EY supported Eosta in its journey to measure and monetize externalities for fruits & vegetables by means of ‘True Cost Accounting’. This work underscores the superior performance of organic over non-organic products in terms of environmental as well as social performance.
Value creation is what drives investors and decision making by business leaders. However, in reality, true value creation can be hidden under the surface and can therefore become merely a qualitative factor in investment, business or consumer decisions. The reason being that companies create externalities (positive and negative) that remain unquantified as well as unpriced.
Eosta has therefore taken the initiative to start measuring its true value creation by means of a True Cost Accounting (TCA) project. This allows Eosta to evaluate and compare the impact from its organic and non-organic vegetables and fruits.
This project had the objective of revealing the impact at the company, product and farm level; to facilitate ‘integrated thinking’ for Eosta, its growers and its consumers. Eosta is the first SME in the food and agricultural sector to deliver such results.
In cooperation with Soil & More, EY used the Natural & Social Capital Protocols (by the Natural Capital Coalition and the World Business Counsel for Sustainable Development respectively) to scope, measure and value externalities across the products life cycle. The impacts in scope for this project were: soil erosion, climate change, water, livelihoods and health impacts due to pesticide exposure.
Data gathering was performed for several fruit and vegetables, together with growers and Eosta, in order to assess the impacts. To measure health impact, industry averages were estimated based on the work by Fantke et al. This analysis was the first project to include such work on health aspects.
The overall results were consolidated into product as well as company dashboards for organic and non-organic production.
Our work revealed to Eosta the magnitude of several impacts, mainly related to the difference between organic and non-organic fruits & vegetables. For instance, the health impact due to consumer exposure to pesticides proved to be material (0,19 € per kg difference between organic and non-organic products). Additionally, our analysis showed a material contribution to climate change due to shipping & transportation to the true costs of several fruits and vegetables.
This project helps Eosta to focus on the main contributors to environmental impact and to further optimize its value creation. Moreover, this project revealed the required next steps for further optimization: we learned for instance that soil fertility is one of the key areas for future enhancement & research. The project results are currently being used to integrate True Cost Accounting into Eosta’s business and to facilitate integrated thinking.