Recommendations

Recommendations © Jason Houston / WWF-US

WHAT ACTIONS ARE NEEDED?

Recommendations

Soy traders

Due to the high volume of soy that moves through a few key players, traders have an outsized influence over how soy is produced. Being at the intersection of producing landscapes and global markets, traders have the ability and the responsibility to drive significant transformation across the industry.

All soy traders must ensure that their supply chains are free from ecosystem conversion and related human rights abuses in all landscapes they source from. They must accelerate delivery on their commitments, and invest time and resources beyond their own supply chains to mainstream soy that is free from deforestation, conversion and human rights abuses.

We call on soy traders to:

 

Strengthen and increase the scope of their deforestation- and conversion-free commitments, in line with Accountability Framework guidance

What are robust deforestation-/conversion-free and human rights commitments?

Company deforestation- and conversion-free commitments should be aligned with the best practice outlined by the Accountability Framework. This includes:

  • A clear public commitment to halting conversion of all natural ecosystems, beyond deforestation only. This should cover both legal and illegal conversion, and include an explicit cutoff date (2020 or earlier) after which conversion renders production areas non-compliant with the commitment. This should apply to the Cerrado, the Gran Chaco and all other biomes the company sources from, in alignment with Accountability Framework guidance. Pre-existing cut-off dates that are aligned with AFi should be respected, and any emerging sectoral or biome-wide cutoff dates must be upheld. Existing cutoff dates that are in the future or not aligned with AFi guidance should be adjusted.

  • An ambitious target date for achievement.

  • A comprehensive scope covering all of the company’s operations, sourcing regions, and direct and indirect suppliers. NB: For traders, this should apply to producers but also to other traders and intermediaries that companies may source from.

  • A strong commitment to respect the human rights of those who work in or are affected by commodity production supply chains. This should apply to all of the company’s production, sourcing and financial investments, and cover at least the rights of indigenous peoples, local communities and workers. This should also include a commitment to secure Free, Prior and Informed Consent (FPIC) before any activity that may affect indigenous peoples and/or local communities’ rights, land, resources, territories, livelihoods or food security. For more information on what this human rights commitment should include, please refer to Core Principle 2 of the Accountability Framework.

For more information, please refer to Core Principles 1 to 3 of the Accountability Framework, to the user guide on how to write an ethical supply chain policy, and to the terms and definitions.

Accelerate delivery on their deforestation and conversion-free commitments. The target date to achieve these commitments should reflect the urgency of the issue – we cannot wait until 2030 or 2025 to stop nature destruction. Traders must provide a publicly available time-bound action plan to deliver on their commitments.

Strengthen supplier engagement to drive mainstream transformation towards a deforestation- and conversion-free industry, by adopting Accountability Framework operational guidance on supply chain management. Companies should encourage progress through incentives and respond to lack of improvement (or worse performance) with sanctions.

What should supplier performance management entail?

Companies should clearly communicate expectations to suppliers, support them to achieve compliance, and establish commercial and non-commercial mechanisms for addressing non-compliance.

  • Communication of expectations to suppliers: The company’s ethical supply chain commitments (including cutoff dates) should be included into any supplier management systems and processes (e.g. sourcing specifications, supplier qualifications, codes of conduct, contract clauses or contract renewals).

  • Support to suppliers to achieve compliance: Good performance and commitment compliance should be supported and incentivized by commercial (e.g. offering larger volumes to better-performing suppliers) or non-commercial (e.g. capacity building, partnerships and external recognition) mechanisms. For more information, please refer to the operational guidance on supply chain management

  • Management of non-compliance: When non-compliance is identified, traders should engage and support the supplier to implement a time-bound plan to address the problem. There should, however, be limits and consequences depending on the severity of the non-compliance, the supplier’s degree of culpability and the supplier’s commitment and capabilities to move towards compliance. Severe or continued non-compliance should be sanctioned by commercial action, which may include decreasing volumes sourced, or suspending or terminating a supplier.

Require all suppliers to have aligned public commitments to halt deforestation and conversion and to respect human rights, as well as time-bound action plans, applying across their entire operations for all commodities (not just soy). This should apply to producers but also to other traders and intermediaries that companies may source from.

Driving best practice up the supply chain

To help drive best practice up the supply chain and accelerate mainstream transformation, traders should ensure standards apply at a group level across their suppliers’ operations. 

Standards should apply to all properties suppliers own – not just those that the trader sources from. 

Standards should apply across all of the commodities handled by the supplier, and not just soy. This is particularly important for soy, since often soy is not planted immediately following deforestation or conversion.

