Traceability, transparency, and forest loss in the agricultural supply chain

Our key takeaway: Primary forest is being lost at an alarming rate with almost 90% of forest loss attributable to the expansion of the agricultural sector. Agricultural supply chains are typically opaque and highly complex, spanning different jurisdictions and involving informal or ‘hidden’ work and smallholder farmers. This means that transparency and traceability tools are important to determine where deforestation is occurring in the value chain so that we can work towards stopping this practice. Despite piloting projects to halt forest loss in their supply chains, a significant number of companies are failing to commit to halt deforestation and even fewer are implementing these commitments in practice. The World Resources Institute issues a call to action: sector-wide collaboration and transformation is absolutely imperative to halt forest loss. The private sector can take actions now to leverage and strengthen existing transparency and traceability tools and should not let data gaps hinder progress. ‍

World Resources Institute published Traceability and transparency in supply chains for agricultural and forest commodities (October 2023):

• Transparency and traceability tools are critical to halt forest loss: The report highlights how agricultural supply chains drive deforestation: “Close to 90 percent of forest loss is associated with expansion of agriculture.” While agricultural supply chains are complex and opaque, it is important to build visibility to halt forest loss and meet climate targets. Enhancing transparency and traceability of commodities as they move throughout the product lifecycle is critical to achieve this: “[F]orest loss cannot be addressed without understanding where and how commodities are produced and how sustainability of agricultural value chains could be strengthened.”
  

• Sector-wide collaboration and transformation is critical to halt forest loss: The report highlights how industry-wide collaboration between various stakeholders, including the private sector, governments, civil society organisations, and rightsholders, is necessary to stop deforestation. Currently, only a few companies are making commitments to halt deforestation and even fewer are tracking their progress: “[T]o date only 36 percent of the largest companies have commitments and many of these companies are not systematically monitoring their progress toward meeting them.” While efforts to implement these commitments in practice can be a source of learning, the impact of these projects is confined to specific projects and supply chains: “Much of the effort to date has been focused on individual supply chains and small pilots.” Rather, “a sector-wide transformation is needed” to address forest loss in supply chains. Furthermore, filling in data gaps should not be prioritised at the expense of taking action to address deforestation: “While continued investments are needed to improve data availability, quality, usability, and interoperability, data gaps should not be used to delay action.” In essence, “[s]olutions should start from the problem, not the available technology.”
  

• What can companies do?: The report provides recommendations for all stakeholders, such as governments, the private sector, and civil society organisations, to play a role in the sector-wide transformation necessary to half deforestation. More specifically, companies can: 1) “[E]xpand the ambition and scale of action now to improve and increase traceability and transparency while engagement and dialogue continue.” This means that there “needs to be a dual approach to simultaneously pursuing better alignment on standards, reporting requirements, and datasets, while putting into place traceability systems”; 2) “[M]ake the necessary effort to collect information, build up traceability systems, and disclose information where appropriate”; 3) “[P]ursue an equitable solution to the additional costs created by increasing demands for traceability and transparency” in collaboration with other stakeholders; 4) “[C]ollaborate with other actors to find ways to ensure that cost does not cut out vulnerable upstream producers from markets; and put in place safeguards to protect privacy”; 5) “[W]ork toward aligned standards for data disclosure and publication” with other stakeholders; 6) “[S]upport greater consistency within the objectives and reporting standards set in policy measures”; and 7) “[W]ork toward coherent and aligned commitments and take measures to address specific challenges facing smallholders and small and medium-sized enterprises in supply chains.”