Operational Guidance on:
Reporting, Disclosure, and Claims
Purpose & Summary
The increasing number of companies making ethical supply chain commitments has coincided with increasing expectations for corporate reporting and disclosure on sustainability issues. Companies must demonstrate progress towards their commitments through accurate, thorough, and timely reporting so that their investors, business partners, governments, civil society, and consumers can make decisions based on credible information. In addition, companies may wish to make claims about the extent to which they have fulfilled their commitments or made progress towards doing so. This Operational Guidance elaborates on Core Principle 12, specifying good practice for company reporting, disclosure, and claims related to commitments that address the Accountability Framework’s scope (i.e., halting deforestation and ecosystem conversion and respecting human rights).
The guidance addresses four primary topics:
- Overview of reporting on supply chain commitments: Section 1 outlines good practices for aggregate-level public and business-to-business reporting on the implementation and outcomes of ethical supply chain commitments. It also discusses the use of existing systems for reporting on commitments within the scope of the Accountability Framework.
- Content of company reporting: Section 2 provides expectations for reporting on exposure to risk, implementation of commitments, traceability and control of commodity supply, compliance with commitments, and outcomes of commitments. This guidance has been developed in consultation with several leading reporting and assessment initiatives that focus on the topics within the Accountability Framework’s scope. It is designed to align with (and help improve alignment among) the systems by which companies are assessed externally by their buyers, investors, civil society, and other stakeholders.
- Information disclosure regarding the supply base and suppliers: Whereas the first two sections address aggregate-level reporting by companies or business units, Section 3 addresses disclosure related to specific origins and suppliers within companies’ operations and supply chains. This information is intended to foster greater transparency and stronger accountability around ethical supply chains.
- Claims: Section 4 explains how companies can develop and substantiate robust and credible claims related to progress towards or fulfillment of commitments within the Accountability Framework’s scope. This material builds directly on Sections 1-3 and other parts of the Framework, as monitoring, verification, reporting, and disclosure practices that adhere to AFi-specified good practices provide a strong foundation for credible claims.
Topics in this Guidance
Public and B2B reporting on progress towards and fulfillment of company commitments should include information on at least the following four components:
- Company exposure to environmental and social risks.
- Management systems and activities related to the implementation of commitments.
- Degree of traceability and/or control in the company’s supply chain.
- Outcomes of commitments in regards to: a) progress towards or fulfillment of the commitment itself; b) the resulting outcomes on the ground.
Company reporting should use standardized, technically sound, and appropriate metrics to ensure that reported information is accurate and sufficiently detailed, and to facilitate the comparability of findings over time and across companies, geographies, and sectors. Metrics used for reporting should include information on whether and how the company is working to implement applicable elements of the Accountability Framework. In order to facilitate consistent reporting and assessment on topics within the AFi’s scope, several major reporting, assessment, and monitoring initiatives are working to align their metrics with the elements of the Framework (see Box 3).
Selection of metrics that are appropriate for a given company will depend on the nature of its business and the context in which it operates – particularly the supply chain stage(s) at which it works. For example, guidance in Section 2.2 related to reporting on implementation activities and systems address both activities on the ground (typically most relevant to producers, processors, and some intermediaries) and through supply chain management and monitoring systems (typically most relevant to intermediaries and downstream buyers). Companies should include those metrics that are relevant to their business, context, and supply chains in their reporting.
In addition to reporting based on appropriate metrics, company reporting should include qualitative and descriptive information and examples. The purpose of this information is to help explain and interpret the metrics-based reporting, as well as to provide additional detail on how the company is implementing its commitments; it can include different challenges encountered, how the company is working to address and overcome these challenges, how the implementation of commitments has led to improvements or impacts, and how the implementation of commitments is being adapted over time based on learning to date.
Box 2: Collaboration to align reporting and assessment of supply chain commitments
Strong accountability is predicated on an effective ‘accountability loop’ with three key components:
- clarity as to the expectations, parameters, and best practices in setting and implementing ethical supply chain commitments;
- the ability of companies to demonstrate progress towards and compliance with commitments in ways that are robust and interpretable to stakeholders; and
- the ability of stakeholders – including buyers, investors, consumers, and civil society organizations – to make informed and appropriate decisions based on objective and reliable information about the company performance that includes standardized and comparable measures.
The Accountability Framework is designed to address the first and second of these components, providing companies with clarity on setting, implementing, and demonstrating progress towards commitments. However, the AFi does not itself intend to assess companies. Therefore, to address the third component, the AFi is collaborating with several leading reporting, assessment, and monitoring initiatives to develop common and aligned approaches for assessment of company performance on topics within the AFi scope.
