Responsible business conduct
OECD Pilot Project on Responsible Agricultural
Supply Chains in Southeast Asia
BASELINE REPORT

OECD Pilot Project on Responsible Agricultural
Supply Chains in Southeast Asia
BASELINE REPORT

Please cite this publication as:OECD (2020), OECD Pilot Project on Responsible Agricultural Supply Chains in Southeast Asia: Baseline
ReportWith funding by the European Union

This document is published under the responsibility of the Secretary-General of the OECD. The opinions expressed andarguments employed herein do not necessarily reflect the official views of OECD member countries. The document andany map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation ofinternational frontiers and boundaries and to the name of any territory, city or area.
© OECD 20202

Foreword
The OECD is engaged in promoting the understanding and uptake in Southeast Asia of supply chain due
diligence recommendations in the OECD-FAO Guidance for Responsible Agricultural Supply Chains. This
report presents the findings of a baseline survey conducted amongst companies along agricultural andseafood supply chains to understand how they are implementing responsible business practices and inparticular risk-based due diligence across agricultural supply chains. The survey was shared withagribusiness companies in the region beyond the pilot participants to capture broader trends of responsible
business conduct in Southeast Asia. Twenty-eight companies, including twenty-three pilot participants,
completed the survey.
This report was prepared by Dr Alison Watson working as a consultant for the OECD Centre on Responsible Business Conduct. It was undertaken within the framework of the ILO-EU-OECD “Responsible Supply
Chains in Asia” programme with funding by the EU.

3About the OECD-FAO Guidance Responsible Agricultural Supply Chains
The OECD-FAO Guidance for Responsible Agricultural Supply Chains (the OECD-FAO
Guidance) provides a common framework and globally applicable benchmark for theapplication of responsible business practices in agricultural supply chains. It is basedon and incorporates various long-standing standards for responsible businessconduct (RBC), such as the OECD Guidelines for Multinational Enterprises (OECDMNE Guidelines), the UN Guiding Principles on Business and Human Rights (UNGPs),
the International Labour Organisation Tripartite Declaration of Principles
Concerning Multinational Enterprises and Social Policy (ILO MNE Declaration), andthe UN Committee on World Food Security’s Principles for Responsible Investment
in Agriculture and Food Systems (CFS-RAI). The OECD-FAO Guidance targets
domestic and international, small, medium and large enterprises across the entire
agricultural value chain, from the farm to the consumer. Find out more athttps://mneguidelines.oecd.org/rbc-agriculture-supply-chains.htm

About the Responsible Supply Chains in Asia programme
A partnership between the European Union (EU), the International Labour
Organization (ILO) and the OECD, with funding by the EU, the programme works withpartners in Asia to promote respect for human rights, including labour rights, andresponsible business standards in global supply chains. The three-year programme(2018-2020), carried out in collaboration with Japan, China, Myanmar, Philippines,
Thailand and Viet Nam, has two broad objectives to promote smart, sustainable andinclusive growth by ensuring that investors and businesses have a better
understanding of corporate social responsibility; and to create policy environments
conducive to promoting RBC and increased opportunities for dialogue. Under thisprogramme, the OECD implements a pilot project with companies in Myanmar,
Philippines, Thailand and Viet Nam to understand how application of international
recommendations and standards in supply chain due diligence can help strengthen
management practices, promote responsible agricultural supply chains and support
business contribution to achieving the Sustainable Development Goals (SDGs). Findout more at http://mneguidelines.oecd.org/Overview-of-activities-Pilot-Project-onResponsible-Agricultural-Supply-Chains-in-Southeast-Asia.pdf

4

Table of Contents
Executive Summary ......................................................................................................................................... 7
Section I. Background ...................................................................................................................................... 9
The OECD-FAO Guidance for Responsible Agricultural Supply Chains ........................................................9
The OECD Pilot on Responsible Agricultural Supply Chains in Southeast Asia .........................................10
SEA Pilot Project approach ........................................................................................................................10
Section II. Survey Approach and Methodology .............................................................................................. 12
Section III. Survey Results .............................................................................................................................. 14
Respondents profile ..................................................................................................................................14
Step 1: Establish strong enterprise management systems for responsible supply chains .......................18
Key findings .......................................................................................................................................... 18
Adoption and integration of RBC policies ............................................................................................ 18
Consideration of international standards and guidance ...................................................................... 23
Internal management structure and support for RBC implementation............................................... 24
Engagement with business partners .................................................................................................... 25
Establish an operational-level grievance mechanism .......................................................................... 27
Step 2. Identify, assess and prioritise risks in the supply chain ................................................................28
Key findings .......................................................................................................................................... 28
Mapping the supply chain .................................................................................................................... 28
Enhanced due diligence........................................................................................................................ 29
Step 3. Design and implement a strategy to respond to identified risks in the supply chain ...................31
Key findings .......................................................................................................................................... 31
Integration of risk into management plan ........................................................................................... 31
Reporting findings of risk assessment and management to senior management ............................... 31
Adopting a risk management plan ....................................................................................................... 32
Consultation with stakeholder when developing and implementing risk management plans ............ 33
Step 4. Verify supply chain due diligence ..................................................................................................34
Key findings .......................................................................................................................................... 34
Verification of supply chain due diligence............................................................................................ 34
Challenges in the implementation of verification measures ............................................................... 37

5

Step 5. Report on supply chain due diligence ...........................................................................................39
Key findings .......................................................................................................................................... 39
Public reporting .................................................................................................................................... 39
Section IV. Recommendations ....................................................................................................................... 42
Annex I. ......................................................................................................................................................... 45
Baseline survey ..........................................................................................................................................45
Definitions .................................................................................................................................................59

6

Executive Summary
This baseline assessment carried out as part of the OECD Pilot Project on Responsible Agricultural Supply
Chains in Southeast Asia1 (SEA Pilot) provides an overview of how certain agribusiness companies operatingin Southeast Asia are currently implementing the recommendations of the OECD-FAO Guidance for
Responsible Agricultural Supply Chains2 (OECD-FAO Guidance).
Companies who participated in this survey represent a diverse group of Southeast Asian agribusinesscompanies operating across the supply chain, with 82% of companies involved in cross-border trade. This
diversity in size, focus, and scope of operations across agricultural supply chains provides valuable insight
into the challenges and opportunities for improving responsible business conduct (RBC) and supply chain
due diligence.
Companies’ policies and actions were assessed against the five-step framework for risk-based due diligence
set out in the OECD-FAO Guidance. Potential gaps and opportunities for improving implementation of riskbased due diligence were identified, along with key findings and recommendations.
The following seven overarching points set out the main conclusions of the report which are recommended
for further consideration in the work of the SEA Pilot, and for in-depth discussions amongst pilot
participants.
1.

Companies are interested and motivated to improve responsible business policy and action.

This is particularly so within the immediate boundaries of company operations and with Tier 1 business
partners. Some companies are also engaged with suppliers beyond Tier 1 relationships and have invested
in the development, and implementation of comprehensive policy related to RBC, which is regularly
verified. Others, however, are at the very start of developing policies and processes across their operations
and supply chains. A ‘learning by doing’ approach, as well as sharing of experiences across the sector should
be further encouraged and supported.
2.

Few companies demonstrate development of comprehensive written policy across all relevant areasof responsible business.

Companies could improve risk-based due diligence efforts by using the model enterprise policy containedin the OECD-FAO Guidance as a template to identify potential policy gaps, with the goal to develop written
policy for RBC, appropriate to their own needs and particular risk profile. Examples of written or model
policies that have been implemented by companies with more advanced RBC programmes should beshared as a valuable resource to help other companies develop or refine strategy.
3.

The use of, or reference to, international and regional guidance, frameworks and standards, is low.

Despite the many international frameworks on responsible agricultural practices available (e.g. the UN
Committee on World Food Security’s Principles for Responsible Investment in Agriculture and Food Systems(CFS-RAI), the Voluntary Guidelines on the Responsible Governance of Tenure of Land, Fisheries and Forestsin the Context of National Food Security (VGGT), and the OECD-FAO Guidance for Responsible Agricultural

1

The SEA Pilot is part of the ILO-EU-OECD “Responsible Supply Chains in Asia” programme with funding by the EU.
The SEA Pilot works with 23 of these companies with operations in Myanmar, the Philippines, Thailand and Viet
Nam in line with the target countries and sectors in the programme. http://mneguidelines.oecd.org/Overview-ofactivities-Pilot-Project-on-Responsible-Agricultural-Supply-Chains-in-Southeast-Asia.pdf
2
https://mneguidelines.oecd.org/rbc-agriculture-supply-chains.htm

7Supply Chains), there is a low awareness of these instruments and consequently a low level of these instruments being referenced in company policies. It is valuable to understand why many companies are notusing or referring to such guidance. Discussion on ways to better integrate and increase awareness of theseresources would be useful.
4.

