Tuesday, April 23, 2013

What is REAL Cost? Part 2: The Food Business

The most important factor for businesses is often their bottom line. A monetary line drawn that says "this is where we win or lose." Considering REAL cost, where is the business' bottom line for environmental impacts? How would you calculate it?
I'm currently reading a book by Daniel Goleman, called Ecological Intelligence, where he details a business' lack of accountability to their ecological impact due to an inability to measure that impact. Economic impact is measured by ROI, or return on investment, which measures how much money you are getting back after taking into account the economic investment you put into your business so that it will continue to thrive.
ROI works similarly with our environmental impact. The more sustainable and eco-friendly we make our industries, and the better we improve upon our land's use and preservation (which is an investment), the better the health of our environment is going to be. Still, how do we make businesses we purchase our food from accountable for their environmental impact?
One of the most significant points Goleman makes is that businesses have to be honest and transparent to the consumer about their business practices and what effect they have on the environment. In the information age, consumers are already learning this kind of information from alternate sources anyway, so as a business, if you are upfront and honest to your customers, they may even be more generous later in supporting you, than if you had lied to them or tried to hide certain information about your practices originally.
The Dalai Lama said, "The lack of transparency results in distrust and a deep sense of insecurity." And he's right! Don't underestimate the shift in consumer spending from one product to the next if they find out you are hiding information from them. Be honest! It's the best way to retain customers for life.
Humans like to use math to validate their decisions, which is one reason statistics are so often used in arguments. Therefore, in order to measure those impacts, businesses need to look at the other costs of their products on the three different levels (yes, the same as those that consumers must pay attention to!):

  • The environmental impacts
  • The social and cultural impacts
  • The impacts on the health of humans and other species

Business can pay attention to how GoodGuide and the Environmental Working Group's Consumer Guides are rating their products, and strive to reduce those three above impacts. Find out where you can cut out negative inputs and outputs. Anything that the business pays for or uses to produce its product should be listed and evaluated, as well as any byproducts of production.
When you are a more accountable and transparent business, your customers will respect you more for the work that you do and the products you provide. I'm reminded of small farmers here, who at any time are usually happy to show you around their farm, how they produce the food they sell, and welcome questions about their business.
As a tie-in: Businesses need to understand the role they play in their customers' lives and the impact they have on the larger world, and consumers need to understand how their purchasing power affects business decisions, and the needs and wants they convey help change how business is run, and shows the impacts they support. The Food Industry can be sustainable, if businesses and consumers work together to ensure they are minimizing their impacts by understanding the REAL costs involved in producing and purchasing food and food products.
So, what is the best bottom line for a sustainable business? It is when the business, the consumer, and the environment are all winning.
If you own a food business or work in the food industry, what are some inputs and outputs you have minimized to lessen your impact on the environment? Leave your comments below! You can also check out Edible Knowledge's Facebook page to keep updated on the posts and other conversations about food and food culture!

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