True cost accounting

True Cost Accounting (TCA) is an accounting approach that measures and values the hidden impacts of economic activities on the environment, society and health. TCA is also referred to as “full cost accounting” (FCA) or “multiple capital accounting (MCA)”.^[1] The approach moves beyond purely economic thinking with the aim of improving decision-making in commercial organizations and in public policy. It includes accounting for natural capital, human capital, social capital and produced capital.

The True Cost Accounting approach can be applied to every sector of the economy. It aims to reveal the impacts of economic activities on society as a whole, in addition to the private costs directly incurred by producers and consumers. These can be environmental, health or social impacts that are not reflected in the market prices of products and services, i.e. not included in the operational profit and loss accounts, and so are regarded as hidden.^[2][3] True Cost Accounting is of particular relevance for agrifood systems (food and non-food agricultural products), where hidden costs can be substantial. Indeed, much of the development of TCA has historically been in the context of food.^[4][5][6][7]