Adoption of an RBC policy requires buy-in from internal and external stakeholders and this can be acomplex process.

Obtaining buy-in for the adoption of policy can be challenging and requires the support of both internaland external stakeholders. Case examples of actual adoption of responsible business policy would be useful. In particular, there is a need to share success stories regarding the implementation of activities upstream in the supply chain. It is also important to share experiences that have not worked well, as suchlearnings give extremely useful insight into future approaches.
5.

The implementation of RBC policy on cross-cutting standards is lower than implementation of policy
on issue-specific standards.

Companies tend to focus responsible business efforts on issue-specific standards (e.g. Labour rights or Environmental issues) compared to the cross-cutting standards (e.g. Benefit sharing) listed under the model
enterprise policy.3 Cross-cutting standards are, however, crucial to enabling responsible business across allareas of company operations. Developing a deeper understanding of the ways that cross-cutting standards
can enhance overall business performance, including performance on issue-specific standards, could promote their implementation. The development of policy on Grievance mechanisms is one example identified
where the development of policy would reinforce efforts towards improved risk-based due diligence acrossother standards such as Human rights.
6.

Management systems to implement RBC and the use of verification processes in partnership withexternal stakeholders is less developed.

Robust management systems to support implementation of supply chain diligence is critical. Results indicated a need for some companies to better clarify roles and responsibilities across the company on RBC
implementation. The implementation of management systems to implement RBC in partnership with external stakeholders is less developed in many companies. These can include measures like contractual
terms in commercial agreements, requesting information from suppliers on their RBC policy and practices,running supplier training sessions, and providing incentives (e.g. long-term supplier contracts, financial bonus). A focus on strengthening verification processes to help measure company performance is alsoneeded. Examples and case-studies of measures and verification processes that support RBC implementation across the supply chain would therefore be helpful for companies to learn from, and adapt to theirown circumstances.
7.

Public reporting and communication of due diligence policy is a challenge for many companies.

Companies use a diversity of approaches to communicate responsible business action, yet many companies
do not currently report publicly. Further discussion on the need for public communication of responsible
business policy and action, as well as on what, when, to whom, how, and why to communicate such information, would be beneficial. Examples of how various companies communicate to different stakeholders
across the supply chain on responsible business policy could be useful tools in themselves for other companies to learn from, and adapt for their own needs.
3

The model enterprise policy consists of nine issue-specific standards (Human rights, Labour rights, Health and safety, Food
security and nutrition, Tenure rights over and access to natural resources, Animal welfare, Environmental protection andsustainable use of natural resources, Governance, Technology and innovation) and six cross-cutting standards (Impact
assessment, Disclosure, Consultations, Benefit sharing, Grievance mechanisms, Gender).

8Section I. Background
The OECD-FAO Guidance for Responsible Agricultural Supply Chains
In 2016, the OECD and Food and Agriculture Organization of the United Nations (FAO), with the support ofa multi-stakeholder advisory group, developed the OECD-FAO Guidance for Responsible Agricultural Supply
Chains (the OECD-FAO Guidance). The OECD-FAO Guidance provides a common framework on due diligence and benchmark for the implementation of responsible business practices across agricultural supply
chains globally.
The OECD-FAO Guidance incorporates a number of long-standing standards for responsible businessconduct (RBC), including the OECD Guidelines for Multinational Enterprises (OECD MNE Guidelines), theUN Committee on World Food Security’s Principles for Responsible Investment in Agriculture and Food
Systems (CFS-RAI), the Voluntary Guidelines on the Responsible Governance of Tenure of Land, Fisheries
and Forests in the Context of National Food Security of the Committee on World Food Security (VGGT), theUN Guiding Principles on Business and Human Rights (UNGPs) and the International Labour Organisation
Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy (ILO MNE
Declaration).
It also provides a five-step risk management framework to help companies operationalise these high-levelnormative expectations into day-to-day business management systems and operations. It provides aflexible and practical approach which can be tailored to companies’ position in the supply chain, context
and location of operations, as well as size and capacity.
The OECD-FAO Guidance is structured around:1.

A model enterprise policy outlining the RBC standards that enterprises should observe to build
responsible agricultural supply chains. These include issue-specific standards and cross-cutting RBC
standards and are illustrated in Figure 1.

2.

A five-step framework for risk-based due diligence which recommends that companies:
Step 1: Establish strong enterprise management systems for responsible agricultural supply chains
Step 2: Identify, assess and prioritise risks in the supply chain
Step 3: Design and implement a strategy to respond to identified risks
Step 4: Verify supply chain due diligence
Step 5: Report on supply chain due diligence3.

Annexes that set out recommended measures for risk mitigation and prevention along agricultural
supply chains and guidance on engagement with indigenous peoples to obtain their free prior andinformed consent (FPIC).

9

Human rights
Technology
and innovation

GovernanceLabour rights

5. Report on supply
chain due diligence

Cross-cutting standards
Impact assessment, Disclosure,
Consultations, Benefit-sharing,
Grievance mechanisms, Gender

Environmental
protection andsustainable
use of natural
resources

1. Establish strong
company
management
systems

Health andsafety4. Verify supply
chain duediligence

2. Identify, assess
and prioritise risks
in the supply chain

Food security
and nutrition

Animal welfare

Tenure rights
over andaccess tonaturalresources

Model enterprise policy
for responsible agricultural supply chains

3. Design andimplement a
strategy torespond to
identified risksFive-step framework for risk-based due diligence

Figure 1: Two major components of the OECD-FAO Guidance for Responsible Agricultural Supply Chains

The OECD Pilot on Responsible Agricultural Supply Chains in Southeast Asia
The OECD Pilot on Responsible Agricultural Supply Chains in Southeast Asia (“SEA Pilot”) was launched in
mid-2019 to promote awareness of the OECD-FAO Guidance in the region, and to increase knowledge on
how agri-businesses can implement risk-based due diligence across the supply chain to meet international
RBC expectations.
With the support of governments, business and civil society among others, the OECD and the consultant
broadly informed companies in the region about this unique opportunity, including during the Responsible
Business and Human Rights Forum in June 2019 in Thailand. The Forum took place during Bangkok Businessand Human Rights Week and was co-organised by the Royal Thai Government, OECD, United Nations
Development Programme (UNDP), United Nations Economic and Social Commission for Asia and the Pacific(ESCAP), ILO and with the participation of the UN Working Group on Business and Human Rights.
The SEA Pilot is not an evaluation or audit of participants’ existing due diligence practices. Rather, it aims
to support participants to collectively identify potential gaps and opportunities to strengthen theirapproach to risk-based due diligence and promote good practices and learnings for implementing theOECD-FAO Guidance and related international standards for RBC in agricultural supply chains. The SEA Pilot
promotes ‘learning by doing’ and encourages communication among supply chain actors to advanceresponsible business actions.

SEA Pilot Project approach
Twenty-three companies are currently participating in the SEA Pilot. Pilot participants are companies
operating in Myanmar, Philippines, Singapore, Thailand and Viet Nam. The Pilot remains open to newmembers and interested companies operating in the region should contact the OECD Secretariat.

10

Participants include agribusiness companies across the supply chain and reflect a very diverse group ofcompanies in terms of company size, focus of operations, commodities and services, as well as level of RBC
knowledge and maturity. More detail on the profile of pilot participants can be found in Section III of thisreport.
The SEA Pilot consists of three major components:
1.

Baseline survey

The first component is the completion of a baseline survey by agribusiness companies. The survey evaluates
existing responsible business practices across companies in comparison to the recommendations of theOECD-FAO Guidance. Company representatives were also invited to participate in a brief interview toprovide further explanation on their practices. The survey was open to all companies in the region who
wanted to participate, hence the results from the baseline survey indicate a response beyond the SEA Pilot
participants. A total of 28 companies participated in the survey.
2.

