The 'Soft Commodities' Compact is a unique, client-led initiative that aims to mobilise the banking industry to help transform soft commodity supply chains, thereby helping corporate clients to achieve zero net deforestation by 2020.
In 2010, the Consumer Goods Forum (CGF)'s Board of Directors committed their 400 members, representing a combined procurement power of over $3 trillion, to achieving zero net deforestation in their supply chains by 2020.
The 'Soft Commodities' Compact was the result of two years of extensive collaboration between the Banking Environment Initiative (BEI) and the CGF, with advice from WWF, to align the banking industry with this goal.
The Compact was endorsed by the CGF Board in December 2013, welcomed by the Obama Administration at a White House meeting shortly after, and used to exemplify powerful industry-to-industry partnerships at a special session of the World Economic Forum’s Annual Meeting in Davos in January 2014. The banks that have now adopted the Compact account for approximately 50 per cent of global trade finance.
Compact Implementation Group
In December 2015, the Compact Implementation Group published an update to the Technical Guidance that supports the Compact. This followed consultation with the CGF as well as with a range of other stakeholders representing civil society, investors and other experts.
The Technical Guidance elaborates on ‘Key Terms’ within the Compact, offers further implementation guidance to banks and recommends Key Performance Indicators (KPIs) for banks to consider when reporting on how they are progressing with their implementation of the Compact through to 2020.
The Compact is not intended to be prescriptive, but rather to lead the banking industry in developing market norms that align bank practice with the CGF’s resolution on deforestation. Individual Compact Banks are therefore expected to make their own decisions on if and how to incorporate the Compact’s commitments into their own business practice. It is not the intention either of the BEI as a leadership group of banks, or of the University of Cambridge Institute for Sustainability Leadership (CISL) as host of the Secretariat for the group, to police or audit individual Compact Bank’s progress towards the Compact’s goal. Indeed, efforts to increase transparency around progress Compact Banks are making to implement the Compact are intended to signal Compact Banks’ willingness to work with all of their own relevant stakeholders to improve their individual performance.
All involved recognise that much more work is needed, particularly in light of practical experience gained in the implementation of the Compact. Such experience will inform refinements and updates to this ‘living document’. Compact Banks will continue to benefit from open dialogue with their clients and others to be able to report on their implementation of the Compact. In the meantime, individual Compact Banks will decide precisely how they will report on their progress against the recommended KPIs.