Green Cats: Scoring Palm Oil and Soy Companies on Forest Polices and Transparency

INTRODUCTION

Many of the world’s agriculture commodity companies have expressed a recognition of the damage caused by unsustainable policies – and hundreds of companies in agricultural supply chains have signed pledges to avoid deforestation, destruction of carbon-rich peatlands and exploitation of local communities. These “NDPE” pledges (No Deforestation, No Peatland, No Exploitation) now cover some of the world’s largest firms. But commitments require action.

Forest Heroes has augmented our previous Green Tigers report to go beyond the promises made by 26 companies – 21 in the Southeast Asian palm oil sector previously covered by Green Tigers, and five in the Latin American soy sector which we have named after a New World cat, the “Green Jaguars.” Our goal with our Green Cats report is to shine a light on their actions, examining publicly available data to find gaps between policies and progress. By comparing these two critical sectors at the nexus of food production, deforestation and climate, we have been able to learn some interesting lessons about what works, and what doesn’t.

South American soy production is heavily concentrated among four companies – Archer Daniel Midlands, Bunge, Cargill and Louis Dreyfus. A fifth, Brazilian company Grupo Magi, is also a major player. The Southeast Asian palm oil market, by contrast, is significantly more fragmented, with 30 companies each managing a land bank of a hundred thousand to a million hectares mostly spread across Indonesia and Malaysia. While our analysis compares these industries side-by-side wherever possible, we adjusted several criteria to account for unique aspects of the production and geographies of the industries.

2016-17 PALM OIL FINDINGS

There are clear differences in the policies and progress among palm oil companies. Seven scored at the top third of our rankings, with nine more in the middle third and five at the bottom.

Of the high-scoring companies, Agropalma, Daabon and Musim Mas are members of the Palm Oil Innovation Group (POIG), a progressive multi-stakeholder initiative promoting responsible palm oil production practices. On the low end of the spectrum, significant players Eagle High Plantations, Triputra Agro and Genting Plantation achieved less than one-fifth of the points of their high-scoring competitors.

For each of the criteria, at least one company scored full points, except for 1H which requires the publication of detailed procedures for addressing suppliers in breach of company policy. Several companies received half points in this category. Although any of these companies have the potential to achieve a perfect score, our investigation reveals a significant gap between stated policies and reports on progress.

Green Tiger companies – those scoring in the top third – received an average of 83 percent of the points for policies, but only 59 percent for implementation and transparency. The middle third of companies – the Orange Tigers – scored 66 percent for policies and just half that for implementation and transparency. While the bottom tier of companies scored a third of the points on policy, their progress on implementation and transparency was nearly non-existent.

TABLE: PALM OIL SCORES

COMPANY

SCORE

77

76

74.5

73.5

71

70.5

68.5

61.5

58.5

58

56

53.5

51

50.5

43.5

42

30

22.5

18

17

12

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

2016-17 SOY FINDINGS

Of the five soy companies we scored, only ADM managed to achieve an “Orange Jaguar” designation, with half of the total available score. Cargill, Bunge, Grupo Magi and Louis Dreyfus each scored less than a third of the overall points, falling into the “Red Jaguar” grade.While none of the companies have had public links to deforestation in their supply chains since January 2015 – a sign of the success of an eleven-year-old moratorium on purchasing soy from companies with those ties – the soy sector as a whole has a long way to go.

For several important criteria, no soy company achieved full points, including the issue of traceability of soy products to their originating farms. While ADM has made initial steps at correcting this, it joins its competitors in failing to produce a public and timely plan to make its products traceable.The soy market has an even larger gulf between the policies to which its companies have committed and their implementation and transparency. Even sector-leader ADM scored only one out of every five possible points in the category compared with nearly two-thirds of policy points. The other four companies received between zero and four points in this category.

TABLE: SOY SCORES

COMPANY

SCORE

50

31

27

14

6

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

COMPARING PALM OIL TO SOY

The development of sound forest policies within the soy industry lags far behind similar commitments in palm oil. Our assessment awarded the average palm oil company with half the available points, while the average soy company scored half of that – a quarter of the total points.

That said, Brazil, where soy was long a leading driver of deforestation, has had more success than palm-oil giant Indonesia in developing and deploying policies to halt forest loss. The success of the 2006 moratorium has led civil society to shift its attention to palm oil, but it masks outdated practices and opaque supply chains. Notably, the soy industry outperformed palm oil on support for small holder producers and had fewer instances of publicly violating their own commitments.Taken together, our analysis demonstrates the critical interplay between corporate pledges and sector-wide efforts.

When it comes to the actual impact on forests, climate and communities, corporate commitments are a great start – but only goes part of the way toward the reductions possible from broad, seriously enforced policies.

Our Green Tigers report examines the current state of forest conservation in the midst of the Asian economic boom. Click here to download Green Tigers: Which Southeast Asian Companies Will Prosper in the New Age of Forest Conservation?

Note: This report is based on analysis of data that was accurate as of September 2016. Since then, many companies have set new policies including Sime Darby and IOI Corporation. Forest Heroes will soon release a new scorecard based on similar criteria, with a focus on human rights.