The impact of labelling “true price” on effectiveness and consumer acceptance

Current food systems contribute significantly to environmental challenges, such as greenhouse gas emissions or biodiversity loss. To accelerate the green transition towards more sustainable food systems that can provide nutritious, safe and affordable foods for future generations, we need to disrupt current practices. True cost accounting (TCA), which aims to internalize externalities that are associated with production and consumption, is based on well-established environmental economics principles, but rarely implemented in practice. Also, it is difficult for consumers to assess the sustainability of products based on prices alone, which may make them both less responsive to and accepting of TCA. In line with current discussions on sustainability labelling in the EU, we therefore propose combining TCA with “traffic light” color-coded sustainability labeling to guide consumers under a “true price” paradigm. Based on two incentive compatible shopping experiments in a university’s virtual reality supermarket and an online survey with a representative sample, we find that sustainability labelling increases shoppers’ inclination to choose the most sustainable alternative. However, shoppers tend to find the higher true prices less fair, with fairness being the most important factor for accepting higher true prices. We discuss our findings in the light of current and planned legislation and provide actionable insight for decision-makers.