Rainforest Action Network Methodology for the Evaluation

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Rainforest Action Network Methodology for the Evaluation of Performance of Brands profiled in the Keep Forest Standing Campaign April 27th, 2021

Rainforest Action Network has undertaken an evaluation of the performance of the influential grouping of banks and brands profiled in our Keep Forest Standing campaign. The brands are the multinational, fast-moving consumer goods companies of Colgate-Palmolive, Ferrero, Kao, Mars, Mondeléz, Nestlé, Nissin Foods, PepsiCo, Procter & Gamble, and Unilever. The banks are the financial powerhouses of ABN Amro, Bank Negara Indonesia (BNI), CIMB, DBS, Industrial and Commercial Bank of China (ICBC), JPMorgan Chase, and Mitsubishi UFJ Financial Group (MUFG). The evaluation assessed the actions taken by each bank and brand to implement the policies and processes needed to ensure that they do not contribute to deforestation, forest degradation or human rights violations, through supply chain or financing connections to commodities known to routinely result in harmful impacts. These policies and processes were detailed as a set of recommendations outlined in the “Keep Forest Standing: Exposing Banks and Brands driving deforestation”, published in March 2020. The methodology that was used to undertake the evaluation is described below. Our assessments of performance were based on published information that was accessible in March 2021, a year after RAN called on each bank and brand to take action to implement the recommendations outlined in our report. The methodology, and results of our initial evaluation, was shared with each bank and brand in advance of the publication of our final “Keep Forest Standing Scorecard”. The responses we received from Ferrero, Kao, Mars, Nestlé, Nissin Foods, Procter & Gamble, Unilever, ABN Amro, CIMB, DBS and Industrial and Commercial Bank of China (ICBC) were considered when finalizing our evaluation.

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“The Keep Forest Standing Scorecard” - The Results of Evaluation The results of our evaluation are shown in the table below.

Company Name

NDPE Policy

NDPE Policy Scope

Mandate for NDPE Policy Adoption

NDPE Implementation Plans

Forest Footprint Disclosure

Proof of Free, Prior and Informed Consent

Robust monitoring and due diligence systems

Zero tolerance for violence and intimidation

Holding bad actors to account

Independent verification of NDPE compliance

Final Score

Colgate- Palmolive Yes Partial No No No No Partial No No No F

Ferrero Yes No No No No No Partial No No Partial F

Kao Yes Partial No No No No No No No No F

Mars Yes Partial No Partial No No Partial No No No D

Mondelez Yes No Partial No No No Partial No No No F

Nestle Yes Partial No Partial Partial No Partial No No No D

Nissin Foods Yes* No No No No No No No No No F

PepsiCo Yes Partial Partial No No Partial Partial No No Partial D

Procter & Gamble Yes No No No No No Partial No No No F

Unilever Yes Yes Yes Partial No Partial Partial Partial Partial Partial C

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Company Name

NDPE Policy

NDPE Policy Scope









Final Score

ABN Amro Yes Yes Partial No No No Partial No Partial No D

BNI No No No No No No No No No No F

CIMB No No No No No No Partial No Partial No F

DBS Yes Partial No Partial No No Partial No Partial No D JPMorgan Chase No No No No No No Partial No No No F

ICBC No No No No No No No No No No F

MUFG Yes No Partial No No No Partial No No No F

The Grading System Used in the Evaluation of Performance of Brands profiled in the Keep Forest Standing Campaign The final grades shown in our “The Keep Forest Standing Scorecard’ were assigned based on each company's overall score which was allocated based on the following score ranges: A ‘Yes’ was awarded two points, A ‘Partial’ was awarded one point, and a ‘No’ was awarded zero points. The final grade was allocated based on the total score obtained by each company out of a total of 20 possible points. RAN used an A - F grading system that was based on the following ranges of points per grade: A= The company has a total score of 18- 20 out of a total of 20 possible points [90%- 100%] B= The company has a total score of 15- 17 out of a total of 20 possible points [75%- 85%] C= The company has a total score of 12-14 out of a total of 20 possible points [60%- 70%] D= The company has a total score of 5-11 out of a total of 20 possible points [25%- 55%] F= The company has a total score of 0- 4 out of a total of 20 possible points [0%- 20%]

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The table below shows the number of points obtained by each company per action and the overall total score obtained out of a total of 20 points.

