The Chain: Cencosud Commits to Mitigating Deforestation Risk in Its Beef Supply Chain


March 5, 2019

Cencosud, the fourth largest supermarket chain in Brazil, published a statement to affirm it will source beef from only slaughterhouses that are not linked to Amazon deforestation, indigenous lands, environmental reserves, or slave labor. The statement, however, lacks details regarding how and when the company will implement this policy. Cencosud has not clarified a strategy or timeline for reaching this goal and getting suppliers to comply with its standards. In the statement, Cencosud wrote: “Cencosud Brazil is committed to the promotion of a more sustainable ranch farming and to the mitigation of risks linked to deforestation in the Amazon biome, irregular using of indigenous lands, conservation, and embargoed areas, and slave labor.”

Cencosud’s statement came after Chain Reaction Research (CRR) released a study that included visits to 50 Cencosud-owned supermarkets in five Brazilian cities and inspections of 497 randomly selected frozen beef products. The labels on these products, which included tax identification numbers of the producer and/or meatpacker of the product, showed links between Cencosud supermarkets and slaughterhouses located in the Legal Amazon, establishing direct links to deforestation. Cencosud says it is reviewing the CRR report.

The CRR report estimated that deforestation risks may expose Cencosud to reputational, market, and financing risks, possibly affecting up to 3.7 percent of Cencosud’s enterprise value and up to 5.7 percent of its market capitalization, based on the size of its operations in Brazil.

Cencosud says it guarantees to follow laws and regulations in sourcing beef, including banning suppliers that violate current laws and regulations. The company has asked its suppliers to sign a commitment to “sustainable” beef and that it would not source from beef sellers that are connected to deforestation, slave labor, or illegal occupation of indigenous lands. However, the Chilean company appears to still lag its competitors in increasing sustainability practices and adopting zero-deforestation policies. The company issued its first sustainability report in 2017, but has yet to provide specific guardrails that it follows.

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