The CEO of Carrefour Brasil, Noël Prioux, sent letters this summer to its main suppliers – Bunge, JBS, Marfrig, Minerva, and Cargill — asking them what concrete and immediate actions they have taken to protect the Amazon and other ecosystems threatened by deforestation. In the letters, obtained by Chain Reaction Research (CRR), Carrefour Brasil’s CEO asked for clarity on the following information:
- How the suppliers are implementing their zero-deforestation policies.
- What their mapping strategies are for their global supply chains.
- Whether they could demonstrate, through their mapping, that they are not linked to recent fire events.
- Whether they have been sending Carrefour geo-monitoring information linked to products that the companies sell to Carrefour.
- What their visions are for creating global market mechanisms to combat deforestation connected to beef and soy supply chains.
Carrefour Brasil’s letters came during this summer when the Amazon fires were in the global spotlight this summer and after engagement from international NGOs, investors, and civil society. Carrefour Brasil’s letters also came after CRR released a report that included visits to 48 Carrefour-owned supermarkets in Brazil. CRR found 11 products on Carrefour’s shelves that originated from slaughterhouses within the Amazon with high deforestation risks. Carrefour Brasil sourced these products from JBS, Marfrig Global Foods, and Mercúrio, all of which signed agreements (TACs) with the Brazilian governments to refrain purchasing from recently deforested farms.
Carrefour SA has committed to eliminating deforestation within its supply chain through its membership in the Consumer Goods Forum. The company says its zero-deforestation commitment applies to both fresh and frozen products. Currently, Carrefour Brasil is working with the Collaboration for Forests and Agriculture, which supports companies in implementing Deforestation and Conversion Free (DCF) commitments for beef and soy supply chains in the Amazon, Cerrado, and Chaco biomes. In September 2018, Carrefour SA launched its “Act for Food” initiative as an effort to shore up its supply chain transparency to reduce its deforestation exposure.
Reputation risks could mount for Carrefour SA if it does not meet its 2020 target of deforestation-free beef supply chains. As CRR noted, civil society and consumer campaigns could negatively affect the company’s net revenues and gross profit, with the value impact possibly totaling 4 to 10 percent of Carrefour Brasil’s market capitalization (USD 9.45 billion). The company’s stock fell 18 percent from early September to mid-October, but it is 37 percent higher year-on-year. In total net revenues for 2018, Brazilian operations accounted for 16 percent of Carrefour SA’s global revenues, while the value of Carrefour SA’s 72 percent stake in Carrefour Brasil’s equity value is equal to 48 percent of its own equity value. As a result, reputation risk would also have an effect on Carrefour SA’s share price and valuation.