How responsible business boosts the agriculture sector

Imagine an agricultural sector without child labour. A fair wage for farm workers and a fair income for farmers and food producers. Food grown with respect for the environment, and water pollution a distant memory. Reaching these goals is possible with the right business approach.

Responsible business conduct is a hot topic of global conversation, and FAO has been at the centre of this discourse in agriculture for several years. In 2016, FAO and the Organisation for Economic Co-operation and Development (OECD) launched the OECD-FAO Guidance for Responsible Agricultural Supply Chains, a global standard for addressing risk and development in the agricultural sector. A growing number of governments around the world have since been incorporating the OECD-FAO Guidance into their corporate sustainability policies, linking together investment, enterprise, agriculture and development.

Photo: FAO

Due diligence: a gateway to development?

The OECD-FAO Guidance recommends that businesses implement due diligence to address the most significant environmental and social risks associated with their agricultural supply chains. Due diligence is the process through which enterprises can identify, assess, mitigate, prevent and account for how they address the actual and potential adverse impacts of their activities as an integral part of business decision-making and risk management systems. In a rising number of countries, governments have introduced legislation that makes due diligence mandatory for companies. The due diligence process helps businesses identify issues and come up with solutions to the adverse impacts of their actions.

This is not just good for the planet but for businesses’ bottom lines too. Doing business responsibly can improve workers’ rights or livelihoods in sourcing communities, but it can also strengthen business processes. In recent years, there has been growing media scrutiny on and consumer interest in supply chains and working conditions. Obtaining more in-depth information on suppliers builds trust and reduces reputational risks from potential problems. By preventing negative impacts, a company will avoid bearing the costs of litigation and remedial actions. Likewise, actions that protect the environment can also bring financial benefits: for example, using renewable energy sources can actually be more economical in the long term and help hedge against the volatile markets of fossil fuels.

The OECD-FAO Guidance illustrates how conducting due diligence and addressing issues in supply chains has the power to boost businesses themselves and many key areas of development, including labour rights, animal welfare, land tenure rights, environmental protection and food security.

But how does it really work?

Let’s start with a simple fact: over 70 percent of child labour takes place in the agricultural sector. By incorporating due diligence into their business models, large companies can contribute to eliminating child labour by conducting reviews to understand the probability of how and at what point in their supply chain this can occur.

Just carrying out audits is not enough to detect risks in supply chains, as audits can be faked or falsified on their own. However, by combining auditing with due diligence and working together with suppliers and outsourced partners along the supply chain, as well as with civil society organizations and other actors, structural problems like child labour can be addressed.

The OECD-FAO Guidance helps explain how companies can tackle issues like this by making them relevant to their operational environments. By doing this, companies not only improve their own supply chains but help contribute to the Sustainable Development Goals, creating change on a larger scale.

Photo: FAO

Better for the environment

Agriculture, forestry and other agricultural land use accounts for up to 25 percent of all greenhouse gas emissions. In most regions of the world, over 70 percent of freshwater is used for agriculture. Significant efforts are required to improve sustainability and reduce agriculture’s impact on the planet.

Upon introducing due diligence, one company that participated in a