Green Cats 2018 Update: Scoring Palm Oil and Soy Companies on Forest Policies and Transparency

INTRODUCTION

Since 2015, Forest Heroes has assessed the actions of companies in their efforts to adhere to deforestation standards and policies in the palm oil and soy sectors around the world in our “Green Cats” report. In the regions where the last wild endangered tigers thrive– often overlapping with palm oil production– and in the habitats where threatened jaguars live where soy production takes place, we provide analysis on company actions by examining publicly available data to find gaps between policies and progress. By comparing these palm oil and soy production– which sit at the nexus of food production, deforestation, and climate change– we have been able to ascertain which companies are making progress toward achieving globally-recognized policies to reduce their impact on deforestation.

This year’s Green Cats 2018 update– Green Tigers for palm oil production and Green Jaguars for soy production– has added one more company to our palm oil analysis for a total of 22 companies, and two more companies to our soy analysis for a total of 7 companies.

Since 2013, an increasing number of the world’s largest agriculture commodity companies have committed to addressing the deforestation impacts that occur in the supply chains associated with the agriculture commodities they produce, refine, transport, and sell. Hundreds of companies have signed pledges to avoid deforestation, to stop destruction of carbon-rich peatlands, and to cease labor exploitation. These business-as-usual policies are called No Deforestation, No Peat, No Exploitation (NDPE). The Green Cats 2018 update assesses these NDPE policies along with each agriculture commodity giant’s approach to transparency and traceability of their agriculture products associated with deforestation, peatland destruction, and labor exploitation.

These NDPE policies are, in fact, common. In Brazil, 49 percent of the country’s soy trade is covered by some type of zero-deforestation commitment. And in Indonesia and Malaysia, companies with NDPE policies operate a refining capacity of 53.2 million metric tons per year, which equals 74 percent total capacity in Indonesia and Malaysia.

But these corporate policies and commitments require action in the form of programs that demonstrate real-world progress. Companies that have committed to addressing deforestation in their supply chains must be transparent to demonstrate their supply chains do not include deforestation, peatland conversion, or labor exploitation from ‘farm to fork’.

We learned in 2018 that companies can address their supply chain impacts when they are transparent about their supply chains and when they publish information on the traceability of their respective supply chains.

On one hand, we know that South American soy production is heavily concentrated among four companies – Archer Daniel Midlands, Bunge, Cargill and Louis Dreyfus. A fifth, Brazilian company Grupo André Maggi, is also a major player, and now the Chinese agricultural giant COFCO has entered the Brazilian market, too.

On the other hand, the SE Asian palm oil market is significantly more fragmented, with 30 companies each managing a land bank of a hundred thousand to a million ha mostly spread across SE Asia.

Our Green Cats 2018 update compares these industries side-by-side and, where possible, adjusts methodology to account for unique aspects of the production and geographies of the industries.

Finally, the key trend of our Green Cats 2018 update is that supply chain transparency creates visibility for both stakeholders and companies, allowing for risk mitigation and enabling deforestation reduction. Companies can only manage their deforestation, peatland conversion, and labor exploitation risks if they transparently measure and monitor their supply chains using traceability.

GREEN CATS METHODOLOGY

The Green Cats 2018 update used sources from company websites and mainstream news exclusively. Thus, the Green Cats 2018 update mirrors how each company wishes to present itself to the public and it reflects the work by investigative journalists.

The Green Cats 2018 update was conducted in October 2018. All analysis was cross-checked multiple times versus each representative company’s website. Data was collected and scored using the same methodology used in the Green Cats 2016 update. By using the previous methodology from 2016, results can be easily benchmarked against previous results. This benchmarking enables scoring that can demonstrate objective improvement or retrenchment versus the public criteria from 2016 to 2018.

The methodology used to score each company is available in the Green Cats methodology available here. This Green Cats methodology uses similar criteria that other organizations such as SPOTT, Supply-Change, CDP, and Chain Reaction Research also use to score companies.

The Green Cats methodology includes criteria used by the companies themselves to present their information publicly. For example, it is now commonplace for companies to publish their supply chain data, demonstrating traceability from farm to mill. These company dashboards enable companies to be held accountable for their environmental and social impacts. It allows companies to demonstrate their commitment to their NDPE policies.

2017-18 PALM OIL FINDINGS

The Green Cats 2018 update showed that the top fifteen companies had stronger transparency scores versus the bottom seven. Transparency of supply chains is the key difference between the better scoring companies and the worst scoring companies.

In fact, the company that improved the most – Olam – did so in large because it raised its transparency and traceability scores.

Three of the higher-scoring companies, Agropalma, Daabon and Musim Mas, are also members of the Palm Oil Innovation Group (POIG), a progressive multi-stakeholder initiative promoting responsible palm oil production practices that integrate business innovation with stakeholder engagement. POIG requires its member companies to have their policies and impacts audited by an independent third-party. This audit provides for external experts to review a company’s policies and assess its impacts, and it provides an opportunity for a company itself to benchmark its performance between auditing periods to show how it can decrease its negative environmental and social impacts.

The lowest scoring companies, Eagle High Plantations, Triputra Agro, Sampoerna Agro and Anglo-Eastern Plantations, scored less than one-fifth of the points of their high-scoring competitors because they lack normative NDPE business policies and insufficiently supply transparency and traceability. These lowest scoring companies remain behind their peers’ normal business practices.

TABLE: PALM OIL SCORES​

COMPANY

2018 SCORE

2016 SCORE

85.5

73.5

77

74.5

76

76

73.5

56

 73

77

72

43.5

71.5

71

69

42

66.5

70.5

66.5

61.5

66

58.5

63.5

68.5

62.5

53.5

58

58

56.5

51

54

50.5

39

30

18

18

13

22.5

9

12

4

17

1

NOT SCORED

How were these scores calculated? Click here to find out >

2017-18 SOY FINDINGS

The Green Cats 2018 update scored seven companies in 2018, with ADM taking the place as the highest scoring company as it significantly improved its profile since 2016. While Bunge was a big mover this year, the most improved company was Louis Dreyfus who announced its ground-breaking supply chain sourcing policy.

For several important criteria, no soy company achieved full points, including on the issue of traceability of soy products from farms to mills. While ADM has made initial steps in correcting this, it joins its competitors in failing to produce a public and timely plan to make its products traceable from all its farmers – whether direct or indirect – and from all mills it does business with. The soy market has an even larger gulf between the policies to which its companies have committed and their implementation and transparency.

TABLE: SOY SCORES

COMPANY

2018 SCORE

2016 SCORE

68

50

50.5

27

43.5

6

34.5

31

26.5

NOT SCORED

24

NOT SCORED

20

14

How were these scores calculated? Click here to find out >

COMPARING PALM OIL TO SOY

The development of sound NDPE policies within the soy industry lags far behind similar commitments in palm oil. Our assessment awarded the average palm oil company with 58 percent of the available points, while the average soy company scored one-third less than then the average palm oil company.

The reason for this discrepancy can be sourced to transparency and traceability. Soy companies have taken much longer to disclose their direct and indirect mills, suppliers, and farmers. This lack of disclosure has made it much more difficult for companies to transparently support their NDPE policies.

But, on the other hand, the soy industry outperformed palm oil on support for small holder producers and has had somewhat fewer instances of land-grabbing, which occurs when an agriculture company or government takes land from a local community or smallholders often without providing fair compensation while threatening individuals.

Soy and palm oil are similar. When it comes to the actual impact on forests, climate and communities, corporate NDPE commitments are a great start – but only goes partway toward the reductions possible from broad, seriously enforced policies. Only through transparency and traceability can these companies be held accountable.