A group of 18 organisations have come together to improve transparency and accountability in the palm oil sector, releasing a set of best-practice reporting guidelines for companies engaged in sustainable palm oil sourcing and production.

Oxfam, WWF, the Rainforest Action Network and Ceres are among the organisations that have collaboratively developed the reporting guidance for responsible palm oil, which could reflect “a turning point for the industry” if accompanied by “robust implementation efforts”, the report says.

The document offers recommendations to companies across the palm oil supply chain – growers, processors, traders, manufacturers and retailers – on topics such as supply chain transparency, effective grievance processes, forced labour, smallholder engagement and responsible land expansion.

Ceres, a non-profit sustainability advocacy organisation and the co-ordinator of the initiative, says the guidance could help identify the gap between corporate commitments and on-the-ground challenges when it comes to sourcing responsibly produced palm oil. It can also be used to guide dialogues and due diligence processes between companies, their suppliers, civil society stakeholders and investors.

“Numerous companies are putting resources towards sustainable palm oil; yet, deforestation, land conflicts and labour issues persist,” says David Bennell, programme director of Ceres’ food and capital markets initiative. “Transparency on supply chain practices is critical for all stakeholders, investors, civil society groups and businesses, to understand and address the implementation gap.”

According to Kate Kroll, shareholder advocate at investment firm Green Century Capital Management, one of the organisations involved, the guidance could be a helpful tool for investors to better identify and assess risks.

“The razing of rainforests and prevalent use of child labour in the palm oil sector create regulatory risks and hinder companies’ social licence to operate, which can threaten access to raw materials, production and overall brand equity. Companies need to be transparent about how they are managing these risks so that we, as investors, can identify and measure them effectively,” she says.

The guidance integrates recommendations from existing reporting frameworks and sustainability initiatives. It encourages companies to report the outlined information through existing platforms such as CDP, the Roundtable on Sustainable Palm Oil (RSPO) Annual Communication on Progress and sustainability reports.

The release of the guidance comes just a week after a Greenpeace report accused HSBC and other banks of financing palm oil companies engaged in unsustainable behaviour in Indonesia, raising questions about the due diligence undertaken by the financial sector when it comes to palm oil.