These initiatives – which include Supply Change, Forest 500, Trase, SCRIPT, CDP Forests, Ceres, ZSL SPOTT, and Global Forest Watch Pro – comprise some of the primary pathways through which buyers, investors, consumers, and other stakeholders gain information about company performance and outcomes relative to supply chain commitments. These initiatives each identify metrics and indicators for monitoring, reporting, and assessment that are appropriate to their scope, application, and target audiences. This collaborative effort will identify core metrics on relevant topics that can be used to harmonize reporting requests and assessment processes for topics addressed by multiple initiatives and by the AFi itself.
This collaborative process is intended to simplify, clarify, and harmonize reporting and assessment by:
- Increasing alignment in the relevant metrics and methods used by different initiatives to assess company performance; and
- Increasing alignment between metrics used by initiatives and the principles and guidance of the Accountability Framework.
Results of this process to date are reflected in this Operational Guidance and are increasingly being incorporated into the tools and methods of above-mentioned initiatives. These alignment processes will benefit both companies and those evaluating their performance by:
- Clarifying expectations for company reporting in line with the elements of the Accountability Framework
- Simplifying reporting requests made of companies, as there is convergence in the metrics used by different initiatives and alignment of these metrics with the Accountability Framework
- Increasing the interpretability of information available for decision-making by commodity buyers and investors
- Amassing a more complete, interpretable, and comparable dataset on company commitments and progress towards them
2.1 Reporting on company attributes, governance, and risk exposure
Company reports should include relevant contextual information on the company’s profile, governance, markets, employees, reporting practices, and other information necessary for stakeholders to understand the scope of the company’s business, the ways in which its business may be associated with social and environmental risks and impacts, and the company-wide systems or mechanisms used to manage these risks and impacts.
GRI Standard 102 includes a detailed set of required disclosures on company attributes, governance, and risk exposure aimed at providing information on:
- The company’s profile and the context in which it operates (i.e. organisation, location of operations, brands, information on its supply chains and markets)
- Key risks and impacts
- Company values and norms
- Company organisation
- Stakeholder engagement mechanisms
- The company’s reporting practice
These disclosures not only improve transparency about the company’s business and potential social and environmental risks, they also provide context for reporting on specific topics. For instance, information on number of employees and the nature of employment are important for understanding reporting related to workers’ rights. Companies are strongly encouraged to follow GRI Standard 102 or otherwise include similar disclosures on company attributes in their reporting.
Other tools are designed to cover exposure appropriate to specific topical scopes. For example, the CDP Forests questionnaire provides a comprehensive approach for reporting on exposure related to deforestation risks, while the UNGP Reporting Framework provides a helpful structure for disclosing risks related to human rights.
Regardless of metrics or reporting mechanism used, reporting on exposure to risks within the scope of the Accountability Framework should include information on the location, nature, and extent of company activities, as elaborated in Box 3.
Box 3: Key elements for reporting on company risk exposure
Companies should report information about their roles in commodity production and trade, land holdings, commodity purchases, and origins of these purchases to help clarify their level of exposure to risks of deforestation, conversion, and human rights violations. This reporting should include the following elements:
For all companies:
- Commodities that the company produces and/or has in its supply chain
- Supply chain role(s) for each commodity that poses social or environmental risks (e.g., producer, processor, trader, manufacturer, retailer)
- Countries in which the company operates or from which it sources, disaggregated by commodity and supply chain role if the company plays multiple roles.
For producers and companies owning or managing production land:
- Total land area owned, managed, or otherwise controlled by the company for each commodity
- Total production area owned, managed, or otherwise controlled by the company for each commodity
- Location(s) of commodity production (e.g., ha of production area per subnational jurisdiction) on land owned, managed, or otherwise controlled by the company
For buyers and downstream companies:
- Total volume of each commodity in the company’s supply chain during the reporting period
- Origin of sourced materials for each commodity (e.g., sourced volume per subnational jurisdiction)
 This section of guidance addresses aggregate metrics of company operations and exposure. In addition to this reporting on the complete nature of exposure, companies are expected to disclose information about the specific operations and suppliers included in these aggregated metrics. Further guidance on these disclosures is found in Section 3 of this document.