Company Name

NDPE Policy

NDPE Policy Scope








Independent verification of NDPE compliance Final Score

Colgate- Palmolive 2 1 0 0 0 0 0 1 0 0 4/20 (20%)

Ferrero 2 0 0 0 0 0 0 1 0 1 4/20 (20%)

Kao 2 1 0 0 0 0 0 0 0 0 3/20 (15%)

Mars 2 1 0 1 0 0 0 1 0 0 5/20 (25%)

Mondeléz 2 0 1 0 0 0 0 1 0 0 4/20 (20%)

Nestlé 2 1 0 1 1 0 0 1 0 0 6/20 (30%)

Nissin Foods 2 0 0 0 0 0 0 0 0 0 2/20 (10%)

PepsiCo 2 1 1 0 0 1 0 1 0 1 7/20 (35%)

Procter & Gamble 2 0 0 0 0 0 0 1 0 0 3/20 (15%)

Unilever 2 2 2 1 0 1 1 1 1 1 12/20 (60%)

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Company Name

NDPE Policy

NDPE Policy Scope









Final Score

ABN Amro 2 2 1 0 0 0 0 1 1 0

7/20 (35%)

BNI 0 0 0 0 0 0 0 0 0 0 0/20(0%)

CIMB 0 0 0 0 0 0 0 1 1 0 2/20 (10%)

DBS 2 1 0 1 0 0 0 1 1 0 6/20 (30%)

JPMorgan Chase 0 0 0 0 0 0 0 1 0 0

1/20 (5%)

ICBC 0 0 0 0 0 0 0 0 0 0 0/20 (0%)

MUFG 2 0 1 0 0 0 0 1 0 0 4/20 (20%)

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The Methodology Used in the Evaluation of Performance of Brands profiled in the Keep Forest Standing Campaign The table below shows the methodology used to assess if a company was awarded a ‘Yes’, ‘Partial’ or ‘No’ score for each recommended action. Keep Forest Standing Campaign Demand Metrics for 'Yes' Metrics for 'No' Metrics for 'Partial'

NDPE Policy Adopt and implement a No Deforestation, No Peatland and No Exploitation (NDPE) Policy.

Published policies require compliance with core elements of a NDPE policy - protect forests (HCS forests, HCV areas) and natural ecosystems/peatlands regardless of depth from deforestation and degradation; respect human rights in accordance with international norms; and prohibit use of fire.

No published policy that requires compliance with core elements of a NDPE policy.

n/a

NDPE Policy Scope NDPE policy covers all forest-risk commodity supply chains, investments (including joint ventures), and all financial services, at a corporate group level.

NDPE policy covers all forest-risk commodity supply chains, investments (including joint ventures), and all financial services, and is applied at a corporate group level for suppliers, investees, or clients.

No published NDPE policy, or NDPE policy neither covers all forest-risk commodities nor applies to all suppliers, investments, (including joint ventures) and clients receiving financial services at the corporate group level For brands, policies only apply to physical supply chains not across landbanks of suppliers at a corporate group level.

NDPE policy covers all forest-risk commodity supply chains or applies to all suppliers, investments (including joint ventures) and clients receiving financial services at the corporate group level, but not both.

Keep Forest Standing Campaign Demand Metrics for 'Yes' Metrics for 'No' Metrics for 'Partial'

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Mandate for NDPE Policy Adoption Make it mandatory for all suppliers, investees, or clients to adopt and implement NDPE policies, at a corporate group level, for all relevant forest-risk commodity supply chains.

Requirement for suppliers, investees, or clients to adopt and comply with corporate group NDPE policies and require the same of third-party suppliers, for all relevant forest-risk commodity supply chains.

No requirement for suppliers, investees, or clients to adopt and comply with corporate group NDPE policies and require the same of third-party suppliers.

Requirement for suppliers, investees, or clients to adopt and comply with NDPE policy only applies to one forest-risk commodity supply chain.

NDPE Implementation Plans Published NDPE Implementation Plan has ambitious target dates for achieving independent verification of NDPE policy compliance across all forest-risk commodities.

