Disclosure for a deforestation-free supply chain
17 November 2020
As corporate policies and commitments to achieve ethical commodity production and trade become the norm, expectations for reporting related to these goals have increased as well.
By AFi and CDP
As corporate policies and commitments to achieve ethical commodity production and trade become the norm, expectations for reporting related to these goals have increased as well. To guide companies in meeting these expectations, the Accountability Framework initiative and CDP are working together to provide clarity on best practice for corporate reporting to demonstrate progress toward eliminating deforestation and other forms of ecosystem conversion from their commodity supply chains.
To amplify and clarify essential action and disclosure by companies, CDP has aligned its 2020 Forests questionnaire with the Framework’s principles, terminology, and guidance. Companies that adopt the principles of the Accountability Framework will be better able to report to and score well against CDP. Companies that disclose comprehensively through the CDP Forests platform will also be reporting effectively against the Accountability Framework itself. Because the principles of the Accountability Framework represent consensus-based best practice, these disclosures will support companies in meeting the expectations of buyers, investors, and other stakeholders.
The report published today by the AFi and CDP shows that leading companies are not only are setting commitments to protect forests; they are also taking measures to implement these commitments, such as assessing deforestation risk, managing suppliers, and collaborating to support sustainable land use in producing regions. Yet progress is highly variable, with many key gaps remaining. This report highlights both progress and gaps so that companies and all stakeholders can focus efforts on what remains to be done to make deforestation-free supply chains the new normal.
This assessment will serve as a basis to track progress in the coming years. It also provides a window into the ways in which companies are responding to these challenges in different sectors and contexts, which may inspire further progress by companies that are just beginning their ethical supply chain journey.
Nearly half of the companies that disclosed on forests through CDP in 2019 had policies or commitments to produce or source one or more commodities free of deforestation or ecosystem conversion. However, the majority of those commitments were not fully aligned with the principles of the Accountability Framework in their terminology, use of cutoff dates, or inclusion of time-bound targets.
The majority of companies, and nearly all companies with robust no-deforestation commitments, were actively assessing deforestation and conversion risk in their operations and supply chains.
Supply chain traceability varied greatly, but in each commodity sector some companies were able to trace to sub-national levels and beyond, and the majority of companies sourcing from regions with high deforestation risk disclosed the origin of commodity volumes down to a sub-national level.
Roughly one third of companies used certification for at least some portion of the commodities in their supply chain.
Supplier engagement is common: each of the three types of engagement covered by the questionnaire (direct suppliers, indirect suppliers, and smallholders) were being conducted by at least half of the disclosing companies.
Fewer than 20% of the companies disclosing to CDP had a commitment to resolving complaints and conflicts through an open, transparent, and consultative process.
More than 80% of companies reported involvement in external sustainability initiatives, such as jurisdictional or sectoral collaborations.
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