2.2 Reporting on management systems and activities related to the implementation of commitments
Companies should report on the management systems and activities used to implement commitments. Reporting should provide information on the existence, extent, and nature of each significant system or activity that is intended to help fulfill, monitor, or verify commitments. This includes both a company’s own activities and those of suppliers and other entities in its supply chain, as assessed through monitoring and other control mechanisms. Specific metrics for reporting may depend on the position of the company within the supply chain and the level of supply chain visibility. For instance, producers and upstream companies may focus their reporting more heavily on land use practices and engagement with communities, while downstream companies may focus their reporting on how direct and indirect suppliers are engaged to ensure effective control of supplies and actions to address any non-compliances.
Annex 1 provides a list of company activities that are identified in the Accountability Framework as essential for effective implementation of commitments. Company reporting should provide information about whether and how these activities are being carried out. Many existing reporting frameworks address certain aspects of commitment implementation processes but currently none provides a complete structure for reporting on all implementation activities and systems related to commitments within the AFi scope. Companies should therefore use existing frameworks in combination and/or supplement these with additional reporting to ensure that they include information on all key implementation components.
2.3 Reporting on traceability and control
Companies should report on the extent to which they know and/or control the origins of materials in their supply chains to assess and ascertain compliance with commitments. As described in Core Principle 5 and the Operational Guidance on Supply Chain Management, this may be done through full traceability and/or effective control systems. This aspect of reporting has two principal components:
- Traceability: Companies should report on the proportion of supply chain volume that is traceable to specific direct or indirect suppliers at each supply stage (e.g., farm or farmer group, mill or silo, trader, direct supplier) as well as the proportion of volume that is not traceable to specific suppliers but can be traced to specific areas of origin (e.g., radius around a mill, a jurisdiction, or a country). This information should be disaggregated by relevant factors including commodity, sourcing origin, or major suppliers.
- Control: Companies should report on the proportion of supply chain volume and/or the subset of their suppliers for which the level of compliance is known. This information should be disaggregated by the same kinds of relevant factors noted in the point above. If the company uses control systems to manage or ensure compliance of upstream suppliers, the identity of each such control system and associated product volume or supplier should be specified. Such control measures include some certification, identification of low-risk jurisdictions and/or participation in effective jurisdictional approaches, and verification of effective control mechanisms by direct suppliers.
In both cases, companies should report on the methodologies used to verify these traceability and control mechanisms.
2.4 Reporting on compliance with and outcomes of commitments
Companies should report accurate and complete information regarding the degree of progress towards fulfilling their commitments and meeting any targets or milestones specified in relation to those commitments. This reporting should include information about both the present level of compliance and the trend over time. In addition to reporting on progress towards compliance, companies should report on outcomes or impacts of company operations and supply chains on deforestation, conversion, ecosystem protection, and human rights. Companies should endeavor to demonstrate the ways in which progressive fulfilment of their commitments is linked to a reduction of negative impacts and/or increase of positive impacts of their operations and supply chain on natural ecosystems and human rights. This information should enable stakeholders to understand the extent to which companies have fulfilled their commitments and interim targets, year-on-year trends towards such goals and milestones, and real-world outcomes of that progress.
Information on compliance and progress may be derived through several different approaches and sources.These include:
- Monitoring data on the company’s own operations (e.g., production or processing sites) or supplier operations, collected by the company itself or by service providers or auditors in accordance with the Accountability Framework or other credible good-practice frameworks; this approach is most relevant for producers, upstream companies, and companies with visibility to the production base
- Receipt, aggregation, and verification of monitoring and management data collected by the company’s suppliers and furnished to the company upon request; this approach is most relevant for downstream companies and companies with limited supply chain visibility
- Data gathered through supply chain mapping and risk assessments that identifies the extent and origins of sourcing from sources, geographies, or jurisdictions that are demonstrated to be low risk for one or more of the social or environmental topics within the reporting scope
- Grievances and concerns received by the company (or otherwise known through reasonable efforts by the company) and the company’s response to these
- Verification conducted in the context of certification programs or other assurance processes
- Evidence of compliance with national and/or international laws, jurisdictional programs, or certification mechanisms that serves to demonstrate compliance with or progress towards aspects of the company’s commitment
In order to facilitate clear interpretation and comparability of reported information, metrics used for reporting outcomes related to commitments should:
- Quantify or describe such outcomes both in absolute terms (e.g., numbers of hectares or persons affected) and relative to the total scope or exposure of the company or its relevant business unit(s) relative to the given outcome (e.g., proportion of the company’s supply volume or proportion of its landbank affected)
- Refer to a consistent scope of operations across metrics and topics (e.g., metrics used to report on deforestation and human rights impacts should cover the same production areas, business segments, and suppliers)
- Provide a full and balanced representation of the conditions or trends that are being reported on, including both positive and negative aspects of company performance across the full scope of the relevant issue, production or sourcing area, or business unit to which the reporting pertains. For instance, reports should not state the volume of sourced materials that are compliant without putting this information in the context of the total volume of sourced materials and the volume that remains non-compliant.
