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

Introduction

Abstract

This chapter introduces the Handbook, outlines who it has been developed for and provides key definitions.

This OECD-FAO Business Handbook on Deforestation and Due Diligence in Agricultural Supply Chains (Handbook) aims to help companies embed considerations on deforestation and forest degradation in corporate due diligence procedures. It builds on the risk-based due diligence framework set out in the OECD-FAO Guidance and the OECD Due Diligence Guidance for Responsible Business Conduct.

The Handbook provides background information, resources and practical actions that enterprises can take when implementing each of the steps of risk-based due diligence in line with the OECD-FAO Guidance. It draws on current corporate practice, including existing tools and resources, data and metrics that are available to support enterprises when they consider how best to identify and avoid deforestation and forest degradation.

Key definitions

Deforestation: The FAO defines deforestation as the conversion of forest to other land use independently whether human-induced or not (FAO, 2020[3]).

Forest degradation: There is no FAO or other standard definition for forest degradation; the FAO encourages countries to define it themselves. The definition included in the Accountability Framework proposed by a group of international NGOs, which applies to other natural ecosystems as well as forests, is: “Changes within a natural ecosystem that significantly and negatively affect its species composition, structure, and/or function and reduce the ecosystem’s capacity to supply products, support biodiversity, and/or deliver ecosystem services” (Accountability Framework, 2020[4]).

For a full list of definitions, see the Glossary.

Who is this Handbook for?

The Handbook is designed for enterprises in agrifood supply chains which source or use commodities and products that may be associated with deforestation or forest degradation. While the Handbook is primarily concerned with the impacts of land use, planting and harvesting on forests, it can be used by enterprises along the entire supply chain, from production to retail.

Increasingly, companies are introducing risk-based due diligence approaches in their policies and procedures to help guide their responsible sourcing efforts and promote responsible business conduct. Many small- and medium-sized enterprises (SMEs) struggle to address trade and market requirements linked to responsible business conduct, including deforestation. To help smaller enterprises address deforestation, each chapter of this Handbook features a box with suggestions on how SMEs can introduce risk-based due diligence in line with the OECD-FAO Guidance.

The Handbook can also be a resource for financial institutions as they assess and evaluate potential business partners’ policies and activities relevant to due diligence expectations and potential deforestation. Annex A of the Handbook lists resources related to deforestation.

Forests, natural ecosystems and conversion

The due diligence framework described in this Handbook applies both to deforestation and forest degradation. For ease of reading, the term ‘deforestation’ is here used to apply to both.

Forests are not the only natural ecosystem that may be adversely affected by conversion to agricultural production. Savannah, grasslands, peatlands and wetlands, among others, can also be at risk when considering land use. Many due diligence policies adopted by enterprises now cover the conversion of these ecosystems alongside forests, and incorporate references to, for example, the protection of high conservation value and high carbon stock areas. While this Handbook focuses only on forests, the due diligence steps it describes are generally also applicable to the conversion of other natural ecosystems.

A full list of definitions used in this Handbook is included in the Glossary.