Peer-learning

In 2020, companies in the SEA Pilot will have the opportunity to participate in a series of peer-learning
webinars to address gaps identified through the baseline analysis. The webinar sessions will explore
challenges and opportunities for improving responsible business in the region. Companies will have theopportunity to engage with subject-matter experts, discuss successes and challenges with peers, sharelearnings, test their approach to addressing critical social and environmental impacts with others andincorporate feedback to strengthen their management systems, approaches and decisions.
3.

Final survey and recommendations

A final survey will be undertaken towards the end of 2020 to capture pilot participants’ learnings, as well
feedback on the Pilot. It will also identify areas for resource development to aid companies in future RBC
efforts. Key takeaways from the SEA Pilot will be highlighted with a final report published at the end of
2020.

11

Section II. Survey Approach and Methodology
Structure of the baseline survey
The aim of the baseline survey is to assess how enterprises in Southeast Asia are implementing therecommendations of the OECD-FAO Guidance and identify potential gaps and opportunities for
improvement in risk-based due diligence. 28 companies completed the survey. The survey responses fromgovernments, research institutions, civil society and international organisations have been noted and will
feed into wider activities, such as the peer learning webinars. However these responses were notconsidered in the analysis given the aim of the baseline survey above.

The baseline survey (Annex 1) comprised of six sections consisting of 31 multiple-choice, Likert and openended style questions as summarised in Table 1.
SectionIntroduction
Definitions
General

Policy development and communication
Risk assessment and due diligence
Next steps

Description
Purpose of the survey, key dates and confidentiality provisions.
Key definitions.
General information about each company, including name,geographical scope, size and operational focus of activities
managed.
Questions related to implementation of Steps 1 and 5 of the fivestep framework for risk-based due diligence
Questions related to implementation of Steps 2, 3 and 4 of the fivestep framework for risk-based due diligence.
Questions related to participation in the SEA Pilot.

Table 1: Structure of the baseline survey

One-on-one Interviews
Companies participating in the survey were invited to share further information in a brief 25-minuteinterview with the consultant. A total of 7 companies participated in these one on one interviews.
Organisation
The survey was open for approximately six weeks from 6 September 2019 using the SurveyMonkey tool.
Invitations to complete the survey were sent to all pilot participants, along with other OECD agribusinessindustry and sector contacts in the region. An explanatory webinar session was offered on 10 September
2019. Additional sessions with the consultant were also undertaken with companies to clarify any aspects.
Invitations for interviews were sent to all pilot participants and companies who indicated interest in
participating in such sessions.
Data
Quantitative and qualitative data was collected. Quantitative information provided by survey participants
was used to analyse key trends, issues and present data on participants’ approach to supply chain due
diligence. Qualitative data supplied by respondents provided additional detail of existing practices, tools
and approaches adopted by companies.
All information provided by participants has been anonymised and analysed in aggregate form. Survey
results presented in this report are therefore not attributed to any individual respondent or their company.

12However, anonymous quotes taken from interview sessions and responses to survey questions have beenused to provide further detail of company perspectives.
Limitations
The survey provides a ‘snapshot’ of current implementation and perceptions of responsible business policy
and action of a selection of (28) agribusiness companies operating in Southeast Asia. It does not represent
a comprehensive study as the sample size is small and focuses only on the response of companies who selfselected to participate in the survey. Quantitative data may, therefore, not always be statisticallysignificant.
Efforts were made to address possible areas of survey ambiguity. For example, one page of the survey was
devoted to key definitions with explanatory links to help secure a common understanding of terms used.
The presence of policy was also deliberately asked in such a manner as to help differentiate efforts onpolicy development between full written policy, partial policy, no policy and not applicable. Where possible,
interview sessions were also used to clarify any responses on the survey.
The results, however, cannot provide any conclusions on actual levels of implementation of responsible
business practice within companies. It is also important to stress that no judgment on the quality of policy
is undertaken and no verification or assessment of the accuracy of any responses has been undertaken. At
this level, the survey is primarily interested in whether policy is present or not, and to help identify potential
gaps and opportunities generally across companies.
The sample is also diverse, representing companies of all sizes, from on-farm enterprises to global fastmoving consumer goods (FMCG) brands. This diversity can also be viewed positively as it introduces avariety of different perspectives on how to implement and improve responsible business across the supply
chain. It does limit, the comparability of data that would be possible, for example, if multiple companies ofsimilar size or at the same stages of the supply chain were participating. This offers an opportunity forfurther targeted research.

13

Section III. Survey Results
Section III presents the results of the baseline survey. The results are analysed against the five-stepframework for risk-based due diligence as detailed in the OECD-FAO Guidance.

Respondents profile
Respondents are primarily senior-level experienced managers
89% of respondents held a senior position in the company. For example, manager level (39% of
respondents) and senior director level (29%) reporting directly to a corporate executive leader or
corporate-level executive. 21% of respondents represented individuals at corporate executive-level (e.g.
CEO, CIO, CFO). This demonstrates a high level of engagement from senior leaders in companies that took
part in the survey.
The geographical scope of company operations is mostly global
68% of respondents describe the geographical scope of the company they work for, as having a global focus(Figure 2). Another 14% trade within the broader Asian region. The survey results, therefore, include
companies with a heavy international and regional cross-border trade focus. 18% of companies operate ata national level, operating and/or trading within one country only.

Figure 2: Geographical scope of companies

Company operations are spread across Southeast Asia
Operations by 28 companies are spread across the Southeast Asian region. Figure 3 shows that companies
have operations in Viet Nam (43%), Philippines (57%) and Thailand (54%). Approximately 29% of companies
have operations in Myanmar.

14

Figure 3: Geographical scope of company operations within Southeast Asia

Size of company (number of employees) are fairly evenly split between SMEs and large companies
Figure 4 shows that 43% of companies represent enterprises of below 250 employers, normally considered
as small and medium-sized enterprises (SMEs) 4 . 43% of companies represent large scale operations
involving 1001+ workers.

Figure 4: Total number of employees per company

Location of company head office is mostly within Southeast Asia
Head offices of respondent companies are located mainly in Southeast Asia, in particular in the Philippines
and Thailand. Five companies had head offices based outside the region, in China, France, Germany andthe United States.

4

The category of micro, small and medium-sized enterprises (SMEs) is defined as an enterprises which employ fewer than 250
persons (EU recommendation 2003/361). For the purposes of this Report company revenue as a consideration of the SME
definition was ignored.

15

Diverse involvement across the agricultural supply chain
Figure 5 illustrates the position of companies along the agricultural supply chain. 64% of companies are
involved in processing and manufacturing, and trading and distribution. One-third of companies are
involved in upstream activities of input provision, primary production, and post-harvest handling. Researchand development, along with retailing and marketing also feature as activities that companies are
significantly involved in.
The diversity of different activities of the supply chain managed by companies in this survey highlights thecomplexity of many agricultural supply chains whereby a single company may be operating at multiple
positions along the supply chain, as well as the use of different forms of integration to control certain aspects of the supply chain critical to company operations.

Figure 5: Focus of company operations along the agricultural supply chain

16

Diverse involvement across the agricultural sector (products/commodities)
Figure 6 illustrates that companies focus, or interact with, a broad range of agricultural commodities andproducts. More than one-quarter of companies list rice, nuts and coconut, livestock, grains/pulses/root
crops, fruit and berries, fresh vegetables, fisheries and aquaculture, as well as animal feed and fodder
products, as a focus of their business.

Figure 6: Focus of operations associated with products/commodities within agribusiness17

Step 1: Establish strong enterprise management systems for responsible supply
chainsKey findings
 The use of, or reference to, international guidance, frameworks and standards, is low.
 Cross-cutting standards have lower rates of policy development compared to issue-specific standards, with on average 61% of companies having some form of policy across the six standards. The
presence of comprehensive written policy was, however, low across the standards. This was particularly evident for standards on Consultation (14% of companies have full written policy), Benefit
sharing (25%), Disclosure (30%) and Grievance mechanisms (32%). Gender, however, was an outlier,with 75% of companies having written or partial policy commitments.
 Companies showed higher levels of policy development for issue-specific standards. 70% of companies indicated the presence of full written or partial policy on Labour rights (70%), Health and safety(71%), Governance (71%), Environmental protection and sustainable use of natural resources (75%),
and Food security and nutrition (79%). The existence of a written policy was lower for Tenure rights
over and access to natural resources (56%), and Human rights (61%). Animal welfare also scored low
at 32%, with an additional third of companies indicating that Animal welfare was not applicable totheir company.
 External drivers, such as increased regulation demands by private and public actors were viewed asimportant motivators for action.
 64% of companies reported that they integrate RBC contractual expectations into commercial agreements with Tier 1 business partners.
 Many companies offer regular or ad-hoc training sessions with Tier 1 business partners/suppliers,
however, 46% of companies currently provide no training.