The following subsections provide further detail about reporting on compliance with and outcomes of commitments. Section 2.4.1 elaborates on reporting related to progress towards compliance with commitments on all topics, Section 2.4.2 provides specific guidance for reporting on outcomes of no-deforestation and no-conversion commitments, and Section 2.4.3 presents additional considerations for reporting on commitments regarding the rights of indigenous peoples and local communities.
2.4.1 Reporting on progress towards and achievement of compliance with commitments on all topics
Companies should report on the degree of compliance with commitments across their full commitment scope. Reporting on compliance should:
- Provide contextualized information on the extent to which compliance for the material that they produce or source is known
- Demonstrate the extent to which progress towards compliance is occurring, and the degree to which commitments have been fulfilled
- Be disaggregated by relevant factors such as sourcing origin and commodity, as well as by each commitment component (e.g., supply chains are deforestation-free or respect workers’ rights)
Depending on their position in the supply chain, companies may report on the degree of compliance based on land area, supply chain volume, or major suppliers. In all cases, reporting on compliance should be contextualized in light of the company’s full operations and scope their commitments.
Frameworks and systems for reporting effectively and in a contextualized way on progress towards compliance are currently in development, including AFi-aligned efforts led by Proforest (See Box 4).
Box 4: The Responsible Sourcing Implementation Framework
The supply chain sustainability organisation, Proforest, with the involvement of several companies, practitioners, and other stakeholders, is developing a framework for reporting volumes at different stages of progress towards delivery of responsible supply chain commitments. Using this approach, companies can allocate volumes of commodities that they purchase or sell to different categories to provide an overall picture of progress across their business and track this year-to-year. This information can be communicated and cascaded down supply chains to facilitate clear and comparable reporting even in the case of complex and shifting supply chain relationships. Companies are encouraged to use this emerging system to report progress based on supply chain volume in a standardized and interpretable way.
Using this approach, companies should report on the proportion of supply chain volume that falls into each of the following categories:
- Source is unknown and compliance is unknown
- Source is known but compliance is unknown
- Source is known and product is known to be non-compliant
- Source is known and product is known to be actively progressing towards compliance
- Source is known and product is known to be compliant
Further details specifying each category, relative to different social and environmental commitments and commodity sectors, are currently in development. This material will be updated with new information or references as such details become available.
2.4.2 Reporting on outcomes of no-deforestation and no-conversion commitments
In addition to reporting on progress towards and achievement of compliance with commitments, companies should, whenever possible, report on the area of deforestation or conversion associated with their operations and/or their supply chains, as well as other land use outcomes related to degradation, conservation, and restoration as applicable.
For producers and companies with visibility and/or control to the level of the production unit, reporting on outcomes related to land use and land cover should be drawn from direct monitoring of production areas. For downstream companies, reporting may include information on land use and land cover aggregated from the reporting of suppliers, as well as estimates of potential impacts developed through monitoring at the scale of known sourcing areas. The Operational Guidance on Monitoring and Verification provides detailed guidance on these approaches to monitoring. Annex 2 of that guidance also identifies appropriate metrics that may be used to quantify outcomes related to deforestation, conversion, ecosystem protection, and restoration. These include metrics for use by producers and companies with direct visibility to the production unit as well as metrics for use by downstream companies. Box 5 identifies key considerations for reporting on outcomes related to deforestation, conversion, and ecosystem protection.
Box 5: Key considerations for reporting on outcomes related to deforestation, conversion, and ecosystem protection
Companies should consider the following guidelines to report on deforestation, conversion, and ecosystem protection in a way that is quantitative, credible, and interpretable.
