The AFi Coalition calls on companies to disclose progress towards deforestation-and conversion-free supply chains
19 April 2023
Transparency is key for ending deforestation and conversion in commodity supply chains
Companies that produce or source agricultural or forestry commodities are seeing ever-clearer expectations to eliminate deforestation, ecosystem conversion, and associated human rights abuses from their supply chains – and to be transparent about their progress. These expectations come from buyers, investors, regulators, and other stakeholders.
To understand company progress, credible disclosure is essential. Therefore, the Accountability Framework initiative (AFi) Coalition calls on companies to annually disclose the proportion of deforestation- and conversion-free (DCF) commodity volumes in their supply chains.
New indicators developed by the AFi and now available across several leading reporting and assessment platforms provide a clear and consistent way for companies to disclose performance and progress towards DCF supply chains. These consensus-based indicators are the result of collaboration between the AFi, leading reporting and assessment initiatives, and representatives from the private sector. They include metrics of traceability, land use change footprint, and proportion of supply chains that are DCF. These indicators have been integrated into reporting methodologies such as CDP Forests, which opens today for company disclosure
Disclosing DCF performance this year will enable stakeholders to understand and recognise progress as companies advance towards a range of climate and nature goals.
Disclosure in relation to the new indicators enables companies to:
- communicate performance and progress to their buyers, investors, and stakeholders in a clear and credible way
- fulfil transparency requirements of related targets and affiliations, such as the Science Based Targets initiative’s Forest Land and Agriculture targets and the Consumer Goods Forum (CGF) Forest Positive Coalition
- improve their ratings and gain positive recognition for transparency
- demonstrate leadership to support and enable sector-wide change
- prepare for forthcoming regulatory and mandatory disclosure requirements
The AFi Coalition, CDP, Forest 500, and other assessment initiatives will assess and recognise companies’ level of transparency on DCF volumes, apart from their current level of DCF performance. Disclosure of limited progress is preferable to no disclosure at all, and in 2023 CDP’s scoring will focus on completeness of the response. From 2024, performance related to DCF volumes will contribute significantly to a company’s overall CDP score.
Who should disclose?
All companies that produce or source agricultural or forestry commodities should disclose this information, regardless of their position in the supply chain or level of progress towards DCF supply chains.
What should be disclosed?
Companies should disclose the DCF status of 100% of the volumes of agricultural or forestry commodities that the company produces or sources across several indicators as follows:
- Report all volumes as either DCF (A, in figure below) or not known to be DCF (B).
- Disaggregate volumes known to be DCF according to the method used to demonstrate DCF status:
- area-level assurance (A1),
- farm-level monitoring (A2), or
- physical (segregated) certified volumes (A3).
- Designate volumes that are not known to be DCF as either:
- of unknown origin (B1), or
- from an origin with known deforestation or conversion (B2).
Methodological guidance on these approaches to assessing DCF status can be found in AFi’s guide on Deforestation- and conversion-free supply chains and land use change emissions.
Chart 1: Recommended structure of disclosure on deforestation and/or conversion-free status of 100% of commodity volumes
Companies should also report on engagement with suppliers and in sourcing regions to eliminate deforestation, conversion, and human rights abuses. Reporting should highlight actions that the company is taking to:
- avoid further conversion;
- support ecosystem protection;
- improve traceability;
- assess and manage supplier compliance; and
- assist suppliers in remediation and other improvement processes.
Disclosure on these actions should focus particularly on the portions of supply chains that are not shown to be DCF.
How can companies disclose?
Companies should include this information in their public sustainability reporting. Such reporting should be carried out using credible reporting standards such as the GRI Sector Standard for Agriculture, Aquaculture, and Fishing.
Companies are also encouraged to disclose through CDP’s Forests questionnaire, which incorporates these indicators in questions 1.5a and 1.5b.
These indicators have also been integrated into the Key Performance Indicators of industry groups such as the Consumer Goods Forum’s Forest Positive Coalition and may be reported on using these KPI templates.