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December 19, 2017
The global agribusiness and food company Bunge is among the largest players in Brazil’s soy supply chain. It is the leading soy trader in Piauí, a state in the Brazil’s Cerrado biome. In Piauí, expansion of soy farms is associated with deforestation and other environmental and social impacts. Downstream companies have called to halt deforestation in the Cerrado biome. The Cerrado Manifesto, published by civil society groups and supported by 23 large consumer goods companies, urges supply chain actors to strengthen the implementation of their zero-deforestation commitments. Bunge continues to source from producers involved in legal deforestation, despite its commitment to achieve zero-deforestation supply chains between 2020-2025 and taking action to stimulate soy expansion into non-forested areas. Failure to meet its commitment could create reputational and market risks.
Deforestation in the Brazilian Soy Supply Chain: Market Access Risk from a Growing Share of Sourcing Commitments
December 21, 2017
The large-scale expansion of soybean cultivation in Brazil has been identified as one of the key drivers of deforestation in Brazil in the last 20 years. While the 2006 Soy Moratorium has helped to weaken the relation between deforestation and soy cultivation in the Brazilian Amazon Biome, other highly biodiverse and carbon-rich eco-regions – such as the Cerrado and the Gran Chaco – have still been converted to cropland at a rapid pace. Public awareness of the role of soy cultivation in deforestation in the Cerrado has grown recently, including among soy traders, consumer facing companies and financiers. This paper explores the existence and extent of market access risk and financial consequences in the soy supply chain due to weak sustainability performance.
Chain Reaction Research conducts sustainability risk analysis for financial analysts and investors. Our special focus is on sectors that deal with environmentally intensive commodities, especially those sourced from tropical regions like palm oil, and pulp and paper.<
We explore whether unsustainable corporate practices and actions have introduced unreported risks – and how or whether sustainability leadership can mitigate those risks and possibly provide competitive advantage. Where possible, we provide pre-IPO checking of claims about risk and assets reported in prospectuses. We also review claims made by publicly traded companies.
Chain Reaction Research has received support, in part, from the David and Lucille Packard Foundation, and from the International Climate and Forest Initiative (NICFI) scheme managed by the Norwegian Agency for Development Cooperation (Norad). Chain Reaction Research statements and materials do not necessarily reflect the standpoints of the Packard Foundation or Norad.