Expectations for corporate sustainability reporting are increasing each year. As companies and their stakeholders gain a greater understanding of sustainability issues in agricultural and forestry supply chains – from GHG emissions and regenerative agriculture to human rights, deforestation, and conversion – companies are faced with a growing number of non-financial disclosure requirements from their investors, customers, and civil society.
To help companies navigate these expectations, the Accountability Framework initiative (AFi) provides clarity on sustainability reporting on forest-risk commodities, such as palm oil, beef, soy, cocoa, and pulp and timber. It does this in two primary ways. First, the Framework itself includes a standard approach to reporting on deforestation, ecosystem conversion, and human rights related to forest-risk commodities. Second, the AFi collaborates with key reporting standards and initiatives to align their indicators with the Accountability Framework and increase consistency between reporting systems.
To clarify expectations on reporting content, the Framework’s Operational Guidance identifies four key elements of reporting that apply for all agricultural and forestry commodities and all companies across the value chain:
- Exposure and risk: To provide an accurate picture of their exposure to environmental and social risk, companies should report information about their roles in commodity production and trade, land holdings and concessions, and commodity purchases. They should also identify and describe salient risks to ecosystems and human rights linked to their operations or supply chains.
- Implementation and management systems to address this risk and achieve responsible supply chains: To show progress towards ethical supply chains, companies should report on their systems and activities to address deforestation, conversion, and human rights risks and impacts. These include risk assessments, supplier management systems, land use planning and land management policies and practices, monitoring systems, and assurance mechanisms such as certification. A list of relevant implementation systems is included as an annex to AFi’s reporting guidance.
- Levels of supply chain traceability and control: Companies should report on the proportion of the commodities they source that are traceable to each applicable level or stage of their supply chains. Reporting should also cover the proportion of supply chain volume and/or the subset of their suppliers for which the level of compliance with the company’s commitments is known.
- Outcomes: Companies should report on both the degree of compliance with supply chain commitments and environmental and social outcomes on the ground. This includes reporting on the degree to which goals have been fulfilled, and progress toward that fulfilment. When possible, it should also include on-the-ground outcomes such as the area of deforestation or conversion associated with their operations or supply chains.
While the Framework’s guidance provides examples of indicators on these four elements, the AFi does not provide a reporting platform or prescribe specific KPIs. This is because there is often value in defining specific KPIs for each reporting topic based on the specific context of each company. Additionally, companies are already using various reporting standards and tools, and many of these have effective indicators for reporting on each of the four elements for some or all of the scope of the Accountability Framework. The AFi is also working with many of these reporting systems to improve the consistency and alignment of the indicators on which companies are asked to report. For example:
- Companies can use relevant Global Reporting Initiative (GRI) standards to report on most aspects of implementation and outcomes in the scope of the Accountability Framework. The forthcoming Agriculture and Fishing sector standard will clarify topics for reporting in this sector and is expected to include new indicators on ecosystem conversion, aligned with the Framework. Once this standard is released, it will likely allow for comprehensive reporting on all elements of the framework.
- As of 2020, the CDP forests questionnaire has been revised to align with the Accountability Framework. Companies can use CDP Forests to report effectively on all Framework elements related to deforestation and conversion, and many of the elements related to land rights.
- The UNGP Reporting Framework, which guides company reporting against the UN Guiding Principles on Business and Human Rights, provides structure for reporting on policies and implementation on elements of the Framework related to workers’ rights and rights of indigenous peoples and local communities.
- The Implementation Reporting Framework facilitates volume-based reporting on compliance of palm oil volumes with commitments to no deforestation, no peatland conversion, and no exploitation (NDPE).
While it might not solve all of your company’s reporting headaches, the Accountability Framework can help you better align your reporting with the expectations of your stakeholders. And by working behind the scenes with reporting systems, the AFi is helping to increase the alignment among reporting standards and indicators to streamline the work of companies to report their sustainability progress.