Sustainability commitments along global agricultural supply chains

The G7 Sustainable Supply Chain Initiative (G7 SSCI) was launched in December 2021 under UK's G7 Presidency. This initiative will strengthen global efforts to meet the Sustainable Development Goals (SDGs) and endeavour to transform food systems to be more sustainable, inclusive and resilient, as set out by the UN Food Systems Summit (UNFSS) action tracks. Currently, 22 leading global food and agriculture companies from G7 countries have committed to action that will improve the environmental, nutritional and social impact of their operations and supply chains. Under the German G7 Presidency, the Federal Ministry for Economic Cooperation and Development (BMZ) continues to support the G7 SSCI. In light of this, the German G7 Presidency has requested the Centre for Responsible Business Conduct at the OECD to act as the G7 SSCI secretariat for the duration of the German Presidency in 2022.

 

Why is it important to involve the private sector in the transformation towards more sustainable and inclusive global food systems?
Shivani Kannabhiran: The desired transformation of the food sector can only be achieved if all relevant actors, including the private sector, contribute and play their role. International food and agriculture companies bring significant leverage and collectively bear responsibility for improving the environmental and social sustainability of food systems. The G7 SSCI brings together 22 leading global food and agriculture companies, representing both upstream and downstream segments of the value chain. The group as a whole, earns over 550 billion USD in annual global revenue and employs over 2 million people directly. If these companies operationalise sustainability commitments on climate, human rights and the environment in line with international recommendations, this can be a significant jump-start to making a change for the better.  

 

By engaging with companies along the entire supply chain from input suppliers, to producers, food manufacturers and retailers, we can transform the sector as a whole and together move from commitments to action.  

 

What methods are used to measure the companies’ performance?
The G7 SSCI uses the Food and Agriculture Benchmark of the World Benchmarking Alliance (WBA) as an independent reference framework to measure the sustainability performance of companies. The benchmark builds upon the OECD-FAO Guidance for Responsible Agricultural Supply Chains, which enables companies of all sizes to implement a risk management due diligence framework to address environmental, human rights and governance risks in global supply chains. The WBA benchmark, comprising 45 indicators, holistically assesses companies from farm to fork on their environmental, nutritional and social impact. The results indicate the extent to which companies already contribute to the achievement of the SDGs. As such, the commitment of the companies in the G7 SSCI is a direct contribution by the private sector towards achieving the SDGs.

 

Where do the companies currently stand?
The WBA Food and Agricultural Benchmark evaluates the activities of the 350 largest global food and agriculture companies globally. So far, the findings demonstrate worrying gaps in the industry’s adaptation to climate change, progress on human rights and contribution to healthy diets. For instance, it shows that only 26 out of these 350 companies are currently working to reduce greenhouse gas emissions in line with the Paris Agreement, despite the fact that indirect greenhouse gas emissions from supply chains (also known as scope 3 emissions) make up around 80% of the emissions for food companies. Over two hundred of these companies do not publicly report on scope 3 emissions or set targets to reduce them.

 

The data available to date also reveals a deplorable lack of action on eliminating child and forced labour. Just 8% of 350 companies have a comprehensive human rights due diligence mechanism in place - despite the existence of global frameworks such as the UN Guiding Principles on Business and Human Rights and the OECD-FAO Guidance for Responsible Agricultural Supply Chains.  

 

In addition, the private sector plays a significant part in ensuring our diets support public health, and that safe and nutritious food is available and accessible to all. This latter consideration has gained urgency in light of the potential food security crisis linked to the war in Ukraine. Nutritious diets are not a consumer choice when three quarters of the benchmarked companies do not make any commitment to improve the accessibility and affordability of healthy foods. The results clearly demonstrate an urgent need for action among the companies.

 

How should this change take place and what levers should be used?
At the OECD, we closely engage with the companies who have committed to be part of the G7 SSCI. The OECD-FAO Guidance for Responsible Agricultural Supply Chains and the WBA Food and Agriculture Benchmark play complementary roles within the G7 SSCI. The OECD-FAO Guidance provides companies with clear recommendations on how to integrate and operationalise corporate risk-management in their business decisions and supply chains. The 5-step due diligence framework helps companies identify, prevent and mitigate a wide range of risks associated with food and agricultural supply chains to meet commitments under the SDGs. WBA’s benchmark highlights the critical issues around the transformation of food systems and serves as an accountability mechanism with specific indicators to track corporate performance over time.  

 

These voluntary mechanisms promote responsible business performance. The OECD recommendations on due diligence are increasingly referenced in legislation that defines corporate behaviour. They also provide a resource to policy makers on how to complement and incentivise responsible business conduct. In the framework of the G7 SSCI, we also aim to create a dialogue between policy makers and the private sector that promotes an understanding of the unique role each plays. We have a shared ambitious goal to improve the sustainability impact of the sector. It is only through partnership, collaboration and clarity on what is needed that we can move forward on action to transform our global food system.

 

What are your plans for this year?
A first technical workshop with G7 SSCI companies was hosted in March this year. We will officially kick-off the G7 SSCI on 13 July 2022 following the G7 summit at the end of June. During the July meeting, we plan to set targets for this year and identify one or two focus topics in which the companies can demonstrate how they are moving from commitments to action. In addition, the WBA is conducting its annual evaluation of G7 SSCI companies for this year. An aggregated report will be shared in October and discussed in a high-level G7 SSCI event later in the year. This meeting will focus on overall trends, successes and challenges across the group and constitute a dialogue platform to exchange views between governments and the private sector on areas for action to drive food system transformation towards greater social and ecological sustainability.

 

Are you planning to open the G7 SSCI to other companies as well?
The G7 SSCI is not a closed group. It is open to all companies at any point in time and we will grow the initiative to increase the collective impact. However, as a starting point, the current focus is on companies headquartered in G7 countries that are part of the WBA Food and Agriculture Benchmark. We plan to extend the scope of the initiative beyond G7 countries so that all companies will have the opportunity to join and together help transform the sector for the better.