Published NDPE Implementation Plan with ambitious target date, and time-bound milestones, for achieving full Independent Verification of NDPE policy compliance by suppliers, investees, or clients for all forest-risk commodity supply chains. For brands full supply chain disclosure includes direct suppliers, processors/mills, and raw material producers, and target date/s for achieving traceability to the source (i.e., plantation/farm/ranch).

No published NDPE Implementation Plan specifying a date for when suppliers, investees or clients must achieve Independent Verification of NDPE policy compliance. For brands, no disclosure of supplier lists and/or target dates for achieving traceability to the source.

Published NDPE implementation plan specifying a date for when suppliers, investees, or clients must achieve Independently Verified NDPE policy compliance for at least one commodity but not all relevant commodities, or target date is not ambitious, or does not include Independent Verification. For brands, they must have also publicly disclosed supplier lists for, multiple, or all forest-risk commodities, or published dates by which they will do so, and a target date set for achieving traceability to the source.

Forest Footprint Disclosure Know and publicly disclose the footprint of

Disclosure of Forest Footprint for all relevant forest-risk commodities and regions.

No disclosure of Forest Footprint

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their global commodity supply chains, investments, or financial services impacting forests, peatlands and the rights of Indigenous Peoples and communities affected by logging and the expansion of industrial agriculture.

Partial disclosure of Forest Footprint for: one forest-risk commodity; one production region; or footprint lacks information on affected rightsholders; or does disclose supply chain information (such as for brands lists of suppliers and maps of their landbanks and for banks does not disclose maps/data which aggregate client/investee spatial data and processing facilities).

Proof of Free, Prior and Informed Consent Require proof of full compliance with laws, regulations, and Free, Prior and Informed Consent (FPIC) processes for all areas under the management and control of the corporate group.

Independent Verification of legality and fulfilment of FPIC rights in accordance with best practices, as outlined by international human rights norms, the High Carbon Stock Approach (HCSA) Social Requirements and Implementation Guidance, and Indigenous Peoples’ own established FPIC protocols.

No Independent Verification of legality or fulfilment of FPIC rights in accordance with best practice or of all relevant forest-risk commodity supply chains, or verification relies solely on certification.

Independent Verification is undertaken by human rights experts, but not yet in accordance with best practice, or if independent verification currently relies on certification systems, then additional verification measures are in place including but not limited to on the ground verification with affected communities. And/or methodology detailing how they and/or their suppliers, investees or clients will undertake independent verification of legality and fulfilment of FPIC rights is under development but has not yet been published or implemented. And/or a public commitment to develop and implement a credible methodology for independent verification of FPIC in accordance with best practice has been made.

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Keep Forest Standing Campaign Demand Metrics for 'Yes' Metrics for 'No' Metrics for 'Partial'

Robust monitoring and due diligence systems Establish robust forest, natural ecosystem, and human rights monitoring and due diligence systems.

Robust and transparent forests and natural ecosystem/peatland monitoring platform and response systems and effective human rights monitoring and due diligence systems for identifying and reporting on suppliers, investments, (including joint ventures) and clients’ non-compliance are in use. Effective human rights monitoring and due diligence systems are in accordance with best practices outlined by international human rights treaties and norms, such as the UN Guiding Principles on Business and Human Rights, cover all human rights, and employ field-based Human Rights Impact Assessments.

No monitoring and due diligence systems have been established.

Monitoring and due diligence systems are used to identify their clients, investors or suppliers’ impact on forest and natural ecosystems, including peatlands. Monitoring and due diligence systems are used to identify their clients, investors, or suppliers’ impact on human rights, but are not effective, cover all human rights, or do not employ field-based Human Rights Impact Assessments.

Holding bad actors to account Stop sourcing commodities from, investing in, or providing financial services to corporate groups that are complicit in deforestation, natural ecosystem degradation, peatland clearance and human

Published non-compliance protocol and demonstration of its use with cases raised across forest-risk commodity supply chains.

No published non-compliance protocol or demonstration of its use with cases raised.

Non-compliance protocol is published but is not comprehensive or has inadequate thresholds for suspension or termination and/or there is a lack of consistent application to cases raised. For brands, a non-compliance protocol is not published but published policies and grievance log demonstrate a consistent approach to responding to social and

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rights abuses, or secure credible, time-bound commitments to ensure suppliers, investees and clients transparently implement corrective actions and remedy negative impacts.

environmental non-compliance and discloses a list of suspended suppliers.

