Ethical Pricing

What do we really pay for when paying for cheap products? We may think that we are paying less, but we may be unaware that these cheap products, whose production generates huge environmental and social impacts, actually cost us more in the long run.

The damages to the environment and to society and communities engender hidden costs - known as externalities - that are paid by all of us in various forms eg. taxes, communal costs (Kryachkova, 2016).

In trying to achieve the United Nations Sustainable Development Goals (SDGs), and especially Goal 8 “Decent Work and Economic Growth”, businesses are starting to adopt the Corporate Social Responsibility (CSR). This takes into account social, environmental, ethical, human rights and consumer concerns (Crifo and Forget, 2012).

Sustainability is also becoming more included in the pricing strategies of businesses. The notion of true value pricing is emerging. This is a strategy that allows us to know the real price of products based on environmental, social and economic impacts once the externalities - that is the hidden costs - are taken into account.

Calculating every cost that goes into producing and consuming products thus allows the assessment of the impact a business has on the society and the environment (Kryachkova, 2016). Ethical products, that are respecting society and the environment, may then appear more expensive, but this can be justified by the accounting for the long-term costs of unethical products (Kryachkova,2016).

To learn more about the UN SustainableDevelopment Goals, see https://www.un.org/sustainabledevelopment/sustainable-development-goals/

‍

Bibliography:

CRIFO, Patricia and FORGET, Vanina (2012) The Economics of Corporate Social Responsibility: ASurvey. Available on https://hal.archives-ouvertes.fr/hal-00720640/document

KRYACHKOVA, Larisa(2016) Triple Bottom Line and the Business-to- Business Pricing Challenge. An Integrated Approach. Building Sustainable Legacies 9.

‍