OECD-FAO Business Handbook on Deforestation and Due Diligence in Agricultural Supply Chains

Step 5: Report on due diligence to address deforestation

Abstract

Step 5 of the OECD-FAO Guidance is about reporting publicly on company efforts to implement due diligence.

Strategic questions for enterprises

• Do we report on deforestation risks identified in our supply chain and specific mitigation we have undertaken?

• Do we provide an annual update on our deforestation commitments and how we are progressing (or not) against them?

• Should our reporting be carried out through one document or through several discrete issue reports linked to our company deforestation commitments, or the commodities we handle, or through a chapter in our company report on sustainability?

• Have we incorporated the reporting recommendations according to the OECD-FAO Guidance?

• Do we share these reports with external stakeholders, and ask for candid feedback on what is good and what can be improved?

• How do our reports on due diligence contribute to improving our overall learning and improvement of due diligence to address deforestation?

• Do we publicly disclose our efforts on the different due diligence steps, including co‑operation with suppliers to mitigate deforestation risks from taking place?

Public Reporting

It is important that enterprises with exposure to actual or potential deforestation risks publicly and regularly report on their forest-related due diligence policies and practices (where appropriate as part of a wider framework, such as deforestation- and conversion-free objectives), with due regard taken to business confidentiality and other competitive concerns. This may include both qualitative information on system design and quantitative reporting on performance. This can provide affected stakeholders, business partners and investors with clear, accurate and timely information on actual and potential adverse impacts identified through ongoing impact assessments, and on the steps and measures taken to mitigate or prevent them.

Information that could feature in such reports includes:

• The enterprise’s commitments with regard to tackling deforestation and forest degradation, including not only the objectives (no deforestation or reduction of risk by a defined percentage, etc.) but also the enterprise’s definition of forests, deforestation and forest degradation, cut-off dates, scope in terms of commodities and geographies, and so on.

• The percentage of the enterprise’s production volume (both from land managed by the enterprise and sourced) that is determined to be deforestation-free or the percentage for which this not known.

• Summaries of the data and information collected, outlining the enterprise’s exposure to risks, progress made against each target and commitment (preferably in a time series, showing progress year by year) and any adverse impacts it may have caused or contributed to.

• The enterprise’s management systems, including its due diligence policy, specifying the management structure responsible for the company’s due diligence and who in the company is directly responsible.

• The risk analysis and mitigation systems put in place by the enterprise to address deforestation, including how they function and the control systems in place, including certification, traceability or chain of custody.

• How the information collected has been used to strengthen responsible sourcing and management, mitigate against risks, provide remediation and meet the enterprise’s commitments.

• Co‑operation with stakeholders and methods for disclosing information to all clients and suppliers, upstream and downstream, including in the context of identifying or managing the drivers of deforestation

• Information on compliance with any national legislative requirements and international standards on due diligence and deforestation.

Reporting on the enterprise’s due diligence systems and performance can take place in various contexts and formats, including the company’s annual reports, sustainability reports or specific reports on the enterprise’s impacts on forests. Reports can be made publicly available through the enterprise’s website, social media and meetings with stakeholders, including upstream and downstream partners. Communication needs to be appropriate to the impacts and audience in terms of its form (including translation into appropriate languages), frequency, accessibility, and the adequacy of information provided. Information collected can also be communicated to reporting frameworks, such as CDP Forests’ disclosure system, the Global Reporting Initiative (GRI) reporting standards, the supply-change.org website or national or international trade associations and groupings.

Reports should adopt clear and constant metrics, to facilitate monitoring and analysis at supply chain or country level, for instance. Enterprises should report on the outcomes of processes in all the due diligence steps, in line with the OECD-FAO Guidance; doing so could also contribute to alignment with reporting standards such as those of the GRI. For instance, with respect to step 1, enterprises could describe their policy commitments for RBC, provide links to these commitments (if publicly available, or, if not, explain the reason for this), report the level at which each of the policy commitments was approved within the organisation, including whether this is the most senior level, report the extent to which the policy commitments apply to the enterprise’s activities and to its business relationships, and describe how the policy commitments are communicated to workers, business partners, and other relevant parties. Moreover, enterprises should describe how they embed each of their policy commitments for RBC throughout their activities and business relationships.

Suggestions for SMEs

All SMEs:

• Decide how and when you want to communicate with your customers and business partners in the most resource efficient way; this can take place via email and supported by social media.

• Include relevant information on deforestation risks you identified and mitigation efforts in your annual reports, if you produce them.

• If your business participates in sub-national, national or international certification or forest protection initiatives, communicate your efforts to mitigate deforestation risks according to the OECD-FAO Guidance and this Handbook.

In addition, upstream SMEs can:

Consider making use of shorter regular updates posted on your premises, website or via social media.