For producers and other companies that own or manage land:
- Deforestation or conversion on land owned or managed by the company should be quantified in hectares
- Deforestation or conversion should be disaggregated by ecosystem type
- Conservation and/or restoration activities on land owned or managed by the company should be quantified in hectares and disaggregated by conservation status, designation, or approach
For companies that source raw materials or derived products from producers or other suppliers:
- When possible, information on deforestation or conversion embedded in materials in the supply chain should be quantified in hectares
- When land use change embedded in the supply chain is not known due to visibility and traceability constraints, companies should report on the extent to which materials are sourced from areas or jurisdictions where they may be associated with deforestation or conversion (see the Operational Guidance on Monitoring and Verification for further elaboration and examples)
- Information on conservation and/or restoration activities supported or facilitated by the company should be quantified in hectares and disaggregated by conservation status, designation, or approach
2.4.3 Reporting on outcomes of commitments to IP/LC rights
Companies involved in the acquisition, development, or management of land for commodity production or processing should report on compliance with and outcomes of their commitments to respect the rights of indigenous peoples and local communities (IP/LC). To provide a holistic picture of company efforts to identify, mitigate, and remedy harms to human rights, reporting on these commitments must focus on company actions and the explanation for those actions. Reporting systems designed to address risks and impacts to human rights, such as the UNGP Reporting Framework (see Box 7) and the Human Rights Compliance Assessment tool (HRCA), developed by the Danish Institute for Human Rights, provide greatest attention to processes and activities undertaken by companies, rather than on quantitative outcomes.
Reporting on company policies and impacts related to human rights requires the company to identify and describe salient risks to human rights linked to its operations. The company should report on efforts taken to avoid or mitigate adverse impacts to those rights, including examples that describe how policies and processes are implemented. Reporting should include discussion of challenges faced by the company in working to respect human rights and the company’s approach to understanding and addressing them. Finally, reporting should describe how and when the remediation of harms to IP/LC rights has been carried out.
For any identified risks to the rights of indigenous people or local communities, reporting on outcomes of commitments to respect those rights should, at minimum, include metrics that describe progress towards or compliance with the components specified in Core Principle 2. These include:
- Description and outcomes of due diligence methods used to assess and ensure that IP/LC rights and actual or potential harms to these rights are identified, avoided or mitigated, and tracked.
- Description of the application of Free, Prior and Informed Consent (FPIC) for all activities carried out by a company and/or its suppliers that may affect indigenous peoples’ and local communities’ rights, land, resources, territories, livelihoods, and food security. This includes identification of land development or site acquisition activities by the company and/or its suppliers that have recently or currently triggered an FPIC process, as well as the status of those FPIC processes and their outcomes.
- Description of measures to provide or cooperate in remediation where it has caused or contributed to harm to IP/LC.
- Responses and/or resolutions to any outstanding grievances, including status and timeframes.
In addition, companies are encouraged to report more broadly on processes and outcomes related to human rights using appropriate tools such as the UNGP Reporting Framework, which provides a set of prompts and associated guidance to lead users through the process of reporting on salient human rights issues in their operations and supply chain (see Box 6).
Complete reporting may require staff or consultants familiar with these topics and/or the use of more detailed tools specifically designed to identify potential harms and company actions related to IP/LC to apply the reporting initiatives effectively in context. Additional frameworks such as the HRCA, which provides a detailed list of questions and associated indicators on a range of topics related to IP/LC rights, may be used to derive more comprehensive metrics and approaches to reporting. Similarly, the Indigenous Navigator provides detailed indicators for reporting on structural, process, and outcome indicators relating to IP/LC rights.
Box 6: The UN Guiding Principles Reporting Framework
Reporting on commitments related to human rights requires the elaboration of company actions to identify, mitigate, and remedy potential or actual harms to the rights of indigenous peoples, local communities, workers, or other stakeholders. The UNGP RF provides a set of prompts to help companies report on their commitments to human rights, including IP/LC rights and workers’ rights. Companies are encouraged to use this or similar fit-for-purpose frameworks to guide reporting on human rights topics. Alignment of the UNGP RF with specific Core Principles is described in an associated resource.
The Reporting Framework instructs companies to:
- State the salient human rights issues associated with the company’s activities and business relationships during the reporting period
- Describe how the salient human rights issues were determined
It then asks a series of questions designed to guide companies through the process of reporting on salient human rights issues:
- Does the company have any specific policies that address its salient human rights issues?
- What is the company’s approach to engagement with stakeholders in relation to each salient human rights issue?
- How does the company identify any changes in the nature of each salient human rights issue over time?
- How does the company integrate its findings about each salient human rights issue into its decision-making processes and actions?
- How does the company know if its efforts to address each salient human rights issue are effective?
- How does the company enable effective remedy if people are harmed by its actions or decisions in relation to the salient human rights issues?
 See Proforest’s Accelerating implementation of responsible sourcing commitments: A Framework for Progress to 2020 and Beyond
 See the Human Rights Compliance Assessment tool, developed by the Danish Institute for Human Rights
 See the Indigenous Navigator