Zero tolerance for violence and intimidation Enact zero tolerance procedures within supply chains, investments and/or financing portfolios to prevent violence, criminalization, intimidation, and killing of human rights, land, and environmental defenders.

Published zero tolerance policy for violence, criminalization, and intimidation of Human Rights Defenders (HRDs) developed with inputs from HRDs.

No published zero tolerance policy for violence, criminalization, and intimidation of HRDs.

Published zero tolerance policy for violence, criminalization, and intimidation against HRD is not aligned with minimum policy requirements as outlined by HRDs or experts (such as the Zero Tolerance Initiative) or policy commitment has been made but not in a stand-alone HRD policy.

Independently verification of NDPE compliance Independently verify and disclose progress on fulfillment of NDPE policies.

Published methodology detailing how Independent Verification of NDPE policy compliance will be undertaken, or must be undertaken by suppliers, investees, or clients and demonstration of its application in all forest-risk commodity supply chains.

No published methodology on Independent Verification of NDPE compliance or Independent Verification relies solely on certification.

Credible methodologies for the Independent Verification of NDPE policy compliance are under development or have been published with plans for its use in at least one forest-risk commodity supply chain in 2021.

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NDPE Policy - What criteria were used to assess if a published policy was considered to be aligned with “No Deforestation, No Peatland and No Exploitation (NDPE) Policy” requirements? A credible policy adopted by brands sourcing forest-risk commodities or banks investing in or providing financial services to Corporate Groups that are producing, processing, or procuring forest-risk commodities must cover the key elements of “No Deforestation, No Peatland/No Natural Ecosystem Conversion/Degradation and No Exploitation requirements (NDPE).” It must also require remedy for environmental and social harms caused by the Corporate Groups and all suppliers throughout their supply chains, over time. Policies must be aligned with the Accountability Framework Initiative (AFI), which provides globally applicable guidance on credible policy setting and implementation, and detail the following NDPE requirements: The policy must have the following mandatory requirements:

● No Deforestation or Conversion/Degradation of Natural Ecosystems of peatlands - requires the protection of forests and natural ecosystems including High Conservation Value areas (HCV areas)1, High Carbon Stock forests (HCS forests)2, Intact Forest Landscapes3 as per commodity sector specific cut-off dates, or pre-existing commitments with a cut-off date that was earlier than the sector specific cutoff dates.

● No Exploitation – which requires: ○ Respect for internationally recognized human rights4 throughout operations, supply chains and investments. ○ Operations only take place if affected Indigenous peoples and local communities give their Free, Prior and Informed Consent to

activities on their lands.5 ○ Zero tolerance for intimidation, violence, criminalization of affected community members/rights holders, Human Rights Defenders,

land, and environment defenders.6 ○ Establishment and demonstrated use of an effective grievance mechanism aligned with the UN Guiding Principles on Business and

Human Rights in order to resolve grievances.

1 As defined by The HCV Resource Network https://hcvnetwork.org/ 2 As defined by The High Carbon Stock Approach http://highcarbonstock.org/ 3 As defined by The IFL Mapping Team http://www.intactforests.org 4 As defined by Internationally recognized human rights norms per UNDRIP, UNDHR, ILO, FAO, UN Guiding Principles on Business and Human Rights 5 The fulfilment of the rights of FPIC must be in accordance with UNDRIP, the HCSA Social Requirements and Implementation Guidance, and the Accountability Framework (May 2020) Operational Guidance on Respecting the Rights of Indigenous Peoples and Local Communities. https://s30882.pcdn.co/wp-content/uploads/2020/09/OG_Respecting_Rights_IPLC-2020-5.pdf 6 Zero tolerance as per the Zero Tolerance Initiative https://www.zerotoleranceinitiative.org/

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● Remediation of environmental harm by supporting proximate conservation and restoration of natural ecosystems, including through financing:

○ For Corporate Groups producing and processing forest-risk commodities: carry out proximate conservation and restoration of natural ecosystems determined based on an independent assessment of harm in and surrounding the Corporate Group’s area of influence and management and monitoring of conservation areas as per Integrated Conservation Land Use Plans7 agreed to with rightsholders.