Adoption and integration of RBC policies
Respondents were asked to provide information as to whether they had an internal written policy/s thatset out expectations and obligations for management across the fifteen policy standards in the model
enterprise policy of the OECD-FAO Guidance.
Cross-cutting standards
75% of companies currently have written or partial policy commitments on Gender. A significant numberof companies (over 50%) are also making commitments across the other five cross-cutting standards:
Impact assessment, Disclosure, Consultations, Benefit sharing, and Grievance mechanisms. 63% ofcompanies state they have full written or partial policies on Disclosure.

18

Figure 8: Policy on cross-cutting standards

In respect to those companies which have a policy on the cross-cutting standards, Figure 9 demonstrates
the difference between companies that have a full written policy and those that have partial policies.

Figure 9: Companies with full written policy and partial policy

Many companies which indicated that they do not currently have any formal or partial policy in place, withregards to the cross-cutting standards, indicate that they in the process of developing one or have started
internal discussions.
Figure 10 shows that 22% of companies have started internal discussions on developing a policy on Impact
assessment and Disclosure. A further 18% of companies are at the stage of starting internal discussions on

19

Benefit sharing. Of particular note is that 21% have no current activity towards the development of policy
on Grievance mechanisms.

Figure 10: State of developing policy in companies with no policy

Issue-specific standards
Companies were asked to indicate whether they had full written policies or partial policies on the nineissue-specific standards listed in the OECD-FAO Guidance.
Figure 11 shows that a significant number of companies had policies on Food security and nutrition (79%),
Environmental protection and sustainable use of natural resources (75%).
However, 39% of companies had no policy on Human rights and 30% had no policy on Labour rights. Animal
welfare was not seen as a relevant policy area for over one-third of companies (32%). Tenure rights over
and access to natural resources also scored low with just over half (56%) of companies having a policy.

20

Figure 11: Policy on issue-specific standards

Companies indicating the presence of issue-specific policy/s were further differentiated between those
who had developed full written policies and those with partial policies (Figure 12). Companies indicatedthey had full written policies on Food security and nutrition (79%) and Environmental concerns (75%). Of
the companies with a policy on Human rights (61%), only 43% have a comprehensive (full) policy.

Figure 12: Companies with full written policy and partial policy21

In the absence of any policy, many companies indicated that they were currently developing one, or beginning internal discussions, demonstrating an active interest by companies to develop future policy as
illustrated in Figure 13.

Figure 13: State of developing policy in companies with no policy

This interest in developing policy was emphasised in interviews, in particular by companies based in thePhilippines who were faced with aligning policy with national reporting regulations expected in 2020 for
publicly listed companies.
Box 1: Example of new regulation driving new RBC policy and reporting
New Sustainability Reporting Guidelines for Publicly Listed Companies in the Philippines
In February 2019, the Securities and Exchange Commission (SEC) in the Philippines made it mandatory for
publicly listed companies to submit their Sustainability Report together with their Annual Report. The rules will
apply to all 2019 Annual Reports that are to be submitted in 2020. For the first 3 years of the submission of therequired Sustainability Reports, the SEC will adopt a ‘comply or explain’ approach. This means that PLCs will be
required to provide information but that the SEC will allow explanations for the items where the company
cannot supply answer if there is no available data yet. Companies will be expected to report publicly on
significant economic, environmental and social impacts in accordance with globally accepted standards. The
reporting requirements are designed to enable more transparent communication with stakeholders, and to help
companies identify, evaluate, and manage their material Economic, Environmental and Social risks andopportunities. See http://www.sec.gov.ph/wp-content/uploads/2019/02/2019MCNo4.pdf

Further analysis of environmental policy
75% of companies have some policy related to Environmental protection and sustainable use of natural
resources which indicated high level of interest on this issue. This can be compared to Human rights which
61% of companies have policy on. Figure 14 shows the sub-issues within Environment protection andsustainable use of natural resources that companies focus on. Waste management (54%), water usage(46%), and the use and management of restricted substances/chemical management (43%) were the top
three environmental issues that companies had written policies on. However emerging issues such as

22

Green House Gas (GHG) emissions as well as Recycling/Plastic usage scored quite low at only 21% and 25%
respectively having a written policy.

Figure 14: Companies with written policies on specific environmental issues

Consideration of international standards and guidanceCompanies were asked if they used or referred to international and regional-level standards, guidance andframeworks in RBC policy. A comprehensive list of relevant examples was provided, and respondents werealso given the opportunity to name any that were not listed.
Table 2 shows that 40% of companies draw upon the 2030 Agenda for Sustainable Development (UN SDGs),
32% on the Principles of the UN Global Compact, and 28% refer to or consider the UNGPs.
The level of awareness of agriculture specific standards such as the CFS-RAI, OECD-FAO Guidance and VGGT
were very low at 12%, 4% and 4% respectively.
International Guidance, Standards, Frameworks
The 2030 Agenda for Sustainable Development (UN SDGs)% ofcompanies
40%

The Principles of the UN Global Compact

32%

UN Guiding Principles on Business and Human Rights (UNGPs)

28%

Principles for Responsible Investment in Agriculture and Food Systems (CFS-RAI Principles)

12%

ILO Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy

16%

Any of the ISO 14000 series (e.g. ISO14001 Environmental management systems)
Principles for Responsible Agricultural Investment that Respects Rights, Livelihoods and Resources (PRAI)
The ASEAN Guidelines on Promoting Responsible Investment in Food, Agriculture and Forestry

12%OECD Guidelines for Multinational Enterprises

4%OECD-FAO Guidance for Responsible Agricultural Supply Chains
Voluntary Guidelines on the Responsible Governance of Tenure of Land, Fisheries and Forests in
the Context of National Food Security (VGGT)IFC Performance Standards on Environmental and Social Sustainability

4%

8%
8%

4%
4%

23

ISO 26000 Social responsibility

4%

The Convention on Biological Diversity (CBD), including the Akwé: Kon Voluntary Guidelines

0%

The Aarhus Convention

0%

None of the above

18%

Don't know

29%

Other (not listed above)

25%

Table 2: The use of, or reference to international guidance, standards and frameworks in RBC policy

25% of companies also listed other standards or frameworks as listed in Table 3.
% ofcompanies

Other guidance, frameworks and standards
EU (EC) no. 834/2007 and 889/2008 (Organic production and labelling of organic products withregard to organic production, labelling and control
ISO 22000 Food Safety Management System (FSMS)
Hazard Analysis and Critical Control Point (HACCP), Good Agricultural Practices (GAPs) & Good
Animal Husbandry Practices (GAHP) programmes
Roundtable on Sustainable Palm Oil

4%
4%
4%
4%

BSCI, Sedex, SMETA

8%Table 3: The use of, or reference to other international guidance, standards and frameworks in RBC policy

18% of respondents stated that their companies did not refer to, or integrate any of the guidance,
frameworks and standards listed. 29% of companies (equal mix of SMEs and large companies) indicatedthey do not know what international or regional frameworks or standards they may be using.
A few companies (8%) referred to the use of private auditing systems such as BSCI, Sedex, SMETA.

Internal management structure and support for RBC implementation
Companies were asked to indicate their level of agreement with statements concerning the level of support
inside the company on RBC policy, including the involvement of senior management, employee incentives
for implementation, and the internal resourcing of RBC capability within the company.