Monitor all direct and indirect suppliers at least quarterly. Use third-party verification to provide a high level of assurance for internal and external stakeholders. For more information, please refer to the operational guidance on monitoring and verification

In the Cerrado, traders should align with the monitoring, verification and reporting system developed by the NGOs in the Cerrado Working Group (GTC). This system is already being used by three traders: CJ Selecta, Imcopa and Caramuru. 

Remedy any adverse human rights impacts caused, and restore or compensate for environmental degradation or any land converted after cutoff dates. See the AFi operational guidance on remediation and access to remedy and on environmental restoration and compensation.

Have all progress reporting independently verified by a third party, with a clear scope and baseline date for compliance. See operational guidance on reporting, disclosure and claims for more. 

Publicly disclose critical information pertaining to their exposure to deforestation and conversion risk. This includes:

  • Sourcing volumes, broken down by:

    • Volumes from high-risk origins

    • Volumes traceable to farm in high-risk origins

    • Volumes traceable to farm and under engagement/monitoring 

    • Volumes sourced from direct/indirect suppliers

    • Volumes of certified (and uncertified) soy sourced (by credible conversion-free standards), broken down by certification programme and supply chain models: identity preserved, segregated, area mass balance, mass balance, book and claim

  • The location of the company's processing and/or production facilities

  • Information on the precise origins of the company's soy supply 

  • Grievance mechanisms, alongside the nature and status of any grievances raised

  • Monitoring protocols and outcomes of monitoring efforts, with both direct and indirect suppliers.

Support the expansion of soy production on already cleared agricultural land, improvements in soy production (including sustainable intensification and best agricultural practices) and incentives for the protection of natural ecosystems. Collaborate with other stakeholders, including farmers, other companies, investors, civil society and governments, to encourage these activities, to decouple soy production and the destruction of nature.

Participate in collaborative initiatives in both producer and consumer countries to support a sustainable soy industry beyond their own supply chains, including support for political leadership and policy and legislative efforts.

"Soy traders must commit now to zero conversion and to respecting human rights across their soy supply chains, with a 2020 (at the latest) cutoff date, and accelerate delivery against this"

Soy buyers

All companies that use soy are responsible for helping to reduce the negative environmental and social impacts of its production. Because soy buyers depend on traders for information about the origin of the soy they use and associated social and environmental risks, it is difficult for them to achieve their own commitments without traders. As a starting point, all soy buyers downstream of soy traders should clearly and consistently demand soy that is free from deforestation, conversion and human rights abuse.

Downstream buyers have varying levels of leverage with soy traders, depending on their position in the supply chain. We call upon each sector of the soy value chain to maximize their influence to halt deforestation, conversion and human rights abuse. 

  • Feed mixers and manufacturers have particularly high leverage to positively shift the industry. They often buy directly from traders, in gargantuan volumes, and are also widely connected to product manufacturers and even retailers and food service companies.
  • Product manufacturers produce or process animal protein – meat, eggs, dairy, aquaculture – into whole or processed food products. They have a key responsibility in understanding the quantity, origins and potential deforestation, conversion and human rights abuse risk of the soy embedded in their products as animal feed, and in transferring this information to end buyers, including retailers and food service. 
  • Retailers, brands and food service companies have a large number of suppliers and use vast amounts of soy embedded in animal feed. They can engage a wide range of suppliers to influence their behaviour and catalyse shifts across the entire supply chain, all the way up to soy trading companies. Having the most direct connection to consumers, they have a critical role to play in communicating where their soy comes from and should shine a light on the role played by soy traders in their supply chain. 

It is critical that all buyers strengthen their engagement with their direct and indirect suppliers – including soy traders –, and request and incentivize ambitious action across their suppliers’ entire operations. Requiring action for mainstream transformation rather than solely focusing on clean supply chains is critical to enabling a rapid shift towards conversion-free soy. 

WWF calls on all soy buyers to:

Have robust commitments to eliminate deforestation/conversion and human rights abuse from supply chains, covering their entire operations and aligned with Accountability Framework guidance. 

What are robust deforestation-/conversion-free and human rights commitments?

Company commitments should be aligned with the best practice outlined by the Accountability Framework. This includes:

  • A clear public commitment to halting conversion of all natural ecosystems, beyond deforestation only. This should cover both legal and illegal conversion, and include an explicit cutoff date (2020 or earlier) after which conversion renders production areas non-compliant with the commitment. This should apply to the Cerrado, the Gran Chaco and all other biomes the company sources from, in alignment with Accountability Framework guidance. Pre-existing cutoff dates that are aligned with AFi should be respected, and any emerging sectoral or biome-wide cutoff dates must be upheld. Existing cutoff dates that are in the future or not aligned with AFi guidance should be adjusted.
  • An ambitious target date for achievement.
  • A comprehensive scope covering all of the company’s operations, sourcing regions, and direct and indirect suppliers. 
  • A strong commitment to respect the human rights of those who work in or are affected by commodity production supply chains. This should apply to all of the company’s production, sourcing and financial investments, and cover at least the rights of indigenous peoples, local communities and workers. This should also include a commitment to secure Free, Prior and Informed Consent (FPIC) before any activity that may affect indigenous peoples and/or local communities’ rights, land, resources, territories, livelihoods or food security. For more information on what this human rights commitment should include, please refer to Core Principle 2 of the Accountability Framework.

