Michel Scholte on The True Price Movement and Sustainable Economy

Summary

Michelle Salter, co-founder of True Price, presents a compelling case for integrating social and environmental costs into product pricing to create a sustainable economy. Drawing from personal experiences and the injustices in the global chocolate supply chain, she introduces the concept of 'true price'—the actual cost that includes factors like underpaid labor, environmental degradation, and social impact. Through the True Price Store and collaborations with businesses, Salter demonstrates how consumers are willing to pay a fair price that reflects these costs. Ultimately, she advocates for a shift towards a regenerative economy, where financial value fosters social and environmental progress.

Takeaways

• 😀 True costs are the social and environmental costs that are often externalized in traditional pricing models, leading to hidden societal impacts.
• 😀 Michelle Salter's personal story of growing up in poverty and later discovering systemic issues in the global supply chain motivated her mission to address true costs.
• 😀 The chocolate industry is an example of how farmers in poorer countries are underpaid and suffer from exploitation while large corporations profit from their work.
• 😀 The true cost of products includes environmental impacts such as carbon emissions, water pollution, and biodiversity loss, as well as social issues like underpayment and labor exploitation.
• 😀 True price is a concept that includes the social and environmental costs into the price of goods, making them more reflective of their true impact on society and the planet.
• 😀 A pilot project in Amsterdam demonstrated that consumers are willing to pay the true price for products if the value of sustainability is communicated effectively.
• 😀 Consumers' willingness to pay for true price is not only a response to ethical concerns but also an opportunity for businesses to foster a more sustainable economy.
• 😀 The True Price movement is gaining traction in retail, with mainstream retailers adopting true pricing models, leading to increased sales and consumer engagement with sustainability.
• 😀 True pricing methodology has been extended to various products, including food items like bananas and vegetables, with detailed breakdowns of the environmental and social costs associated with them.
• 😀 The concept of true profits takes a broader view of value, considering not only shareholder returns but also the impact on suppliers, workers, and the environment, driving a more inclusive financial system.
• 😀 By internalizing the costs of human rights violations, environmental damage, and other externalities, businesses and consumers can help create a regenerative economy that benefits society as a whole.

Q & A

What is the primary issue discussed in Michelle Scholza's presentation?

The primary issue is the externalization of social and environmental costs in the production of goods, which results in a significant gap between market prices and the 'true prices' that account for these hidden costs.

What inspired Michelle Scholza to begin exploring true pricing?

Michelle was inspired by her childhood experience of questioning why her family was poor, followed by her travels and encounters with impoverished communities, particularly farmers who were underpaid for their contributions to the chocolate industry.

How does Michelle Scholza define the 'true cost' of products?

The true cost includes not only the market price of a product but also the social, environmental, and remediation costs, such as underpayment of workers, pollution, and biodiversity loss, which are often externalized and not reflected in the market price.

What role does the chocolate industry play in the problem of externalized costs?

In the chocolate industry, farmers who produce cocoa beans are underpaid, often living in poverty, while the major chocolate companies profit immensely. The environmental costs, such as pollution and water scarcity, are also not factored into the retail price of chocolate.

What is the 'true price' of a product, and how is it calculated?

The true price is the cost of a product that includes not only the market price but also the social and environmental costs, such as compensation for workers, environmental remediation, and prevention of harm. For example, a chocolate bar might retail for 3 Euros, but its true price could be as high as 4 Euros when these additional costs are included.

How does the concept of true pricing aim to create a more sustainable economy?

True pricing seeks to ensure that the real costs of production are included in the price of goods, promoting accountability and sustainability. By including social and environmental costs, businesses and consumers can contribute to a more equitable and regenerative economy.

What experiment did Michelle Scholza's team conduct to demonstrate the success of true pricing?

The team opened a 'True Price Store' in Amsterdam, where they sold products with true pricing. Consumers were willing to pay the additional costs once they understood the true impact of their purchases, leading to a 5% increase in sales after true prices were introduced.

What has been the response of mainstream retailers to the true pricing movement?

Mainstream retailers, including a major supermarket in the Netherlands, have joined the true pricing movement. They have seen positive responses, such as voluntary payments from consumers willing to pay the true price, even without it being mandatory.

What is the 'true profit' concept, and how does it extend traditional accounting?

The true profit concept extends traditional accounting by not only measuring financial returns for shareholders but also accounting for the financial impact on suppliers and the broader social, environmental, and human capital involved in production.

How does Michelle Scholza envision the future of true pricing in education and business?

Michelle envisions true pricing becoming a standard part of economics education worldwide and being increasingly incorporated into business practices. This would make true pricing the new norm for future entrepreneurs and consumers, helping to create a more sustainable and regenerative economy.