ADM to Suppliers of Soy, Palm Oil: End Deforestation

Attention now turns to Bunge, Cargill, and Louis Dreyfus

In one of the most significant developments yet in the rapid transformation of global agriculture toward responsible production, agribusiness giant Archer Daniels Midland (ADM) will adopt a new No Deforestation policy, with a special focus on its soy and palm oil supply chains. ADM’s policy was released today and will be formally announced in May. It is the first of any major agricultural traders to extend an action plan for strong forest conservation beyond the Brazilian Amazon to other parts of South America where forests are also under threat from irresponsible practices related to soy and cattle production, such as Paraguay, Colombia, Bolivia, and the cerrado region of Brazil.

“ADM’s action plan for forest conservation in Latin America makes the company the leader among the big soy traders,” said Forest Heroes chairman Glenn Hurowitz. “ADM has shown that they can boost soy production by focusing expansion on degraded land and yield improvement, instead of sacrificing forests.”

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’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 New York State and Green Century have now withdrawn the resolution in response to ADM’s commitment.

“Institutional investors have a major role to play in reducing forest destruction globally”, said Lars Løvold, director of Rainforest Foundation Norway. “This is a great example of responsible investors joining forces to demand that the companies they invest in take action to reduce deforestation.”

Forest Heroes also worked with groups including the Sierra Club, the Union of Concerned Scientists, the National Wildlife Federation, SumOfUs, and NRDC to advance this policy.

The move comes on the heels of a wave of recent studies showing an alarming increase in deforestation in Latin America. Much of this deforestation is caused by agricultural expansion to grow soy to feed cattle and other livestock in Europe, China, and elsewhere. Yet the case of the Brazilian Amazon shows that a different path is possible: since ADM and other companies agreed to a 2006 moratorium on deforestation for soy, production has actually increased 25% while deforestation due to soy fell to one quarter of one percent, according to a study co-authored by the National Wildlife Federation, who have also been urging ADM to adopt a No Deforestation policy. 

ADM’s move follows the 2013 announcement by its joint venture partner Wilmar, Asia’s biggest agribusiness, of a comprehensive No Deforestation, No Peat, No Exploitation policy for palm oil, soy, sugar, and other commodities. ADM owns 16 percent of Wilmar, 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. 

“Wilmar’s work to protect forests has given ADM an emerging source of responsible palm oil, and now ADM is returning the favor by moving to give Wilmar a responsible source of soy,” Hurowitz said. 

Last fall, ADM competitor Cargill announced at the U.N. Secretary-General’s Climate Change summit 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 committed to working with third-party experts on palm oil and soy to map its supply chains over the next six months; and to identify High Carbon Stock (HCS) and High Conservation Value (HCV) areas that must be protected. ADM also commits to developing and making public specific action plans, and integrating this commitment with its existing human rights policy.

“Just how fast is this transformation taking place? Well, we had been planning a multi-year campaign to convince ADM to take this action – but I’m happy to say that we can put that on hold as we monitor ADM’s progress and shift our attention to the other big ag suppliers,” said Hurowitz. “In order to fulfill its commitments, ADM will have to set credible thresholds that fully protect high carbon stock and high conservation value forests, as well as indigenous peoples’ rights. We look forward to joining with civil society organizations in Latin America over the next few months to help ADM fully develop its policy and action plans, and to swiftly turn its commitments into enduring protections for forests and native eco-systems around the world.”

“Meanwhile, there’s still plenty of room for other big South American players like Bunge, Cargill, and Louis Dreyfus to leapfrog ADM in the global race to deliver the environmentally and socially responsible products that consumers want to buy,” said Barbara Bramble of the National Wildlife Federation.

On March 31, 2015
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