External costs in catering. Part 1: specific tips for catering contracts

The Ministry of Agriculture, Nature and Food Quality (LNV) is working with the Food transition coalition on a multi-year programme called Experimenting with True Pricing, in order to put the pricing of environmental damage into practice. CE Delft has brought together caterers and clients as part of this experimental programme. This first publication answers the question: ‘How can working with external costs be incorporated into catering contracts?’

By external costs we mean the costs that we as a society incur, but for which no one is currently paying a financial price.  Both environmental and social costs are relevant. In this publication, we describe various methods and databases that you can currently use to calculate external costs.

There are a number of advantages to working with external costs:

1. It aims to improve ‘the big picture’: all aspects are compared with each other.
2. It forms a good basis for monitoring, which assists in the transition to sustainable catering.
3. It is an effective approach because of its focus on hotspots.
4. It forms a good basis for communication with consumers.
5. It allows for creativity in finding solutions, since no solutions are prescribed.

The first step to working with external costs is to create insight. Actually making people pay for external costs is a second step. Both steps can make the food system more sustainable. Firstly, the insight will provide a price incentive to buy products with a lower environmental impact. If consumers do buy products with a lower environmental impact, the food system as a whole will become more sustainable. Secondly, any proceeds can be used to reduce the environmental impact in the supply chain. This can be done by donating the monetary proceeds to existing funds and sustainability projects in agriculture, or by channelling the monetary proceeds directly to producers in their respective chains.

The publication mentions a number of examples of possible criteria that clients can include in the tender documents, at different levels:

1. The tenderer will cooperate in understanding external costs (basic).
2. Experience in calculating external costs is mandatory (significant).
3. The translation of our vision on how to deal with the pricing of external costs by clients (significant).
4. More experience with pricing of external costs is rated higher (ambitious).
5. A vision of the services and the cooperation, including an operational and improvement plan (ambitious).

Other publications within this project are:
Part 2: The environmental costs of catering in three company restaurants
Part 3: Experiment with paying environmental costs in company restaurants (expected in 2023)