Economía Agroalimentaria

The role of true cost accounting in guiding agrifood businesses and investments towards sustainability

Background paper for The State of Food and Agriculture 2023
Año: 2023
Autor(es): Riemer, O., Mairaj Shah, T. & Müller, A.
Editor: FAO

FAO Agricultural Development Economics Working Paper, No. 23-13.

This background paper to The State of Food and Agriculture 2023 describes how true cost accounting (TCA) and the lessons learned from its application can inform efforts to develop a sound economic foundation for sustainability in business and finance in agrifood systems. It looks at the current state of TCA in the business and financial sector, giving examples of different initiatives and resources available that have contributed significantly to the development of knowledge and guidance for TCA application within the private and financial sectors in agrifood systems. 

The paper recognises the value of drawing on the extensive groundwork that has been conducted under various TCA initiatives to develop ready-reference databases and tools for the private sector. It also acknowledges that numerous gaps need to be filled to ensure the mainstreaming of TCA. These include gaps in the standardization of methods, including indicators, impact pathways and valuation factors. Research and guidance are needed to help businesses integrate capital accounting into corporate governance, strategy and performance models. Overcoming these barriers will require coordinated efforts by different actors in agrifood systems. 

The great challenges of our time call for a new economic foundation for sustainability. The momentum at the international level to reform business accounting and reporting standards can support a transformation towards sustainable agrifood systems. So far, the initial success of agrifood businesses in applying and integrating TCA into decision-making shows that, given the right enabling environment, businesses can contribute to building socially, environmentally and economically sustainable agrifood systems. To achieve this transformation, however, standard-setting is needed to create a level playing field.

Tipo de documento: Documento de trabajo
Región: Global
ISBN: 978-92-5-138291-2
ISSN: 2521-1838
JEL codes: D47, D61, D62, G32, M21, M41, O16, Q13, Q14, Q56.