○ For banks and end users, such as brands, retailers, consumer goods manufacturers, and downstream traders or processors: support and finance proximate conservation and restoration of natural ecosystems in the regions where commodities are sourced from, or where the landbanks of their clients’ operations are located.

● Remediation of social harm ○ For Corporate Groups producing and processing forest-risk commodities, this requires:

○ respecting the rights of affected communities to use, access and control their lands and resources, ○ fulfilment of the right to Free, Prior and Informed Consent (FPIC) and respecting the right to withhold and/or withdraw FPIC

for new and existing operations, ○ informing communities of the company’s commitment, and standard operating procedures used, to respect these rights and

remedy harm, ○ providing remedy, determined based on an independent assessment of harm that involves affected communities, ○ resolving conflicts and securing remedy to harm through processes agreed to by the affected communities and in a manner

consistent with FPIC, ○ includes negotiated settlements, which may require return of lands or enclaving of lands from within development areas, and ○ having an effective grievance mechanism.8 ○ For affected workers this may include immediate return of passports and other identity documents to address harm caused by

restrictions to freedom of movement; reimbursement of excessive recruitment fees to address the harm caused by debt bondage; and immediate compliance with national labor laws to reduce workers’ vulnerability to coercion and intimidation, until more permanent corrective actions are implemented.

○ For banks and end users, such as brands, retailers, consumer goods manufacturers, and downstream traders or processors: require remediation for harm, as per independent assessment of harms and agreements with affected communities or workers, and the responsibilities outlined in the UN Guiding Principles on Business and Human Rights.

7 As per HCSA guidance on Integrated Conservation and Land Use Plan (soon to be published) 8 As per the UN Guiding Principles on Business and Human Rights

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NDPE Policy Scope The NDPE policies adopted must apply to all forest-risk commodities. Forest-risk commodities include palm oil, pulp, paper, forestry products including sawn wood, tissue, viscose, biomass, biofuel, rubber, soy, beef, cocoa.

The scope of the policy adopted by brands and banks should be comprehensive and apply to all suppliers or clients respectively, in addition to investees, involved in the production, processing, and procurement of forest-risk commodities across all of their operations.

For banks, NDPE policies must set mandatory requirements for all clients associated with forest-risk commodities to ensure compliance throughout the supply chains. This includes clients that are producers and processors of forest-risk commodities––these clients must comply with NDPE requirements across all their operations that are involved in production, procurement, and trade of forest-risk commodities, at a Corporate Group level. It also includes clients that are end users of commodities, such as consumer goods manufacturers, retailers, and traders or processors with downstream operations in procurement regions but not upstream operations and landbanks in production countries––these clients must ensure NDPE compliance by all direct and indirect suppliers throughout their forest-risk commodity supply chains. The policy must require end users to achieve compliance across the supply chains for all forest-risk commodities they source or have investments in and include requirements for independent verification of compliance by all suppliers in its global supply chains at a Corporate Group level. This includes direct suppliers (Tier 1 suppliers with contracts) and the requirements must cascade throughout the supply chain to indirect suppliers with processing facilities and raw material producers at a Corporate Group level. For brands, NDPE policies must set mandatory requirements for all direct suppliers, indirect suppliers and raw material producers and investors that are active in forest-risk commodity supply chains. The policy must require all suppliers and investees to achieve compliance across the supply chains for all forest-risk commodities they produce or process and trade and include requirements for independent verification of compliance by all suppliers in its global supply chains at a Corporate Group level. Mandate for NDPE Policy Adoption Published policies should also include the mandatory requirements for the adoption and implementation of a NDPE aligned policy by all suppliers, clients, or investees. RAN’s scorecard includes this action as a standalone recommendation that each company’s performance is evaluated on given the importance of the NDPE production requirements becoming the norm, not just in policies applied to the palm oil sector, but across all forest-risk commodities, and NDPE policy adoption being cascaded from direct suppliers or clients throughout supply chains to raw material producers.

● Bank policies must include a mandatory requirement for all clients receiving investments or financial services to adopt and comply with a corporate group level NDPE policy, and to require the same of their suppliers.

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● Brand policies must include a mandatory requirement for all suppliers and investors to adopt and comply with a corporate group level NDPE policy, and to require the same of their suppliers.

