Promoting Responsible Agricultural Supply Chains – Coralie David, OECD & FAO
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The document provides guidance from FAO and OECD to help enterprises conduct responsible practices along agricultural supply chains. It outlines a 5-step framework for risk-based due diligence involving identifying, assessing, and addressing potential adverse impacts. This includes adopting a policy, identifying supply chain risks, developing mitigation strategies, auditing due diligence, and reporting. It also provides a model policy and examples of addressing risks like land tenure rights. The guidance is meant to help enterprises observe standards for responsible business conduct in their supply chains.
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Promoting Responsible Agricultural Supply Chains – Coralie David, OECD & FAO
- 1. Promoting responsible agricultural supply chains A FAO-OECD guidance 1
- 2. FAO-OECD Guidance Help enterprises observe existing standards of responsible business conduct along agricultural supply chains Through a multi-stakeholder advisory group Three main sections: 1. A five-step framework for risk-based due diligence 2. A model enterprise policy 3. Measures for risk mitigation
- 3. 1. Five-Step Framework for Due Diligence Identify, assess, mitigate, prevent and address actual and potential adverse impacts Five steps: 1. Adopt an enterprise policy 2. Identify and assess risks along the supply chain 3. Design and implement a strategy to respond to identified risks 4. Commission an audit of supply chain due diligence 5. Report on supply chain due diligence 3
- 5. Health Sustainable use of natural resources Technology and innovation Tenure rights over and access to natural resources Animal welfare Labour rights Food security POTENTIAL RISKS Human rights Governance 2. Model Enterprise Policy
- 6. Major Existing Standards • OECD Guidelines for Multinational Enterprises • Principles for Responsible Investment in Agriculture and Food Systems of the Committee on World Food Security (CFS-RAI) • FAO Voluntary Guidelines on the Responsible Governance of Tenure of Land, Fisheries and Forests in the Context of National Food Security (VGGT) • Principles for Responsible Agricultural Investment that respect rights, livelihoods and resources (PRAI) • UN Guiding Principles on Business and Human Rights • IFC Performance Standards • ILO Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy • Convention on Biological Diversity 6
- 7. 3. Risk Mitigation Measures 7 Example of land tenure rights: •Identify land tenure rights holders •Consult and negotiate with them •Be transparent and disclose information •Avoid the displacement of local communities •Fairly compensate evicted local communities •Promote business partnerships
- 8. Implementation Activities 8 • Interactive website • Road-testing • Case studies from enterprises • Tailored to specific enterprises and/or commodities Capacity-building • Due diligence trainings • Peer-learning webinars Practical due diligence tools Use of the FAO-OECD guidance
- 9. THANK YOU! mneguidelines.oecd.org For more information: Coralie.David@oecd.org
- 10. THANK YOU! mneguidelines.oecd.org For more information: Coralie.David@oecd.org
Editor's Notes
- Enterprises: Private and SOEs, including small-scale producers and MNEs Institutional investors, including private financial actors and state-owned funds: commercial banks, investment funds, hedge funds, private equity funds, family offices, pension funds, sovereign wealth funds, and development finance institutions. The Advisory Group comprises: OECD and non-OECD countries: US, France, the Netherlands, Germany, Switzerland, Colombia, Chile, Sierra Leone, European Commission, Chair of the Committee on World Food Security Institutional investors: Aquila Capital Farms, EBG Capital AG, BNP Paribas, Milltrust International, Rabobank, Saudi Agricultural and Livestock Investment Company Agri-food companies: Food Drink Europe, Cargill, Monsanto, Syngenta, Yara, SOMDIAA Civil society organisations: OECD Watch, Oxfam Novib, CCFD, Earth Security Initiative, World Farmers’ Organisation, World Society for the Protection of Animals Other: OECD, FAO, ILO, Un Global Compact, ASEAN CSR network, Sidley Austin LLP, Columbia Centre on Sustainable Investment
- Enterprises may cause or contribute to adverse impacts directly and generate adverse impacts that are directly linked to their operations, products or services through a business relationship. The term ‘business relationship’ includes relationships with business partners and state or non-state entities directly linked to an enterprise’s business operations, products or services. Enterprises with large supply chains are encouraged to identify general areas where the risk of adverse impacts is most significant and, based on this risk assessment, prioritise suppliers for due diligence. If business partners may be sourcing from or linked to any party violating rights, work with them on corrective action and, to the extent possible, terminate the business relationship if no remedial action is taken. If the enterprise has the ability to effect change in the wrongful practices of the entity that causes the harm, then it has leverage over that entity. Enterprises at various stages of supply chains have different responsibilities: Upstream enterprises: carry out on-the-ground DD; collect information on the risks and adverse impacts related to agricultural production. Downstream actors (consumer-facing enterprises): ensure that their suppliers have carried out DD, use Know-Your-Counterparty DD, audit their suppliers.