Statements

Employees are trained and are incentivised to comply
with the responsible business standards and requirements set out in company policy(s)There is an individual or team in the company withwell-defined responsibilities for overseeing the implementation of the RBC policy(s)There is a corporate-level executive on the management board (e.g. CEO, CSO) that takes an active role in
RBC policy at my company.
Adequate financial resources are available to support
due diligence and responsible sourcing

Strongly
Agree/
Agree(x% = % ofstrongagreement)

Strongly
Disagree/Disagree(x% = %ofstrong disagreement)

Neither
Agreeor Disagree

Weighted
Average
SD = 1SA=577% (33%)

4% (4%)

19%

4.0

65% (29%)

18% (7%)18%

3.7

74% (41%)

8% (4%)

19%

4.0

68% (29%)

7% (0%)

25%

3.8

Table 4: Perceptions of internal management support in companies towards RBC policy

24

77% of respondents had strong to very strong confidence that their companies trained employees andincentivised compliance, with RBC standards, where these were set out in company policy. Likewise, many
respondents (74%) felt that senior leadership at the corporate executive level took an active role in RBC
policy. 41% strongly agreed with the statement, which might reflect that 50% of the respondents answering
the survey on behalf of companies classified themselves in positions at corporate executive-level or directly
reporting to this level.
Analysis using a weighted average considering the full range of answers showed agreement with thestatement, but not strong agreement. 68% agreed that “Adequate financial resources were available tosupport due diligence and responsible sourcing,” however, there were higher levels of neutral responses.
There was less agreement on the issue of well-defined responsibilities for individuals or teams within thecompany to oversee implementation of RBC policy, with a high dissatisfaction rating (18%), and lower
weighted average, slightly below agreement level. This could point to some gap existing between highlevel statements or support of policy and the actual implementation of policy. This is also relevant to theimplementation of Step 3 in the five-step framework.
Internal training was discussed in one-on-one interview sessions. Most companies interviewed described
employee training typically occurring at certain key moments such as the initial induction, the introductionof new regulations, or the on-boarding or development of new customers or contracts. This indicates theimportance of using those moments efficiently and effectively to embed RBC policy as part of the culture
or expectations of the company. Training also tended to focus on certain elements, such as the companywide Code of Conduct, worker health and safety guidance, and labour rights, pay and contract terms of theemployee-employer relationship.

Engagement with business partners
Contracts
64% of companies reported that they integrate RBC contractual expectations in commercial agreementswith Tier 1 business partners/suppliers. Table 5 shows that companies use a range of contractual
provisions.
40% of respondents indicate their company requires written confirmation that suppliers have read thecompany’s Supplier Code of Conduct and a ‘right to audit’ provision. 36% of companies require writtenagreement that suppliers will comply with a company's RBC/CSR/ESG policies and programmes, and 32%
use contract provisions that include a contractual right of termination in case of a breach of national
environmental protection laws.
36% of respondents indicate their companies do not currently use any provisions in contracts relating to
RBC practice expectations. Such contractual provisions, while not enough by themselves to ensure RBC
compliance, can help set clearer expectations to suppliers of expected conduct, as well as serve as a usefulstep in enabling communication on RBC behaviour expected by companies of their suppliers and business
partners.
Contractual terms
A contractual right of termination in case of breach of anti-corruption laws

% ofcompanies
32%

A written agreement to comply with your company's RBC/CSR/ESG policies and programmes
A written confirmation that they have read your company's Supplier Code of Conduct and agree
to satisfy its requirements

36%

A ‘right to audit’ provision, providing access to relevant records of the supplier40%

A contractual right of termination in case of a breach of national environmental protection laws

36%

40%

25

Provisions limiting their ability to act on behalf of your company and/or to have interactions withgovernment officials
A provision obligating your supplier or business partner to maintain accurate books and records,
and an effective system of internal controls
A contractual clause setting out due diligence obligations by the Tier 1 supplier or business partner towards any of their suppliers and business partners which contribute to the services or products provided to your company.

28%
28%
20%

No such provisions relating to RBC

36%

Other

8%
Table 5: Contractual terms related to RBC policy used by companies

Training and support for business partners and suppliers
Figure 15 shows that 47% of companies run training sessions with Tier 1 business partners/suppliers.
Training sessions are predominantly offered on an ad-hoc basis with only 18% hold training sessions
regularly. Companies explained in interviews that training sessions with business partners were normallyconsidered on a case-by-case basis depending on factors such as the product, service, business partner andlocation.

Figure 15: The use of training sessions with Tier 1 business partners

46% of companies carried out no training sessions with Tier 1 business partners/suppliers. A number ofcompanies noted that their company did not always have access to resources or capability internally tooffer any training sessions with Tier 1 business partners. The willingness of Tier 1 business partners toparticipate in training sessions was explained as an important factor.
Commercial incentives
Respondents were asked to give their level of agreement as to whether company suppliers and business
partners were commercially incentivised to improve their RBC performance (e.g. additional payments orbonus, farm management advice). The results in Figure 16 shows an absence of any strong disagreementwith the statement but also a very low level of strong agreement (15%), the lowest response across all
Likert questions in the survey. Neutral responses are also high (33%).
Examples of the use of commercial incentives by companies were provided in interview sessions. These
often related to additional training, on-farm support with production advice or extension services, data
management tools. However, companies said that the use of commercial incentives to drive RBC was worth
further investigation and that there was interest in understanding how other companies were proceeding26

in this manner. There were a number of difficulties also raised by companies when trying to develop fairand cost-effective incentive schemes for suppliers, particularly in highly competitive markets and acrossdiverse suppliers which might number in the thousands, and which have very different models of
production and needs.

Figure 16: Perceptions on the use of commercial incentives by companies to improve RBC

Establish an operational-level grievance mechanism
The OECD-FAO Guidance advises that grievance mechanisms should be easily accessible for workers andall those potentially affected by the adverse impacts of an enterprise’s failure to uphold RBC standards.5
43% of companies do not have any formal written or partial policy on Grievance mechanisms.
Approximately half of those companies, however, state that they are actively considering the developmentof such policy i.e. policy is being developed or internal discussions have started.

5

Step 1.5 of the OECD-FAO Guidance at http://mneguidelines.oecd.org/OECD-FAO-Guidance.pdf#page=35

27

Step 2. Identify, assess and prioritise risks in the supply chain
Key findings
 71% of companies currently conduct some degree of supply chain mapping, with 29% carrying out
no mapping.
 Both large-scale globally focused companies and SMEs stressed the difficulties in undertaking supply
chain mapping due to the complexity and diversity of agricultural supply chains which often encompassed multiple stakeholders and activities.
 54% of companies do not ask for any information from business partners related to their RBC policies.
 Reasons for undertaking supply chain mapping were most likely related to whether the product being
mapped was a significant spend or cost to the company, or whether it was considered as a criticalsupply input for company operations.
 In cases where high-risk situations (e.g. locations, products, business partners) have been
identified, 60% of companies “always” or “usually” undertake enhanced due diligence.

Mapping the supply chain
Figure 17 shows that 29% of companies currently do not map the supply chain. In interviews, companies
gave reasons for why they did not undertake supply chain mapping. These included: high complexity; thatit required resources they did not have or could not afford; or that there was no internal support yet forsuch action.
Over 50% of companies said that the decision to undertake full/partial supply chain mapping related towhether the product/commodity/service was a:

critical supply input for company operations (57%); and/or
significant spend or cost to the company (54%).

Companies also cited external factors such as high environmental risks (21%), and high-risk locations(21%) as reasons to undertake supply chain mapping.

Figure 17: Reasons for companies to undertake supply chain mapping28

In addition, some companies provided three other reasons not listed. These included:

Downstream supply chain customers requesting supply chain mapping.
Regulatory bodies in export markets demanding supply chain mapping.
The need to demonstrate known positive social benefits from the production of the commodity.

In interviews, companies stressed the complexity of undertaking supply chain mapping in agricultural
supply chains that might have hundreds or even thousands of Beyond-Tier 1 business partners andsuppliers.
Requesting information on business partner/supplier RBC practices
Companies in the survey were asked if they required Tier 1 business partners and suppliers to provide any
information related to their RBC policies and due diligence. Figure 18 shows that approximately 47% ofcompanies request information related to RBC policies and due diligence practices. Of this, 29% ofcompanies did so for all Tier 1 suppliers and business partners. 18% required such information for only
some Tier 1 suppliers and business partners.

Figure 18: Responses by companies on requesting information from suppliers and business partners

More than half (54%) of companies currently do not ask for any information from business partners related
to their RBC policies, indicating a potential new action for these companies to consider in future practice.

