Boston, April 29, 2024 – Bunge Global SA, a leading global agribusiness company, has agreed to report on deforestation and conversion risks in its supply chain and take immediate corrective action to protect tropical ecosystems. The commitment came in response to a shareholder proposal from six investors – Green Century, AXA Investment Managers, Nordea Asset Management, Schroders, Storebrand Asset Management and UBS Asset Management – asking the company to address deforestation risks driven by its current policies.
In exchange for withdrawal of the proposal, Bunge also committed to 100% geospatial monitoring for soy and enhanced disclosure of traceability for indirect suppliers (where soy is mixed from multiple farms). The report will cover both legal and illegal deforestation, as well as native vegetation conversion, or the repurposing of wild land for agriculture.
“Biodiversity hotspots like the Amazon and Cerrado, home to animals from jaguars to giant otters, are the last places we should be clearing forests for food,” said Annie Sanders, director of shareholder advocacy at Green Century. “We congratulate Bunge on taking steps to more fully protect the rich biodiversity of these special places.”
Investors Concerned About a “Race to Deforest”
In 2021, Green Century and Storebrand filed a shareholder resolution asking Bunge to accelerate efforts to eliminate conversion from its supply chain, which received a 98% majority vote with support from the board. Although the company had already committed to eliminate deforestation by 2025, investors remained concerned that its 2025 “cut-off date,” which allows the company to buy crops from land deforested through the end of 2025, effectively incentivizes a race to deforest until that date.
”Bunge’s 2025 target is great, but without a cut-off date in the past, there is a risk that farmers will rush to clear forests for new fields before the deforestation ban kicks in,” said Vemund Olsen, senior sustainability analyst at Storebrand Asset Management. “We’re glad to see that Bunge has committed to report on the risk of inadvertently incentivizing deforestation and we hope the company will take appropriate corrective action.”
Deforestation and native vegetation conversion degrade ecosystems such as the Cerrado savanna in Brazil that are critical to preserving biodiversity and mitigating climate change. Soy production is a leading cause of native vegetation conversion in South American habitats and contributes to a broader decline of South American wilderness.
“The global agribusiness industry as a whole should do more to protect complex and valuable ecosystems,” said Michaela Zhirova, engagement specialist at Nordea Asset Management. “We hope any progress Bunge makes would help to lift the baseline for the entire sector.”
Pressure Mounts to Halt Deforestation
The urgency of the twin climate and biodiversity crises coupled with 22 new policies last year to halt deforestation and nature loss highlight the imperative for companies to eliminate deforestation by 2025. The highly concentrated agribusiness sector is under particular pressure to reduce its environmental and biodiversity footprint, as reputational risk and the risk of market access disruption due to emerging regulation could prove a persistent threat to business models.
“Deforestation risk in this region is directly linked to managing investment risk on behalf of our clients,” said Sarah Woodfield, biodiversity engagement lead at Schroders. “The current economic factors driving demand for soy have prompted us to ask companies like Bunge to more fully address related risks.”
The agreement marks a new phase in the multi-year deforestation engagement with Bunge. The investor group plans to continue its dialogue with the company on these and connected issues, and on the fulfillment of Bunge’s most recent commitments.
“Companies and their investors have a key role to play in driving meaningful change in value chains, particularly in critical biomes,” said Sanders. “We’re hopeful that Bunge will achieve deforestation and conversion-free supply chains as soon as possible.”