Model Policy Language

What does a best-in-class forest sourcing policy include?

• Prohibitions against deforestation, conversion, and degradation across entire supply chain.

• Clear, scientifically rigorous definitions of what constitutes deforestation, conversion and degradation.

  • Deforestation: The Accountability Framework Initiative (AFi) defines deforestation as, “Loss of natural forest as a result of (i) conversion to agriculture or other non-forest land use; (ii) conversion to a tree plantation; or (iii) severe and sustained degradation.”

  • Conversion: As defined by AFi, “Loss of a natural ecosystem as a result of its replacement with agriculture or another land use, or due to a profound and sustained change in a natural ecosystem’s species composition, structure, or function.”

  • Degradation: “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.” (Source: AFi)

• Human rights policy

  • FPIC and adherence to the U.N.’s Declaration on the Rights of Indigenous People.

  • Zero tolerance of violence and intimidation toward Human Rights Defenders (HRDs)

• Annual disclosure of entire forest footprint –i.e. the entirety of areas of forest that are impacted by a company’s supply chain, both upstream and downstream- including targets to reduce footprint. (Note: Rainforest Action Network has a useful methodology that companies can use to determine and disclose their forest footprints.)

• Ongoing robust and transparent supply chain monitoring of deforestation, conversion, degradation, and human rights violations, verified by a credible, independent third party.

• A non-compliance protocol with clear thresholds for suspension or termination of suppliers or investors for policy violations, as well as a process for remedying issues and requirements for bringing suspended suppliers back into policy compliance.

• A grievance process is in place aligned with the U.N.’s Guiding Principles on Business and Human Rights.

• Clear application of policy across all commodities, the entire corporate group, and all direct and indirect suppliers.

Furthermore, a policy is only as strong as its implementation. Investors must look for evidence of clear and ongoing application of environmental and social policies by any company with which they engage and invest. Investors can typically find these commitments disclosed across a company’s forest sourcing or deforestation policy, human rights and human rights defender policies, supplier code of conduct, responsible sourcing standards, and broader sustainability reporting.

Best practices for corporate engagement and stewardship

1. Read the sourcing policy and corporate disclosure documents.

2. Go deeper. Ask companies how, not just whether, they monitor for compliance with their policies. How often do they review their suppliers’ footprints? What information do they require suppliers to share with them? How do they verify that information?

3. Press for disclosure. Sunlight is the best disinfectant. Variability between corporate disclosures and reporting leads to increased financial risk. Companies should disclose their entire forest footprint to the forest unit level including volumes and corporate groups.

4. Look for trade group membership and policy positions. Sourcing policies and regulatory policy go hand-in-hand. Often, companies will have sourcing policies articulating a specific position but take positions on legislation and regulations (either individually or as members of a particular trade group) that undermine progress on the stated issue. It is critical that companies’ stances on government policies reflect and reinforce halting and reversing deforestation, conversion, and degradation globally.

5. Look for executive incentives tied to strong environmental performance.