Investors and businesses call for action to support deforestation-free soy in Brazil

A group of global investors and businesses, including Tesco, Mars and Sainsbury's, have signed a letter calling for the Brazilian Government and president Jair Bolsonaro to support a voluntary agreement that has limited deforestation from soy production in the country.

Investors and businesses call for action to support deforestation-free soy in Brazil

Global demand for soy is expected to increase 4% annually

The investor network FAIRR has co-ordinated investors worth $3trn and businesses that purchase soy from Brazil to sign the letter calling for more support for the Amazon Soy Moratorium (ASM).

The ASM was established in 2006 after soy production in the Amazon expanded by one million hectares and contributing to deforestation at rapid scale over a five-year period. Since the ASM was implemented, deforestation from soy in the Amazon decreased from 30% to less than 1.5%, while soy production in the area has increased by 400%.

However, reports from Brazil suggest that local farmers, namely the Aprosoja group, are attempting to end the ASM in order to improve market competitiveness in the region.

Brazil’s Abiove, the association representing the soy grower industry has opposed calls to scrap the ASM, which provides reputation benefits to a sector worth $32bn in annual trade. With the European market demanding that soy imports be deforestation-free the farmers are risking economic security in favour of short-term gain.

In response, the FAIRR network has seen its letter signed by more than 60 investors, including Legal & General Investment Management and Robeco, and businesses who wish to source deforestation-free soy from the region.

“Our position is clear: we want to be able to continue to source from, or invest in, the Brazilian soy industry but if the ASM is not maintained, this will risk our business with Brazilian soy,” the letter states.

“Today, there is enough existing agricultural land to continue to increase soy production in the Amazon by an additional 600% compared to current figures. We look forward to supporting Brazilian partners to continue their leadership and show that economic development and environmental protection can go hand in hand.”

Brazil ablaze

Global demand for soy is expected to increase 4% annually, mainly for its use as an ingredient in animal feed. Soy produced in the Amazon represents 10% of Brazil’s total soy production.

However, the rainforest has spent much of 2019 ablaze. Brazil’s National Institute for Space Research (INPE) states that there has been a total of 72,843 fires in Brazil this year and more than 1.5 football fields of Amazon rainforest are being destroyed per minute, per day – an increase of 80% compared to the same period the year prior.

It has largely been driven by cattle farmers, but the appointment of president Bolsonaro is unlikely to reverse the trends; environmentalists claim he has encouraged the clearance of large areas of the rainforest since his election last October.

At the G7 In Biarritz in August, a $20m international aid pledge to combat the fires in the Amazon, the most of which would be spent on paying for more firefighting plane, was agreed by world leaders.

Rather than accept the fund, Bolsonaro engaged in an online spat with world leaders, which has more recently seen actor Leonardo DiCaprio criticise the country’s leader.

The Amazon rainforest has a key role to play in combatting climate change and is often referred to as the “lungs” of the planet. It hosts more than 10% of all biodiversity and acts as a valuable carbon sink. However, deforestation in the Brazil Amazon has increased from 460,000 hectares in 2012 to almost one million last year.

These trends have placed an emphasis on businesses and stakeholders to act. Research from Global Canopy found that 52% of shareholder proposals between 2011 and 2017, put forward by members of the Ceres Investor Network – which collectively manages more than $17trn in assets – led to the formation of some sort of company action plan or commitment to tackle deforestation risks.

Matt Mace

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