It is important that companies have effective systems in place to ensure that they fulfil their commitments related to sustainable sourcing in soft commodity supply chains. Companies should know the origins of the commodities they source to a sufficient extent that they can be certain that sourcing complies with their commitments. Financial institutions can help by requiring companies to have an assurance mechanism in place.
Certification and traceability are two practical ways in which companies can ensure compliance. Traceability alone does not ensure that commodities are produced sustainably, but it is a key step as it focuses attention on areas of the supply chain where improvement is needed. For some commodities, such as palm oil, certification allows producers to demonstrate to the market that the commodities they are supplying are not associated with environmental or social impacts. While certification credits can be beneficial as they financially support the transition to sustainable production, it is crucial that downstream companies rely on ‘physically’ certified commodities in order to be certain that their products are free from environmental and social impacts. Not all assurance mechanisms are equally well-suited across geographies and commodities, so companies should use systems that are tailored to the commodity and sourcing region.
- The Accountability Framework: Draft Operational Guidance on Supply Chain Management (2018)
- Financial Institution Guidance: Soft Commodity Company Strategy (2017)