This report aims to provide G7 agricultural policy makers with insights to better understand the design, objectives and mechanisms of national and regional, voluntary and mandatory due diligence-related measures. The report creates a fact-based selective inventory for policy makers to identify common elements across the measures with a view to strengthening, where possible, coherence of G7 policy responses to promote responsible business conduct in agricultural supply chains. The inventory also aims to help companies understand different national and regional standards by highlighting synergies and, where applicable discrepancies, to enable and support effective implementation.
Review of G7 Government-led Voluntary and Mandatory Due Diligence Measures for Sustainable Agri-food Supply Chains
Abstract
Executive Summary
G7 countries are increasingly taking action in response to growing concerns about environmental and human rights risks and impacts in agricultural supply chains while looking at ways to foster more resilient and sustainable food systems. Responsible business conduct (RBC) due diligence, as outlined in the OECD Due Diligence Guidance for RBC, is a key reference point in this context. It helps companies to identify, prevent, mitigate and account for potential and actual adverse environmental and social risks and impacts of their operations, supply chains and other business relationships.
Due diligence processes can be incentivised through a range of voluntary and mandatory policy measures. This report and the selective inventory (see Annex A) identifies 24 policy measures among G7 countries that can be applied to agricultural supply chains. The report classifies each of the government measures into one of five categories:
mandatory measures: (1) corporate due diligence disclosure measures; (2) trade-based measures; and (3) mandatory due diligence measures.
voluntary measures: (4) government guidances; and (5) government-led partnerships and initiatives.
Ten (42%) of the 24 measures are mandatory, of which three are corporate due diligence disclosure measures, five are trade-based measures and two are mandatory due diligence laws. Fourteen (58%) are voluntary measures: four are government guidances and ten are government-led partnerships and initiatives.
These measures, many of which have been introduced in the last three years, vary significantly in design, scope and objectives. Some of the main variations identified include the following:
RBC risk scope: the measures vary in whether they take a broad or narrow approach to the environmental or human rights risks or impacts that they aim to address. While the majority of measures pre-determine specific risks (e.g., forced labour, deforestation), others take a more overarching approach and apply to a broad scope of risks. Definitions of the issues or risks also vary.
Supply chain scope: while all the measures aim to address risks beyond companies’ own operations, they take different approaches when applying due diligence expectations to the supply chain and other business relationships. Some measures focus on specific points or tiers in the chain and others on a broader concept of supply chain or value chain. Terms such as ‘supply chains’ or ‘suppliers’ are often undefined.
Commodity scope: over half of the measures pre-define specific commodities in scope of the measures. Commodities are often selected for being associated with a specific risk.
Entity scope: the policy measures also take different approaches for defining the entities in scope of the law. Some measures focus on large multinational enterprises, with specific criteria and thresholds, others also include expectations for small and medium-sized enterprises (SMEs).
The report considers how ten identified mandatory measures approach RBC due diligence, with a focus on two key due diligence principles (i.e., risk-based due diligence and stakeholder engagement) and on public reporting expectations. A comprehensive analysis of the 24 policy measures against OECD RBC due diligence standards is outside the scope of this analysis. Additional research and analysis beyond the scope of this high level and inventory-focused analysis is recommended if policy makers wish to understand for example alignment between the measures and the six-step due diligence framework or other key due diligence principles. Overall, the high-level analysis shows that the mandatory measures identified take very different approaches to due diligence, in part because of their core underlying nature and purpose (i.e., corporate due diligence disclosure, conduct-based or trade-based measure) and specific policy aims. Public disclosure is the most commonly shared feature among the mandatory measures, although the nature and level of granularity of information to demonstrate compliance also vary.
Finally, the report considers the need for future research to understand and address the impacts of the measures as well as lessons learned from implementation (challenges as well as good practices), noting that many of the measures were only adopted in the last three years and so it is too early to carry out a comprehensive study of their current or future impacts.
Going forward, fostering greater policy coherence around internationally recognised standards on RBC can help to promote greater predictability and effectiveness for companies and their suppliers in agricultural supply chains. It can also help to ensure that policy expectations on due diligence are designed in a way that avoids unintended outcomes such as de-risking and disengagement from higher-risk suppliers and geographies, or companies pushing costs and requirements on to upstream suppliers. Governments have an important opportunity to coordinate around accompanying measures to build capacity, create an enabling environment for RBC, and promote engagement and partnership with key producer and consumer countries.
The report Is structured as follows:
Section 1 considers the background and rationale for the report and selective inventory.
Section 2 presents an analytical framework to categorise the policy measures.
Section 3 sets out a comparative review of the policy measures.
Section 4 briefly discusses the need for future research to understand and address potential impacts of the measures.
