFO could play a key role in
the integration into business
decisions). A dedicated person
or team can drive the integrated
agenda and impact across the
organization.
The True Value of Food A powerful aid to business decision-making 13Endnotes
1
Paper in Environmental 3
Scientific group of the UN Food 7
DSM, Oatwell® White Paper,
Research Letters, by experts System Summit: The True Cost 2015 https://trueprice.org/con-
from FAO, NASA Goddard and True Price of Food (2021) sumer/oatwell-dsm/
Institute for Space Studies, https://sc-fss2021.org/wp-con-
New York University, and tent/uploads/2021/06/UNFSS_
8
Database: https://capitalsco-
Columbia University estimate true_cost_of_food.pdf alition.org/impact/case-stud-
the food system’s overall role ies/?fwp_filter_tabs=case_
in the climate crisis to be 1/3rd 4
Calories from solid fats or sugar study
of global emissions in 2018 – empty calories add calories
https://iopscience.iop.org/ to the food but have few or 9
https://www.kateraworth.com/
article/10.1088/1748-9326/ no nutrients, United States doughnut/
ac018e Department of Agriculture
10
https://capitalscoalition.org
2
UN global population forecast
6
USD 220 billion market size
https://population.un.org/wpp/ in 2019 and anticipated 6% 11
https://www.value-balancing.
growth YoY by 2030, Global com
FoodTech Market report, 2021
https://www.statista.com/statis- 12
http://shift.tools/contribu-
tics/1238860/food-tech-mar- tors/551
ket-size-worldwide/
For further information
and reference materials
accompanying this report,
navigate to:
https://www.wbcsd.org/zqmg4
The True Value of Food A powerful aid to business decision-making 14ACKNOWLEDGEMENTS Capitals Coalition DISCLAIMER
Martine van Weelden, Senior
WBCSD is delighted to partner Manager This report is released in the name
with Boston Consulting of WBCSD. Like other reports,
Group (BCG), a leading global Danone it is the result of collaborative
management consulting firm, to Agnes Martin, Health & Diets efforts by WBCSD staff, experts
advance business understanding Advocacy Director and executives from member
and action on the important Antoine Guttinger, Senior VP companies. Drafts were reviewed
subject of the true value of food. Finance by a wide range of members,
We would like to express special Fabien Delaere, Impact Valuation ensuring that the document
gratitude to their team for their Director broadly represents the majority
contributions to this report, more view of WBCSD members. It does
specifically to: DSM not mean, however, that every
Jacobine Das Gupta, Director member company of WBCSD
Shalini Unnikrishnan is Managing Sustainability and Lead Nutrition agrees with every word. Please
Director and Partner in the Chicago Reinoud Clemens, Sustainability note that the data published in the
office of Boston Consulting Group Portfolio Manager report are as of September 2021.
and is BCG’s global topic lead for
social impact and sustainability in Global Alliance for the Future of ABOUT WBCSD
consumer products. Food
You may contact her via email at Lauren Baker, Senior Director of WBCSD is a global, CEO-led
unnikrishnan.shalini@bcg.com Programs organization of over 200 leading
Jenn Yates, Coordinator, True Cost businesses working together
Chris Mitchell is Managing Director to accelerate the transition to a
and Partner in the Nairobi office of Accounting Accelerator
Guillermo Castilleja, former Senior sustainable world. We help make
Boston Consulting Group and is an our member companies more
expert on agriculture and nutrition. Advisor
successful and sustainable by
You may contact him via email at focusing on the maximum positive
mitchell.chris@bcg.com Nestlé
Magdi Batato, Executive VP impact for shareholders, the
Operations environment and societies.
Torsten Kurth is Managing Director Our member companies come
and Senior Partner in the Berlin Urs Schenker, Sustainability
Manager in Nestle Research from all business sectors and all
office of Boston Consulting Group major economies, representing a
and is BCG’s global topic lead for combined revenue of more than
agribusiness. OCP
Hanane Mourchid, Directrice USD $8.5 trillion and 19 million
You may contact him via email at employees. Our global network
kurth.torsten@bcg.com Sustainability & Green Industrial
Development of almost 70 national business
Imane Aboulfeth, Senior Project councils gives our members
Evelien Dupont is Partner in the
Analyst External Engagement unparalleled reach across the
Amsterdam office of Boston
globe. Since 1995, WBCSD has
Consulting Group and is an expert
Olam Food Ingredients been uniquely positioned to work
on sustainability in consumer
Ria Bakshi, Lead Finance for with member companies along
products. You may contact her via
Sustainability and across value chains to deliver
email at dupont.evelien@bcg.com
Rishi Kalra, Managing Director impactful business solutions to
COORDINATION and Group CFO the most challenging sustainability
issues.
Emeline Fellus is Director, Food Rabobank
Reform for Sustainable and Health Johan Verburg, Sustainability and Together, we are the leading voice
(FReSH) at WBCSD. You may Climate – Senior Advisor Policy of business for sustainability:
contact her by email at fellus@ & Risk united by our vision of a world
wbcsd.org where more than 9 billion people
Syngenta are all living well and within
Matthew Watkins is Manager, Food Roberto Vega, Global Head Value planetary boundaries, by 2050.
Reform for Sustainable and Health Chain www.wbcsd.org
(FReSH) at WBCSD. Varun Vats, Global Lead, Public
You may contact him by email at Policy and Partnerships Follow us on Twitter and LinkedIn
watkins@wbcsd.org
CONTRIBUTORS Impact Institute
Adrian de Groot Ruiz, Executive Copyright
Bayer Director
Gabriela Burian, Global Claire van den Broek, Public
Entrepreneurship Lead Copyright © WBCSD,
Partnerships / Multi-Stakeholder
September 2021.
Platform Lead
Prashanth Chakravartula, Unit BCG
Head, Business Planning Nour Mejri, Consultant
Sophia Warren, Sustainable Food Nkululeko Mhlongo, Senior
Systems Intern Associate
The
The True
True Value
Value of
of Food
Food AA powerful
powerful aid
aid to
to business
business decision-making
decision-making 15
15World Business Council
for Sustainable Development
Geneva, Beijing, Delhi, London, New York, Singapore
www.wbcsd.org
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