Enhanced due diligence
35% of companies stated they “always” carry out enhanced due diligence in high-risk contexts, with afurther 25% “usually” undertaking enhanced due diligence. Figure 19 also shows that 39% of companies
only “sometimes”, “rarely”, or “never”, carry out enhanced due diligence when high-risk situations havebeen identified.

29

Figure 19: Action on enhanced due diligence in high risk/red flag situations

Third-party risk identification tools
A number of companies identified the use of third-party risk identification tools and services. These
included Supplier Ethical Data Exchange (Sedex), Sedex Members Ethical Trade Audit (SMETA), BusinessSocial Compliance Initiative (BSCI), and RepRisk.
Some companies also rely on industry-specific frameworks developed to support the identification andmanagement of risks in specific supply chains, as well as certification processes, for example, membershipto the Roundtable on Sustainable Palm Oil (RSPO). Another example given by one company was to checkthat business partners had not been listed on the Sanctions Program of the United States’ Office of Foreign
Assets Control.
A few companies also mentioned interest in hearing about any novel or innovative tools and approaches
developed by companies to help identify risks beyond-Tier 1 suppliers upstream in the supply chain. Manycompanies, particularly SMEs, expressed the need for more guidance and advice on tools and technologies
to help better identify risk.

30

Step 3. Design and implement a strategy to respond to identified risks in the supply
chain
Key findings
 A number of companies stressed that the major challenge in the adoption of risk management plans
was getting the ‘buy-in’ for adopting the plan from stakeholders outside the direct control of thecompany (e.g. with Tier 1, Beyond-Tier 1 business partners and other external stakeholders), whowere critical to the implementation of actions under the plan.
 The complexity of adopting risk management plans across multiple operations situated in diverse
regulatory and social environments was considered a significant challenge. Each location, for example, might require a different plan, making it difficult to adopt common standards across all operations.

Integration of risk into management plan
Companies were asked to rate their level of agreement with the statement: “We systematically identify all
relevant RBC risks across the full supply chain and incorporate them into our risk management plan.” Levelof agreement with this statement was 72%, in line with the percentage of companies undertaking supply
chain mapping. Only 27% of those, however, highly agreed with this statement. An additional 25% ofcompanies indicated they neither agreed nor disagreed with the statement.

Figure 20: Perceived policy and implementation of risk management within companies

Reporting findings of risk assessment and management to senior management
Reporting on risk assessment, and effective monitoring of risk management plans, requires clear and robustlines of responsibility and reporting across the enterprise. Results in Figure 21 show strong agreement(41%) that senior management at the highest levels is taking an active role in RBC policy. However, levelsof strong agreement (29%) decrease when respondents are asked about whether there is an individual orteam with well-defined responsibilities for overseeing RBC policy implementation. There is also noticeable
disagreement on this aspect.

31

Figure 21: Perceptions of internal RBC support systems within companies

Adopting a risk management plan
In interview sessions, companies were asked to describe the steps that the company took in identifying risk
to the company, addressing that risk, and the challenges they faced when adopting any plan. A number ofcompanies talked about the difficulties of adopting a risk management plan, in particular with stakeholders
outside the company to which the company did not have direct control over. Stakeholders were often
viewed as “internal” or “external”, and a key challenge was, “to get the same level of understanding
between both.”“Internally it may be relatively easy to develop a risk management plan or policy but
when we come to implement it on the supply-side that can be very difficult. Suppliers
often require more resources to implement any new demands. We need to get their buyin which can take time and resource, we need to get them to take on commitments,
sometimes written ones, as well as organise possible new training. When you aredealing with hundreds to thousands of farmers or suppliers it takes time andconsiderable effort to achieve adoption of any policy or risk management plan.”
Another challenge voiced by a number of companies was the complexity of adopting risk management
plans across operations situated in diverse regulatory and social environments. Some companies described
multiple operations across countries and talked about the sometimes-extreme differences due to local,
regional and national-level differences. Different languages, cultures and regulatory environments acrossSoutheast Asia made adoption of any risk management plan extremely challenging. Therefore, it was often
unlikely that any single-use plan could therefore be employed across all operations without somemodification. Modifications, however, required considerable resources. It also sometimes createddifficulties in driving common standards across operations.
“Every location, at local, regional, or country-level can require different risk
management plans. It’s very context dependent. Therefore, adoption of risk
management needs to consider all the different rules, regulations, situations in each of
our areas of operation. This is a challenge then, actual implementation.”32

Lastly, companies discussed the significant resources required for training, incentives and communicationthat were needed to ensure that risk management plans were adopted. Examples of different ways tocommunicate with farmers to ensure implementation of the risk management plan were provided. One
such example involved the use of small vans that could move around farms and help disseminate
information and advice in the local language. On-site training on health and safety was another example
shared. Some smaller companies talked about the current lack of internal resource within the company toadequately develop and adopt a risk management plan.

Consultation with stakeholder when developing and implementing risk management plans
Figure 22 demonstrates that 36% of respondents strongly agreed that companies’ internal stakeholders(e.g. workers/public affairs/operations/legal division) were fully consulted in the development of risk
management plans, with another 43% agreeing with the statement. There were relatively low levels ofneutral responses or disagreement.

Figure 22: Level of consultation with stakeholders

Figure 22 does, however, show higher levels of ambivalence or indifference and lower levels of strong
agreement (25%) on the perception that respondent’s companies fully consult with a range of external
stakeholders, compared to internal stakeholders.

33Step 4. Verify supply chain due diligence
Key findingsVerifying supply chain due diligence was considered a complex and demanding process along
agricultural supply chains due to often large, complex supply chains, made up of sometimes
thousands of suppliers, operating over multiple locations and countries where national laws andpractices can differ markedly.



Verification processes are more commonly used across the nine issue-specific standards incomparison to cross-cutting standards.

Labour rights, Health and safety and Environmental protection and sustainable use of natural
resources were the most commonly verified issue-specific standards with approximately 80% ofcompanies indicating they used some verification process to monitor policy effectiveness.
Companies most preferred, on average, to use the following verification processes for issue-specificstandards: internal audits (45%), on-site investigations (35%), and external audits (32%).

More companies verify actions related to Impact assessment than any other cross-cutting standard.
Action on Benefit sharing and Consultation are least likely to be verified by companies. Companies
most preferred to use internal audits (42%), on-site investigation (31%) and external audits (27%).
There is comparative high use of certification (26%) in verifying Impact assessment. Roughly onethird of the companies do not currently use any verification process yet for verifying supply chain
due diligence on cross-cutting standards.



There is comparatively high use of on-site investigations for Environmental protection andsustainable use of natural resources (50%) and Tenure rights over and access to natural resources(29%).

Verification of supply chain due diligence
Companies were asked to provide information on how they verified that their due diligence practices are
effective.
Verification processes used across cross-cutting standards
Figure 23 illustrates that more companies verify actions related to Impact assessment than any other crosscutting standard. For example, on average, the different verification methods (internal audits, external
audits, on-site investigations, third-party monitoring, certification) are used to verify action on Impact
assessment by one-third of companies, compared to Benefit sharing where 19% of companies on averageutilised the range of verification processes. The most preferred verification process used across all crosscutting standards on average were internal audits (on average 42%) and on-site investigations (31%).

34

Figure23: Use of verification processes across cross-cutting standards. (Combined no verification = No + N/A)

On average, monitoring by third parties (14%) and certification (9%) are less preferred to the other actions
to verify effectiveness of companies’ due diligence on the six cross-cutting RBC issues. Of note, is the highuse of certification (26% of companies) in verifying Impact assessment.
Cross-cutting standards should normally be pertinent to all companies. The combined responses of notapplicable and no verification in Figure 23 indicates that roughly one-third of the companies do notcurrently use any process for verifying compliance with company policy on cross-cutting issues.
Action on Benefit sharing and Consultation appear to be the least likely to be verified by companies.
Verification processes used across nine issue-specific standards
In respect to the nine issue-specific standards of the model enterprise policy, companies also favoured, on
average, internal audits (45%), on-site investigations (35%), and external audits (32%) as demonstrated in
Figure 24.
Certification and monitoring by third parties were used by more companies compared to their use inverification of cross-cutting standards. Of particular note is that monitoring by third parties was used by
14% of companies to verify performance on cross-cutting standards compared to 25% of companies on
issue-specific standards. Discounting data on Impact assessment 6 , on average 6% of companies usedcertification across cross-cutting standards compared to 14% of companies across issue-specific standards.
Labour rights, Health and safety and Environmental protection and sustainable use of natural resourceswere the most commonly verified standards with approximately 80% of companies indicating they usedsome verification process to monitor effectiveness of policy on these issues.

