40 Full-cost accounting for sustainable food and nutrition security

Natural capital accounting, including food system impacts and dependencies, for informed decision-making

Organizers

  • Netherlands, Ministry of Economic Affairs
  • Natural Capital Coalition
  • International Finance Corporation
  • FAO

Abstract

The Sustainable Development Goals reaffirm the inter-dependency between food security and other sectors. Managing the trade-offs and synergies across different sectors requires understanding of all impacts and dependencies of the food sector on environmental and societal resources. Full-cost accounting seeks to guide decision-makers on such inter-dependencies and a first tool has been developed by the Natural Capital Coalition (NCC) and partners such as FAO: the Natural Capital Protocol and its accompanying Sector Guide for Food & Beverages. Relevant tools, aimed to increase food security and business opportunities in the longer term, will be presented, followed by a panel discussion around best practices and future challenges, with representatives from the Worldbank/IFC, governments, business and finance (to be selected).

Background:

The NCC is a global, multi-stakeholder open source platform for supporting the development of methods for natural and social capital valuation in business. It is made up of early adopters from the business, policy, accounting and NGO’s.

The Natural Capital Protocol (NCP) provides a standardized framework for business to measure and value their impacts and dependencies on natural capital. It has been developed in collaboration with businesses and was piloted in a number of settings, before being launched in July 2016.

The NCP Sector Guide for Food & Beverages was developed in collaboration with FAO to provide additional guidance and complementary information, in particular relating to the most relevant food system interactions through the value chain.

Relevant case studies that could be presented by panelists include:

A country-pilots of IFC/NCC in Rwanda (tea) and/or Indonesia (coffee), that links natural capital accounting by government and business (with preferably participation of business)

An example of truepricing at company level (Eosta, NL), creating a methodology that is usable at corporate, smallholder and finance levels

An example of measuring impact and providing levers for change for farmers in the dairy sector (developed by Friesland Campina NL, in collaboration with WWF-Netherlands and Rabobank)

Examples of policy measures to create an enabling environment for natural capital accounting.

Key speakers/presenters:

Welcome

  • Hans Hoogeveen, Netherlands Ambassador to the FAO

Key Notes

  • Mark Gough, Natural Capital Coalition
  • Nadia Scialabba, FAO

Panelists

  • Alice Ruhweza, Conservation International
  • Petri Lehtonen, InduFor Group
  • Michaël Wilde, Eosta
  • Moderation
  • Martin Lok, Ministry of Economic Affairs (Netherlands)

Summary

Full-cost Accounting and natural capital accounting and its potential importance for greening the economy and achieving world food security within the limits of the earth’s carrying capacity   

Experiences of practitioners with the application of full-cost accounting and natural capital accounting.

Mark Gough presented an overview of the emergence of and collaboration around Natural Capital approaches. He explained the concept of natural capital and outlined the four Stages of Natural Capital Protocol, including the underlying relevance of a capitals approach and the relation to other initiatives such as SDGs and  disclosure. Gough presented several examples of how valuing impacts and dependencies in the food and beverages sectorcontribute to better decisions for a better world.

Nadia Scialabba presented key FAO-reports on full cost accounting of food since 2013. Her presentation included Sustainability Assessment of Food and Agricultural Systems (SAFA, 2013), the Food Wastage Footprint study (2014) and Natural Capitals in Agriculture ( 2015). The last report focused on natural capital costs associated with farming and upstream supply chains for beef, rice, soy and wheat. Scialabba concluded with the need to improve data and KPIs and the possible added value of full-cost accounting for taking better decisions and monitor progress towards the SDGs.

The panel discussion aimed at sharing practical examples from different angles.
Alice Ruhweza shared her experiences with creating a sound dataset of relevant indicators on the food-nature nexus, which help governments and businesses to take better decisions. Petri Lehtonen brought the experiences of country pilots in Rwanda and Indonesia to the discussion, where the International Finance Corporation collaborated with the Natural Capital Coalition and others to link governments efforts to create Natural Capital Accounts (building on UN-SEEA) with business application of the Natural Capital Protocol. Michaël Wilde presented the experiences of a retailer communicating to their consumers the full costs of food, including both environmental and social externalities,  demonstrating that  organic food is not expensive, as compared to conventional food that is too cheap because of unpaid  externalities.

Key outcomes/take away messages

Collaboration amongst business, NGOs, governments, finance and academia is crucial to improve data quality and availability and to increase the application of natural capital thinking and full-cost accounting in relation to food security.

It is also key to invest in creating and sharing practical experiences that contribute to joint learning and help to create convincing and context specific storylines around the added value of natural capital and full-cost accounting.

There is a need to develop simple to use tools, datasets and key performance indicators (KPIs) that build on existing frameworks and methodologies and promote application by governments and agrifood enterprises, including SMEs. The FAO, IFC, the Natural Capital Coalition and Netherlands might consider creating proposals for collaborative action to develop these kind of tools, in collaboration with other interested governments and organisations.

Side Event - 40 - Full-cost accounting for sustainable food and nutrition security