ADM tells suppliers of soy, palm oil to end deforestation
Agribusiness giant Archer Daniels Midland (ADM:US) announced yesterday that it will adopt a new No Deforestation policy for its soy and palm oil supply chains. It is the first of any major agricultural traders to extend an action plan for forest conservation beyond the Brazilian Amazon to other parts of South America where forests are also under threat from soy and cattle production, such as Paraguay, Colombia, Bolivia, and the cerrado region of Brazil. The announcement was covered in The New York Times, Wall Street Journal, Bloomberg, and other publications.
ADM’s announcement followed action by two investors—Green Century Capital Management and the New York State Common Retirement Fund—who filed a shareholder resolution that called on ADM to eliminate deforestation across its supply chains. Nordic investors signed an open letter in support of the resolution rallied by Rainforest Foundation Norway. New York State and Green Century have now withdrawn the resolution in response to ADM’s commitment.
ADM, headquartered in Chicago, IL, operates in 140 countries, and is the world’s third largest global trader of agricultural commodities, including soy, corn and grains. The company has more than 265 processing plants, 460 crop procurement facilities, and a worldwide crop transportation network. ADM owns 16 percent of Wilmar International, and Wilmar is in turn a large-scale buyer of ADM’s Latin American and American soy for import to China and other parts of Asia. Just as Wilmar’s forest protection efforts have given ADM a source of responsible palm oil, ADM’s move is set to provide Wilmar with a source of responsible soy.
Last fall, ADM competitor Cargill announced that it would eliminate deforestation across supply chains including soy, cattle, and sugar, but has not announced any concrete plans to implement its commitment outside of palm oil. In contrast, ADM is committing to work with The Forest Trust to map its supply chains over the next six months to identify High Carbon Stock (HCS) and High Conservation Value (HCV) areas that must be protected. ADM also committed to developing and making public specific action plans, and integrating this commitment with its existing human rights policy. ADM’s other top US competitor, Bunge, also adopted a No Deforestation palm oil policy last year, but has not committed to a conservation policy that extends to its other commodities supply chains.
New palm oil scorecard highlights brand leaders and laggards
A new scorecard released today from the Union of Concerned Scientists rates many of the world’s largest, most recognizable consumer brands on their commitments to use deforestation-free palm oil. The 2014 version of the scorecard evaluated 30 major brands across the fast food, packaged food, and personal care product sectors for their palm oil sustainability policies. This year’s update recalculates each company’s score to account for progress, or lack thereof, in the industry, and also includes a new category of retail stores. The scores reflect the significant progress that has been made recently – companies such as Kellogg’s and Dunkin’ Donuts are given “strong commitment” ratings after having a low or zero ratings just last year. Still, many top brands, such Starbucks and Estée Lauder, are shown to be lagging in their commitment to sustainable sourcing policies.
Credit Suisse violates sustainability policy by financing APRIL
A recent analysis by BankTrack shows that Credit Suisse (CSGN:VX) has violated its own Forestry and Agribusiness Policy by financing pulp and paper company Royal Golden Eagle Group, the parent company of Singapore-based Asia Pacific Resources International Limited (APRIL). Recent reports have shown that APRIL has continued to clear forests and peatlands, in spite of a sustainability pledge made last year. Recently, banking giants Santander Bank and ABN AMRO announced that they would not provide further financing for the RGE Group or APRIL in response to this evidence. BankTrack shows that APRIL’s practices in Indonesia have breached Credit Suisse’s policy to exclude financing for the destruction of protected areas, illegal logging, illegal use of fire, violation of local laws, major resettlements, and human rights abuses.
Addressing KLK’s response to CRR Sustainability Risk Assessment report
On 26 February 2015, Chain Reaction Research published our sustainability risk analysis of Malaysian palm oil company Kuala Lumpur Kepong (KLK:MK). The report gives an overview of the company, delves into the environmental and social issues it faces, and presents a financial analysis of how sustainability risks may impact the bottom line. As noted in the report, a draft version of the sustainability risks identified was sent to KLK for review on 24 November 2014 and subsequently. KLK did not respond to CRR regarding these issues prior to publication of the report.
Two weeks after publication, on 13 March 2015, KLK issued a formal response to CRR directly. We invite you to read CRR’s response to KLK’s statements here.