6

Use of certification verification for Impact assessment was high (26%) compared to other cross-cutting standards.

35

Figure 24: Use of verification processes across 9 issue-specific standards of the model enterprise policy (Combined no verification =No + N/A)

30% of companies state that they have no verification processes, or that verification is not applicable, for
Human rights or Governance. For Governance, this is consistent with the findings which found that 29% ofcompanies have no policy. 39% of companies do not have policy on Human rights, indicating a small gap
between policy and verification efforts. However, the key factor for presence of verification appears to be
the presence of existing policy i.e. something to verify. Tenure rights over and access to natural resources
is an area where 57% of companies have no verification or consider this issue not applicable.
Monitoring by third parties scores particularly high in verifying activities related to Labour rights (39%), andHealth and safety (36%), indicating the possible influence of higher regulation in these areas by national
governments.
There is comparatively high use of on-site investigations for Environmental protection and sustainable useof natural resources (50%) and Tenure rights over and access to natural resources (29%). Of note is the low
use of internal audits for Tenure rights over and access to natural resources (21%). Certification is also
particularly used for policy areas of Health and safety (25%), and Environmental protection and sustainable

36

use of natural resources (25%) verification, potentially indicating a higher number of certification processes
existing in these two areas.
Figure 25 demonstrates percentage of companies not using any verification process across the model
enterprise policy standards. The high percentage of companies not verifying Animal welfare practices isperhaps not surprising given that many companies stated this policy area was not applicable to theircompany. The high percentage (57%) of companies not using verification for Tenure rights over and accessto natural resources also potentially represents lack of policy on this issue, although it should be noted thatroughly 13% of companies with policy do not verify performance. This is, however, fairly consistent withother standards. For example, 79% of companies have policy on Food security and nutrition, with 32% notusing any verification, demonstrating a gap of around 11% of companies with policy, not verifying
performance.
Impact assessment is, however, an anomaly. 57% of companies state they have some policy on Impact
assessment, yet 74% of companies indicate they undertake some form of verification to assess
performance on this aspect. The reasons for this gap should be investigated further.

Figure 25: Percentage of companies that do not use verification processes for model enterprise policy standards

Challenges in the implementation of verification measures
Discussions in interviews on the challenges of verification processes focused on the practicalities ofverifying actions across large, complex supply chains, made up of sometimes thousands of suppliers,
operating over multiple locations and countries where national laws and practices can differ markedly.
In interviews, some companies remarked on the difficulty in finding and using verifiers in certain locations,for example in remote farming areas where language and culture may be a barrier to communication. In
these cases, companies believed there was sometimes a lack of suitably trained verifiers in some regionsof Southeast Asia that had the right skills, training and location-specific experience.

37

Verification of practices of Beyond-Tier 1 business partners was considered very complex. One company
highlighted the importance of prioritising risk when choosing a verification method and to be open tousing different verification methods, when needed, to obtain a clearer picture on key issues. The use of a‘different set of eyes’ was viewed as invaluable. This was seen as one of the benefits of using third-party
monitoring.
Another company discussed the importance of getting ‘buy-in’ from business partners to undertaking
verification across the supply chain. This required building trust and understanding on the importance ofverification to both parties. This was considered a worthy yet time-intensive process, but it was,
“important that business partners and suppliers did not feel suspicious of your intentions, or feeloverloaded with additional work, or expectations.”

38

Step 5. Report on supply chain due diligence
Key findings
 39% of companies report publicly – as either a stand-alone report or integrated within an annual
report. 61% of companies indicated that they do not publish a public report on their due diligenceand RBC activities.
 Many companies publish parts of policy on particular interest areas or on topics that have drawn
stakeholder attention. Companies utilise a diversity of communication approaches including communication practices via a range of public forums, for example, company websites, industry or community roundtables, industry initiatives or certification schemes.

Public reporting
Companies were asked whether they published any report on RBC, or other such reports, like a corporatesocial responsibility (CSR) or environmental, social and governance (ESG) report. Figure 26 shows that 39%
report publicly - as either a stand-alone report or integrated within an annual report

Figure 26: Publication of public report on RBC

Of those 39% of companies that publish some type of RBC report, Figure 27 shows that 14% of companies
publish a ‘stand-alone’ report on RBC, and 25% publish a report integrated within their annual company
report.

39

Figure 27: Public communication of RBC policy by companies

61% of companies do not publish any public report, although 21% of those companies report internally.
There may be a number of reasons for this, for example, privately-owned companies may have reporting
policies that are focused on internal communication compared to publicly listed companies, where public
reporting on RBC might be required. A significant proportion of companies (39%) do not carry out any
comprehensive reporting either externally or internally.
A number of companies in interviews said that it was important to publicly report in a meaningful way on
RBC which were also able to be verified.
“It’s not enough to dump a whole lot of good-looking activities in a list in a glossy
brochure and say you are doing RBC. It needs to be more than this.”A desire for better guidance on how to report on RBC in an effective way without looking like they were
‘greenwashing’ or doing it solely as a public relations exercise, was also stated. One company mentioned
growing confusion over what international frameworks or standards to use in reporting on RBC. Examples
of how companies were reporting on, and more widely communicating on RBC, were considered as useful
resources to share and learn from.
Stakeholder communication
Companies were asked about the extent of their communications with external stakeholders. 29% of
respondents strongly agreed that their company communicated externally all relevant information to
stakeholders, while no companies strongly disagreed. 43% of companies “agreed” that their company
externally communicated all relevant information (Figure 28).

40

Figure 28: Perception of external communication of company RBC policy and action

These results appeared somewhat inconsistent with responses that indicated a significant number ofcompanies do not publicly communicate any or only low levels of information. Further discussion on this
aspect would be helpful to better understand perceptions of performance versus actual implementation,
as well as developing a deeper understanding on robust external communication and reporting
requirements.
Diversity of approaches
Companies use a range of different ways to communicate on RBC practices including on their due diligence
actions. For example, some companies publicly present their overall RBC policy including specific targets
on issues such as mapping of critical raw materials suppliers by an agreed date, while also giving an
indication of progress towards achievement of the targets.
Company websites also included many examples of specific policies on certain RBC issues or company
policies. For example, one company publishes online the company-wide code of conduct, setting out legal
and ethical responsibilities of employees. Another company publishes a detailed anti-corruption policy thatsets out policy, roles, responsibilities and actions by individuals in the company. Another example was adetailed section on the company’s website that comprehensively lists policies and actions by the company
on RBC. Companies also engage in industry or community roundtables, or as part of industry initiatives orcertification schemes. And any companies also report directly to external stakeholders, such as lenders,shareholders, and regulatory bodies.

41Section IV. Recommendations
The analysis has yielded valuable insights into the most common challenges faced by companies andinitiatives in advancing the recommendations of the OECD-FAO Guidance in Southeast Asia. The following
recommendations are aimed at addressing the challenges presented in this report and leveraging
opportunities to strengthen companies’ due diligence practices in the future.

Step 1: Establish strong enterprise management systems for responsible supply chains
Recommendation 1: Address gaps in policy, in particular on cross-cutting standards, Human rights, andGrievance mechanisms
Some companies have comprehensive written policy across all, or the majority of RBC standards, whereas
others still have significant gaps. 39% of companies did not have a policy on Human rights and this could
be an area for further attention. Cross-cutting standards are of equal importance to issue-specific standards
and should normally be expected to apply to all companies. For example, only 43% of companies indicatedthey had developed policy on Grievance mechanisms. Given the valuable role of robust Grievancemechanisms in supporting issue-specific standards, this is likely to be an area that would benefit fromfurther discussion in the SEA Pilot.