- Environment: Land degradation, water resource depletion, losses of pristine forests and biodiversity. Most common issue among the 39 investments analysed by the World Bank and UNCTAD: agrochemical use, such as water contamination, chemical drift, and aerial spraying. Also external impacts: GHG emissions, impacts on watersheds, or deforestation occurring far from the location of the operations but directly linked to them. Labour: Job creation was the most frequently cited benefit arising from the investments analysed in the World Bank and UNCTAD study. Enterprises in the sample employed around 40,000 people - an average of one job for every 20 hectares and roughly equally split between permanent and temporary or seasonal jobs - often in remote areas where formal employment had not existed previously.
- MNE Guidelines: voluntary RBC principles and standards for enterprises consistent with applicable laws and internationally recognised standards. Revised in 2011. 46 countries. Cover all major areas of business ethics - information disclosure, HR, employment and industrial relations, environment, bribery and corruption, consumer interests, S&T, competition, taxation. CFS-RAI: Endorsed by the CFS in October. 10 principles: (1) food security and nutrition; (2) sustainable and inclusive economic development and poverty eradication; (3) gender equality and women’s empowerment; (4) youth; (5) tenure of land, fisheries, and forests and access to water; (6) sustainable management of natural resources; (7) cultural heritage and traditional knowledge, and support diversity and innovation; (8) safe and healthy agriculture; (9) inclusive and transparent governance structures, processes, and grievance mechanisms; (10 impacts and accountability VGGT: Endorsed by the CFS in May 2012 PRAI: IFAD, FAO, UNCTAD and WB. Recognised by the G20 and the G8. Pilot projects to field test them. UN Guiding Principles: Endorsed by the UN Human Rights Council in 2011. Proposed by UN Special Representative on human rights and transnational corporations, John Ruggie IFC Perf. Standards: 8 standards to be applied by IFC clients. Latest version released in 2012.
- Respect legitimate tenure rights over natural resources, including public, private, communal, collective, indigenous and customary rights, potentially affected by our activities. Hold good-faith, effective and meaningful consultations with communities through their own representative institutions before initiating any operations that may affect them and continue to hold consultations with them during and at the end of operations. Disclose timely and accurate information related to foreseeable risk factors and the response to particular adverse impacts to potentially affected communities. Give preference to feasible alternative project designs to minimise the physical and/or economic displacement of legitimate tenure right holders. When negative impacts on holders of legitimate tenure rights cannot be avoided, we will ensure that such holders receive a fair and prompt compensation of their tenure rights. Contract farming, outgrower schemes, and joint ventures can offer enterprises as much security of supply as direct production, spread the risks between private companies and smallholders, and reduce transaction costs.
- Use of the guidance Expected endorsement by FAO and OECD User-friendly website to share the guidance and best practices Road-testing by selected enterprises and/or industry associations Material providing case studies from enterprises Collaboration with selected commodity standards and industry initiatives to integrate the guidance into their tools One-on-one engagement with major industry players Participation in key industry conferences Research and analysis Due diligence guidance tailored to each type of enterprises to describe their respective responsibilities Commodity-specific due diligence guidance Close alignment with OECD sectoral projects on responsible business conduct and FAO activities on responsible agricultural investment Training Due diligence trainings, workshops and peer-learning webinars focusing on producers, SMEs, and institutional investors Country roundtables and pilot implementation programmes for specific commodities and/or enterprises