Recent advances in supply-chain transparency are transforming our ability to identify more systematically the greatest opportunities for action.
On deforestation for instance, subnational data analysis across major commodity producing countries in the tropics shows that the vast majority of deforestation linked to the production and trade of agricultural commodities occurs in a handful of places where the commodities are produced.
Yet this is not where efforts to manage deforestation risks in commodity supply chains are systematically concentrated. Traditional approaches to tracing and verifying forest-risk commodities in fact rarely penetrate a market far enough to be able to separate the bad from the good, at scale. This is particularly evident for voluntary sustainability certification schemes that generally cover a few percentage points of the total volumes in a given supply chain.
Share of the world production covered by a sustainability certification scheme (green) versus the proportion concentrating 80% of commodity-driven deforestation in four global supply chains (red) extrapolated from patterns of the largest producing tropical countries for each of these supply chains (Brazil, Indonesia, Argentina and Côte d’Ivoire).
A new approach is needed: one that leverages transparency at both ends of major agricultural commodity supply chains, and that can turn policy aspirations into pragmatic measures to decouple deforestation and trade.
Supply chain traceability aims at demonstrating origin, while supply chain transparency aims at demonstrating impact. Supply chain traceability refers to the ability to trace the origin, production, processing history and distribution of a given product.
Supply chain transparency is a much broader term, encompassing various dimensions necessary to improve sustainability practices and standards, such as monitoring, voluntary or compliant disclosure, reporting, complaints resolution and verification. The connection and monitoring of these two dimensions are at the core of supply chain sustainability frameworks.
The Transparency Pathway takes a territorial approach to supply-chain traceability and transparency for several reasons:
Subnational territorial approaches provide a middle ground between broader approaches that may not be detailed enough for targeted interventions, and those that may be difficult to implement at scale due to gaps in property-level data on deforestation, production and supply chain connections.
Small-scale producers rarely have the skills and resources needed to meet the burden of proof to obtain certification in regards to the sustainability of their production practices. Small-scale producers can also struggle to meet sustainability standards if their land is not zoned for legally planting crops, if administrative procedures are complex, or if official monitoring and law enforcement are not fairly or evenly directed. These are governance issues that only the government and local authorities can address. A territorial approach allows vulnerable actors to be included.
Territorial approaches corresponding with administrative boundaries – also known as jurisdictional approaches – have the advantage of involving local governments that often have the authority and legitimacy to implement sustainability policies. They may also have the authority to issue regulations that cover the entire land area under their control and to monitor and enforce relevant laws and regulations.
Deforestation, water contamination, and child labour are among the many challenges that have a great capacity to shift across places and supply chains. These so-called “leakage effects” are a constant concern in efforts to reduce deforestation and forest degradation. Territorial approaches allow for going beyond the inevitable fragmentation of other approaches that focus on just one supply chain or group of actors in a territory. This is the approach taken in the Transparency Pathway, inspired notably by the Terpercaya experience in Indonesia.
1. Transparency is only ever a means, not an end
Transparency can serve as a tool (means) to support the achievement of sustainability outcomes. Greater transparency must be coupled with action for sustainability goals to be reached (ends).
2. Transparency is a two-pronged approach
Supply chain transparency can support efforts to develop more sustainable practices by providing the means to identify where sustainability efforts have succeeded and, in turn, support actors engaged in sustainable practices and promote sustainably produced products. On the other hand, supply chain information can also be used to identify where sustainable practices are lacking and can serve as a mechanism to hold actors accountable for their production practices.
3. More transparency may have unintended negative outcomes
Increased transparency can exacerbate existing inequalities and create negative outcomes especially for vulnerable actors, such as smallholder farmers, who may not have sufficient resources to comply with standards or to provide necessary traceability information. Moreover, low quality, incomplete, or false information can undermine the uptake and efficacy of transparency initiatives.
4. What matters the most are changes on the ground, as linked to supply chains
The sustainability of supply chains is ultimately determined by conditions on the ground. Therefore, to assess the effects of sustainability efforts, supply chain information on commodities and actors must be linked to data on the specific locations where commodities are produced or processed.
5. Supply chain maps need to balance detail and scale
Supply chain analyses can be done at a range of scales and levels of detail depending on the needs of interested actors and the availability of data. Coarser-grained analyses of supply chains can be used to determine priorities and strategies, to develop an understanding of dynamics among actors and across places of production as well as to identify where finer-scale data is needed. Detailed analyses, such as those at the farm level, can then be used to identify specific sites of compliance, understand relationships between particular actors and practices, and assess the impact of farm-level investments among other questions.
6. Greater transparency of one phenomenon can reduce the relevance of another
Increased transparency efforts can draw attention to specific indicators, actors, commodities, or localities, which may reduce emphasis on other important factors. For example, an increased focus on supply chain transparency for soy may reduce attention given to transparency efforts for palm oil or other commodities.
7. Transparency should be public but also mediated
Public transparency has the potential for transformative sustainability improvements. Information on production practices, actors, and commodity characteristics should be made available to the public in a form that is easily accessed and understood. Trusted intermediary actors, such as third party, non-governmental actors, can disseminate information and ensure the credibility of data.
8. Data overload can result in decision paralysis
An overabundance of information or poorly organized data can complicate decision-making and sustainability efforts because of uncertainty about data sources and their quality, competing stakes in which information is used, and an excess of choice.
9. Transparency is best understood as a process of continuous improvement
Supply chain information should contribute to ongoing implementation and learning processes and can be used to identify problems (e.g., whether a given commodity is driving deforestation), inform decision-making and action, and hold actors to account.
10. Transparency is not a substitute for effective environmental and social governance
Increased transparency can contribute to, but will not necessarily alone lead to, good and effective governance. Transparency initiatives are tools that can support governments and civil society in their various efforts to promote sustainability.
Source: Gardner et al., ‘Transparency and sustainability in global commodity supply chains’, World Development, Vol. 121, 2019.