Recommendation 2: Increase understanding of policy areas under the model enterprise policy and help
encourage companies to consider the impact of their operations across the full supply chain.
There may be some confusion as to the applicability and understanding of issues as defined in the model
enterprise policy of the OECD-FAO Guidance. This was especially evident in interview sessions wherecompanies showed different levels of understanding on standards under the model enterprise policy.
Companies also outlined the difficulties in considering impacts beyond the direct control of the company.
Care should be taken when deciding if policy areas are not applicable to company operations. For example,
issues such as tenure rights are often be present at some level within agricultural supply chains, even inplant-based commodity systems.

Recommendation 3: Increase understanding on the use of internal and external-focused measures to help
improve RBC management performance.
Companies can employ a variety of management measures to help support RBC implementation, yet somecompanies are yet to take advantage of these. For example, 36% of companies reported that they do notcurrently integrate RBC contractual expectations into commercial agreements with Tier 1 business
partners. Given this is often a useful first step in communicating the importance of RBC policy to business
partners and suppliers, companies are encouraged to consider the potential for such an approach in futurebusiness relationships. There is significant potential amongst the 46% of companies who currently
undertake no training sessions, to start doing so, even in a limited capacity. Other measures that companies
might consider include the use of incentives to encourage responsible business action (e.g. financial
benefits, long-term contracts, technical assistance, access to digital tools, low-interest loans, innovative
partnerships) as well as the development of sector-led approaches. Sharing of case studies from thosecompanies who are implementing such measures and promotion of regional training would be useful.

42

Recommendation 4: Increase understanding on, and use of, relevant international and regional standards,
guidance and frameworks on RBC
The survey results suggest that integration of international and regional standards, guidance andframeworks in company policy is still at a development stage. Developing a greater understanding on thebenefits of such resources, including any barriers to their effective use is important. Discussion on waysthat companies can better integrate relevant international and regional guidance would be helpful.

Step 2: Identify, assess and prioritise risks in the supply chain
Recommendation 5: Increase the capacity and capability of companies to carry out full supply chain
mapping, particularly in cases involving high risk circumstances, locations, products, or business partners.
71% of companies currently undertake some degree of supply chain mapping, however, there remains asignificant opportunity for those companies not doing so, to start on this important process. For those thatare already doing so, further work to systemically work towards a complete picture of all their business
relationships should be encouraged. Companies could learn much from the practices of those companies
in the SEA Pilot who are already carrying out sophisticated supply chain mapping. In most cases, identified
high risk situations should necessitate enhanced due diligence. Gaining insight, therefore, into why 40% ofcompanies do not “always” or “usually” enact this process in such instances is important.

Recommendation 6: Draw attention to measures that companies can implement to help assess risks along
the supply chain and with business partners
Approximately half of companies in the survey do not currently ask for information from business partners,
relating to their RBC policy and actions. Such information is however useful to identify possible red flags
for further investigation. It can also play an important cascade role across the supply chain, whereby
suppliers in-turn start asking for information from their upstream suppliers and so forth. Dissemination onvarious risk assessment tools, identifying independent and credible sources of risk information is also
recommended.

Step 3: Design and implement a strategy to respond to identified risks in the supply chain
Recommendation 7: Clarify roles and reporting responsibilities across the enterprise to ensure that risks areadequately reported to senior management, effectively managed and reported on.
Clear roles and responsibilities across companies and coordination across often diverse departments (e.g.
operations, marketing, legal) is essential to the effective implementation of RBC policy. The results
indicated that this is an area which deserves further attention to ensure robust coordination and control
on risk management. This aspect was also highlighted in interviews and survey results. For example, someinterviewees demonstrated very clear and coordinated understanding on RBC implementation across thecompany, whereas others were less confident on this aspect. 29% of respondents indicated they did notknow what international and regional guidance, standards and frameworks were used, or referred to, by
the company, indicating some gap in company-wide knowledge related to RBC implementation.

Recommendation 8: Encourage sharing of lessons learnt from the adoption and implementation of risk
management plans and emphasise the ‘learning by doing’ approach43

Designing and implementing a strategy to respond to identified risks in the supply chain was described as
a complex and difficult process by companies and a ‘learning by doing’ approach was emphasised, which
could then be refined over time. Companies interviewed expressed an interest in hearing from othercompanies on their approaches, in particular on activities with upstream producers in the supply chain.

Step 4: Verify supply chain due diligence
Recommendation 9: Increase the use of verification processes by developing greater understanding on theessential requirements for, and benefits from, achieving robust verification.
Limited verification efforts, particularly in cross-cutting standards and several issue-specific standards,
demonstrates a possible gap in current implementation of the OECD-FAO Guidance (e.g. lack of policy toverify), or possible confusion over the applicability of cross-cutting standards to company operations (i.e.
not applicable). The key takeaway is, however, that verification relies on the presence of policy. Examining
areas where companies do not verify their performance against RBC policy can indicate areas wherecompanies need additional support and guidance to best implement RBC risk-based due diligence,
including any need to develop robust written policy that can be adequately monitored across time.

Recommendation 10: Share the experience of companies in using verification processes
A number of companies stressed the difficulties in verification of practices beyond Tier 1 business partners.
However, examples were also provided involving comprehensive supply chain mapping and verification
processes that companies had committed themselves to. Sharing these examples and developing a better
understanding of the use of verification, drawing on the experience of leaders in the field including local
civil society, monitoring groups, or field auditors, could help others with implementation.

Step 5: Report on supply chain due diligence
Recommendation 11: Improve public reporting on RBC in a meaningful and robust way
A significant percentage of companies are not currently providing any public reporting in line with theOECD-FAO Guidance. Given the importance of effective reporting to promote RBC, the SEA Pilot could
provide an opportunity to help address this gap. Examples of reporting by companies that are at a moreadvanced stage of public reporting on RBC could be used as a valuable resource for others, along withdiscussion on tools and approaches and feedback from civil society and government agencies on good
examples of public reporting on due diligence.

44Annex I.
Baseline survey

45

46

47

48

49

50

51

52

53

54

55

56

57

58

Definitions
Agricultural supply chains
A system encompassing all the activities, organisations, actors, technology, information, resources and services involved in producing agri-food products for consumer markets
Business partner
Entities with which an enterprise has a business relationship are referred to as ‘business partners’.
Business relationship
The term business relationship includes an enterprise’s relationships with business partners, entities in the supply
chain and any other non-state or state entities directly linked to its business operations, products or services.
Due diligence
The process through which enterprises can identify, assess, mitigate, prevent and account for how they address theactual and potential adverse impacts of their activities as an integral part of business decision-making and risk management systems. Due diligence concerns adverse impacts caused or contributed to by enterprises as well as those
adverse impacts that are directly linked to their operations, products or services through a business relationship.
Enhanced due diligence
Higher-risk areas such as “red flag” locations, products or business partners should be subject to enhanced due diligence. Enhanced due diligence may include on-the-ground verification of qualitative circumstances for “red flag” locations, products, or business partners.
Mitigation“Mitigation” refers to actions taken to diminish or eliminate harm if a negative event occurs. Mitigation measures
may be taken before, during, or after an event with the aim of reducing the degree of harm.
Prevention“Prevention” refers to actions taken to prevent harm from occurring or re-occurring. In other words, prevention
measures are taken before harm occurs.
Remediation
The provision of remedy for adverse impacts.
Risk
Likelihood of adverse impacts on people, the environment and society that enterprises cause, contribute to, or towhich they are directly linked.
Risk-based due diligence
When the nature and extent of due diligence correspond to the type and level of risk of adverse impacts. The severityof actual and potential adverse impacts should determine the scale and complexity of the necessary due diligence.
Risk management
Prevention, mitigation, remediation of potential and actual adverse impacts.
Stakeholders
Stakeholders include persons or groups who are or could be directly or indirectly affected by the actions of the enterprise and its interlocutors.
Supplier
All business relationships that provide a product or service to an enterprise, either directly or indirectly.

59

OECD Pilot Project on Responsible Agricultural Supply
Chains in Southeast Asia
BASELINE REPORTThe OECD is engaged in promoting the understanding and uptake inSoutheast Asia of supply chain due diligence recommendations in the
OECD-FAO Guidance for Responsible Agricultural Supply Chains. This reportpresents the findings of a baseline survey conducted amongst companies
along agricultural and seafood supply chains to understand how they are
implementing responsible business practices and in particular riskbased due diligence across agricultural supply chains.

mneguidelines.oecd.org/rbc-agriculture-supply-chains.htm

With funding by theEuropean Union