Operational Guidance on:
Monitoring and Verification
Purpose & Summary
This Operational Guidance elaborates norms and good practices on monitoring and verification (M&V) related to company commitments on topics within the Accountability Framework scope. It focuses on environmental and social outcomes associated with raw material production and primary processing. The guidance includes:
- Elaboration of approaches for monitoring the implementation and outcomes related to company commitments at three levels: i) the supply-base, i.e., production units and primary processing sites; ii) areas or jurisdictions from which companies source; and iii) the suppliers from which companies source
- Guidelines for the design of effective monitoring systems
- Guidelines for credible verification of compliance and progress to provide the necessary level of assurance for both internal management and external stakeholders
- Information on suitable monitoring tools and metrics (in the Annexes)
This high-level guidance on credible and effective M&V is intended to apply across a range of commodities and contexts and may be adapted through the development or adoption of context-specific M&V systems, tools, and processes.
Topics in this Guidance
The purpose of this Operational Guidance is to provide clear and consistent guidelines and good practices for monitoring and verifying the fulfilment of company supply chain commitments on topics within the Accountability Framework’s scope. This material expands upon Core Principle 11, which outlines high-level expectations related to monitoring and verification (M&V). As with the Accountability Framework overall, the voluntary commitments being monitored and verified refer to:
- No-deforestation supply chains and protection of forests
- No-conversion supply chains and protection of other natural ecosystems
- Respecting human rights (including rights of indigenous peoples, local communities, and workers)
This Operational Guidance builds from existing credible and accepted practices for monitoring and assurance of environmental and social performance. It also incorporates emerging innovations in M&V made possible by new technology and necessitated by the imperative for M&V to become more effective, cost-efficient, and scalable if it is to support the fulfilment of supply chain commitments at a sector-wide level.
Monitoring and verification are closely related activities, and there can be a great deal of overlap in their respective methods, tools, and approaches. Sections 2 and 3 below concentrate on monitoring, recognizing that much of this material is also germane to verification practices. Section 4 complements this material by providing guidelines specific to verification.
M&V is an integral part of a company’s overall due diligence and supply chain management system. Readers are therefore encouraged to review the Operational Guidance on Supply Chain Management when developing or evaluating an M&V system and when assessing its degree of alignment with the Accountability Framework. That Operational Guidance provides further information on supply chain mapping, traceability, risk categorization, and supplier management processes.
Additionally, this guidance concentrates specifically on M&V activities carried out within a company’s own operations and supply chains. To maximize monitoring efforts and outcomes, companies are also encouraged to engage with other companies, civil society, government and other actors to jointly monitor performance and outcomes in overlapping sourcing regions and/or through sectoral initiatives (see Operational Guidance on Achieving Commitments Through Collaboration).
Box 1: Some key challenges related to supply chain monitoring and verification
M&V of supply chain commitments has proven challenging for many of the companies that have issued such commitments and are working to honor them. Key challenges and barriers include:
- Traceability: Downstream companies often are not able to gain access to key information about their direct and indirect suppliers, including producers and primary processors that are most directly linked to on-the-ground social and environmental conditions. This can be particularly challenging when sourcing from smallholders or independent suppliers, or through spot markets.
- Monitoring metrics: Clarity on what to monitor at the supply-base level is often lacking. Companies may also receive divergent expectations or advice as to the metrics they should use.
- Local capacity: Suppliers may lack the capacity or resources to conduct M&V that meets the requirements or expectations of their customers (e.g., downstream companies) and other stakeholders. This often reflects the constraints within which suppliers operate as well as limited support from buyers to suppliers to fulfil, monitor, and verify commitments. In many contexts, there is also a dearth of qualified professionals or organisations to provide effective M&V services. It is often challenging for companies to prioritize which suppliers to support, and in what ways, to help drive impactful engagement and positive outcomes.
- Detection of non-compliant suppliers and actions: Traditional M&V tools and approaches are often not able to detect non-compliant behavior and conditions. This is especially true for human rights issues, for which geospatial monitoring tools are generally not suitable and for which it is necessary to use a variety of ground-based methods (e.g., worker interviews).
- Use of existing monitoring systems: Companies are not always clear on whether and how they should utilize existing governmental, sectoral, or other context-specific monitoring systems and tools as part of their supply chain monitoring efforts, given that the capabilities and limitations of these systems and tools vary widely.
Box 2: What is meant by monitoring and verification (M&V)?
M&V is an iterative, ongoing process that companies use to assess and demonstrate compliance, performance, and progress with respect to their supply chain commitments.
Monitoring is an ongoing function that uses the systematic collection of data on specific indicators to assess and document the extent to which actions, progress, and compliance are being carried out or achieved.
Verification is an assessment and validation of compliance, performance, and/or actions relative to a stated commitment, standard, or target. It utilizes monitoring data and other information sources as input to the verification process.
