Archer Daniels (NYSE:ADM)
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6 Meses : De Dic 2018 a Jun 2019
--Investors representing $6.3 trillion have asked companies to eliminate deforestation in their soybean supply chains
--Letters were sent to 25 companies sourcing soybeans from South America
--At least 7% of global soybean crop expansion caused deforestation between 2012 and 2015
By Dieter Holger
Investors representing $6.3 trillion in assets are calling on companies to eliminate deforestation in their soybean supply chains, demanding time-bound targets and more transparency.
Some 57 investors sent a letter, organized by investor advocacy group Ceres, to 25 companies that source soybeans from South America, which produces more than half of the world's soybeans according to Spain's University of Navarra.
"Companies that source soy products grown in South America are exposed to a number of deforestation-related business risks," the investors said.
These include reputational risks as consumers become aware that a company's supply chain is linked with deforestation, land and labor rights issues, and operational risks from potential changes in local climate and falling agricultural yields, the investors said. Further considerations include regulatory and litigation risks, and market access risk, they added.
At least 7% of global soybean crop expansion caused deforestation between 2012 and 2015, according to a study from Transport and Environment.
Soybean-caused deforestation threatens forests, which serve as so called carbon sinks and soak up CO2 emissions, Ceres said.
"Effective management and reduction of deforestation by our investee companies in their agricultural supply chains, such as soybean, is critical to reducing our portfolio exposure to climate change related risks," said Beth Richtman, managing investment director of sustainable investments at the California Public Employees' Retirement System, the largest pension fund in the U.S.
The investors said the companies need to set time-bound targets, disclose their deforestation policies and publish data on where their soybeans come from.
"While we recognize the important role of agriculture and soybean production to economic development and the livelihoods of farmers, we are also concerned that the environmental and social issues associated with unsustainable soybean production could have a material impact on companies that source the commodity," the investors said.
Ceres didn't name any of the 25 businesses that were targeted--but agriculture companies Archer Daniels Midland Co. (ADM) and Bunge Ltd. (BG) responded to the letter.
"The recommendations of the investor letter overlap in important ways with elements of Bunge's current approach to sustainable soy," said Stewart Lindsay, vice president of sustainability and government affairs at Bunge.
Mr. Lindsay said Bunge already has board oversight on the issue and aims to achieve a deforestation-free supply chain by 2025.
"We will continue to enhance our own work, and will collaborate with peers in the industry," Mr. Lindsay said.
ADM is currently refining the accuracy of where it sources soybeans and has a policy of not buying the commodity from high carbon stock forests, which absorb large amounts of CO2, according to its 2018 Soy Progress Report.
"We are committed to working with shareholders, industry counterparts, producers, governments and other stakeholders to do our part to protect the environment and people of South America," said Alison Taylor, chief sustainability officer at ADM.
Unilever PLC (ULVR.LN), which owns brands that use soy but didn't receive the letter, said it will publish more data on its soybean supply chain this year.
"We agree that more needs to be done to end deforestation," a spokeswoman said.
Write to Dieter Holger at firstname.lastname@example.org; @dieterholger
(END) Dow Jones Newswires
March 07, 2019 09:55 ET (14:55 GMT)
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