NDPE Implementation Plans The NDPE policy and associated implementation plans must have ambitious target dates, and time-bound milestones, for achieving implementation and Independent Verification of full compliance with the requirements detailed in the NDPE Policy for all forest-risk commodities at a corporate group level. Target dates for banks should include, but not be limited to, dates to achieve independent verification of client compliance with requirements and cut-off dates for deforestation and conversion and degradation of other natural ecosystems. Target dates set for clients that are producers, processors and end users of commodities must include deadlines to achieve full traceability to the source for all forest-risk commodities and independent verification of full compliance with the NDPE Policy. Target dates for brands should include, but not be limited to, dates to achieve independent verification of suppliers and investees compliance with requirements and cut-off dates for deforestation and conversion and degradation of other natural ecosystems. For brands targets should be set for achieving full supply chain disclosure for all forest-risk commodity supply chains, including direct suppliers, processors/mills, and raw material producers, and target date/s for achieving traceability to the source (i.e., plantation/farm/ranch). Target dates set by brands for their suppliers and investees that are producers, processors and end users of commodities must include deadlines to achieve full traceability to the source for all forest-risk commodities and independent verification of full compliance with the NDPE Policy. Additional dates that may be set out in implementation plans but were not used as a basis for this evaluation, include deadlines by which suppliers, clients and investees publish or enable the provision of information to inform transparent and collaborative monitoring systems that are accessible to the public and can inform monitoring of policy implementation and credible and independent verification. This includes data on all raw material source areas and landbanks, traceability data, conservation areas, and affected Indigenous Peoples and local communities under the influence of the corporate group and suppliers in its global supply chains and investments. A NDPE policy and implementation plan should also describe the commitments to transparent and public reporting on all areas relevant for the policy implementation. For the purposes of this evaluation these criteria were not used, but the following actions remain necessary disclosures for banks and brands to take to demonstrate robust policy implementation:

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● Annual publication of the results of due diligence and independent verification undertaken and implementation against clear time-bound targets, actions and tangible outcomes outlined in the policy. Methodologies used to undertake independent verification of performance must be disclosed. Methodologies for Independent verification must include credible approaches for desk-top and field-based verification of fulfilment of rights to Free, Prior and Informed Consent that are undertaken by human rights experts and involve affected Indigenous Peoples and local communities.

● Publication of a forest footprint, including disclosure of maps/data which aggregate client/investee spatial data and processing facilities (including third parties) and provides the total area of forests and peatlands that have been, or could be, impacted by a bank's financing / investment in forest-risk commodities. It should also include client/investee impact on Indigenous Peoples and local communities’ rights when forest and peatland areas are on traditionally managed lands.

● Publication and provision of information to transparent and collaborative monitoring systems that are accessible to the public and can inform monitoring of policy implementation and credible independent verification. This includes data on all raw material source areas and landbanks, traceability data, conservation areas, and affected Indigenous Peoples and local communities under the influence of the corporate group and suppliers in its global supply chains and investments

Forest Footprint Disclosure What is a “forest footprint”? A forest footprint refers to the total area of forests and peatlands that have been, or could be, impacted by a brand’s consumption, or a bank's financing, of forest-risk commodities. A brand or bank’s footprint includes their contribution to the destruction of forests and peatlands by their suppliers or clients over the period of their business relationship, in addition to the areas that remain at risk within all suppliers’ or clients’ global forest-risk commodity supply chains and sourcing regions. It also includes their impact on Indigenous Peoples and local communities’ rights when forest and peatland areas are on traditionally managed lands.

Areas at risk include forests and peatlands located within plantation development areas under a supplier, investees, or client’s control; areas under the control of third-party suppliers; and areas allocated for future logging or agricultural development within the sourcing region surrounding mills, refineries, or processing facilities in their global supply chains. All of which must be known and publicly disclosed.

Rainforest Action Network is calling on Brands and Banks to know and publicly disclose the footprint of their global commodity supply chains, investments, or financial services impacting forests, peatlands and the rights of Indigenous Peoples and communities affected by logging and the expansion of industrial agriculture. RAN has prepared methodologies that may be used by banks and brands to undertake a Forest Footprint analysis. To request a copy of the methodologies, contact RAN on [email protected].

Documents

Rainforest Action Network Methodology for the Evaluation