Given the integrated nature of M&V, the methodologies, tools, and approaches used for monitoring may be similar to those used for verification.
1.1 Scope and applicability
Robust monitoring and verification systems are essential components of company operations, supply chain management, and accountability. Internally, M&V enables companies to assess performance relative to company commitments in order to facilitate internal learning and adaptive management of operations and supply chains. Externally, as presented in Core Principle 12, companies are expected to report regularly on commitment progress and outcomes, and M&V systems are critical for providing such information to buyers, investors, and civil society in a credible and consistent way.
While companies are expected to monitor and report on the presence and status of policies, practices, systems and other elements within their supply chains, the focus of this guidance is the monitoring and verification of social and environmental outcomes associated with raw material production and primary processing at the supply-base level. This level is where supply chain commitments often fall short and where companies may not have systems in place to allow for such monitoring.
This guidance is applicable to both suppliers of agricultural and forestry commodities and companies that have those commodities in their supply chain:
- Upstream supply chain actors (i.e., producers, primary processors, and in many cases companies such as traders that buy from these entities and have visibility to the supply-base level) are in the position to conduct monitoring of on-the-ground conditions and to provide downstream buyers with monitoring information on these operations.
- Downstream companies that purchase commodities or derived products (i.e., buyers that manage a portfolio of suppliers) are expected to monitor the control systems of their suppliers as a means of ensuring suppliers’ compliance or progress toward fulfilling commitments, including monitoring of how non-compliance is identified and addressed. Information about compliance derived from these monitoring systems can be used as a proxy to assess outcomes related to commitments. When this information is not available, downstream companies may need to monitor outcomes more directly by monitoring sourcing areas and/or improving supply chain traceability so that outcomes can be monitored at (or closer to) the point of origin. Buyers are also expected to collect and utilize M&V data from across their sourcing portfolios to inform decision-making toward full compliance and to provide composite information about fulfilment of commitments.
Many companies – such as processors, traders, and some manufacturers – are both suppliers and buyers of raw, processed, or manufactured materials, and therefore play multiple roles in support of M&V. Ultimately, the company making environmental and social commitments (whether it is a buyer, a supplier, or both) is responsible for monitoring progress and demonstrating fulfilment of its commitments and impacts of its operations.
 More specifically, the supply-base level includes: 1) production units, i.e., farms, plantations, farmer groups, forest management units, and the like; 2) primary processing facilities – such as mills, slaughterhouses, silos, and aggregation sites – and their associated supplysheds; and 3) groups of production units and primary processing facilities located in close geographic proximity and under common management. Downstream trading and processing operations, such as manufacturing and shipping, are not considered as part of the supply-base level.
1.2 Assessing progress toward fulfiling commitments
While companies are ultimately accountable for full compliance with their respective commitments (e.g., no-deforestation, no-conversion, and respect for human rights), this may take time to achieve. Therefore, as indicated in Core Principle 11.1, M&V systems need to assess not only compliance with commitments but also incremental progress towards compliance. To effectively measure progress towards compliance, monitoring should assess two types of results:
- Implementation of commitments, including actions taken by companies and their suppliers to achieve compliance.
- Outcomes of commitments, as reflected in metrics of ecosystem protection and respect for human rights, and trends in these metrics over time. Information on outcomes is used to demonstrate both progress (i.e., partial realisation of a commitment or target) and compliance (i.e., full realization of a commitment or target).
Monitoring systems that track progress towards full compliance should be used by companies to manage and accelerate implementation of their commitments. As discussed in the Operational Guidance on Supply Chain Management, buyers should have policies and processes in their supplier management systems to address stagnating progress or repeated or systemic non-compliance.
Box 3: Relationship to existing initiatives and standards
As stated in Core Principle 11.6, and further referenced in Core Principles 5 and 12, certain existing control systems (such as certification, credible trader-managed control systems, or sectoral initiatives) may fulfil some or all of a company’s M&V needs for the areas or product volumes for which they are used. Companies that use or are interested in using such systems should assess the extent to which they address the elements of the Core Principles and the expectations for M&V elaborated in this Operational Guidance. Where gaps are found, companies must take complementary actions (or utilize complementary tools) to ensure that the company’s overall M&V system is adequately credible and comprehensive.
The Collaboration for Forests and Agriculture (CFA) is an initiative designed to support no-deforestation and no-conversion supply chains in the Amazon, Cerrado, and Gran Chaco regions of South America. Their guidance for advancing these commitments (see the DCF Regional Guidance) is closely aligned with the AFi, and provides more contextualized guidance for monitoring of land use change in those ecosystems.
 As clarified in the Definitions and Core Principles, the term “non-compliance” is used throughout the Accountability Framework to include non-compliance with company commitments or applicable law related to the Accountability Framework’s scope, as well as adverse impacts to internationally recognized human rights.