For more information, please refer to Core Principles 1 to 3 of the Accountability Framework, to the user guide on how to write an ethical supply chain policy, and to the terms and definitions.

Strengthen supplier engagement to respond to their performance and ensure compliance with commitments, by adopting AFi operational guidance on supply chain management. Companies should encourage progress through incentives and respond to lack of improvement (or worse performance) with sanctions. This could include proactive and reactive engagement, as well as commercial and non-commercial mechanisms. 

What should supplier performance management entail?

  • Systematically assess suppliers’ performance towards addressing deforestation, conversion and human rights abuse across their operations; and ask them to improve their performance. Unless the company is able to conduct or access more detailed assessments, use the results of this scorecard to inform procurement decisions, and ask suppliers to do so as well. 

  • Encourage progress through incentives and respond to any lack of improvement (or worse performance) with sanctions. These incentives and sanctions may be commercial or non-commercial. Soy buyers should adopt both commercial and non-commercial action to maximize the impact of performance monitoring. Commercial action may include adjustments to product specifications, supplier qualifications, codes of conduct, contract clauses or contract renewals, which can be used at all stages of the buying process. Non-commercial action may include public letters and calls to action or capacity building activities.

  • A key example of commercial action that all buyers should consider adopting is inserting clauses in contracts with all direct suppliers to specify compliance with deforestation- and conversion-free commitments (including clear cutoff dates of 2020 or earlier). Eight French retailers did this in 2021 and we strongly encourage all soy buyers to follow suit.

  • Companies need to have both proactive and reactive supplier engagement practices – to prevent but also resolve and remediate any environmental or social harm. 

  • When non-compliance is identified, buyers should engage and support the supplier to implement a time-bound plan to address the problem. There should, however, be limits and consequences depending on the severity of the non-compliance, the supplier’s degree of culpability and the supplier’s commitment and capabilities to move towards compliance. For more information, please refer to the operational guidance on supply chain management.

Integrate the results of this scorecard and any other assessment exercises (e.g. by the Soy Transparency Coalition) into procurement decisions and use them to set progress expectations from traders. Consider requesting that traders submit a time-bound improvement plan as a condition of supply/future contracts, and set meetings to review progress. Share the scorecard findings and recommendations with direct suppliers, and encourage them to integrate them into their own sourcing decisions.

Require suppliers to have aligned public commitments to halt deforestation and conversion and to respect human rights, as well as time-bound action plans, applying credible actions and systems across their entire operations.

Uphold high levels of transparency on their soy footprint, on their deforestation- and conversion-free commitments, and on progress towards them.

Publicly report at least annually on:

  • Progress towards their own commitments to end deforestation and conversion in supply chains, against publicly available action plans.

  • The size of their soy footprint, and the proportion which is verified deforestation- and conversion-free (e.g. through robust chain of custody certification) or covered by other certification systems.

  • The proportion of soy footprint traceable to a level that allows the company to ascertain compliance (for more information, see Core Principle 5 and the operational guidance on supply chain management).
  • The soy traders present in the supply chain, including the percentage of total soy volume sourced from each trader, along with the company’s efforts to engage with soy traders towards an effective industry-wide solution.

Consider investing in the development of sustainable novel feed ingredients (e.g. insect protein and seaweed) to reduce pressure on natural ecosystems now and in the future. 

Collaborate to drive large-scale transformation towards a conversion-free soy industry. Engage in advocacy for policy change to enable this transition, and participate in initiatives such as the Cerrado Manifesto Statement of Support Group, the Soy Transparency Coalition, the Consumer Goods Forum’s Forest Positive Coalition, the Cerrado Funding Coalition, the European National Soy Initiatives and the China Sustainable Meat Declaration.

Consider using long-term contracts or offtake agreements to provide an asset that helps producers gain access to long-term finance to invest in more sustainable production systems, including the rehabilitation of degraded land.

Consider bundling long-term contracts with other downstream buyers to create volumes that are more significant as incentives for soy traders or other downstream actors to provide products produced with deforestation- and conversion-free soy.

"Soy buyers must that ensure their own soy supply chains are free of deforestation, conversion and human rights abuses, require their suppliers to take action across their entire operations, and strengthen support for mainstream, biome-wide solutions"

Financial institutions

Financial institutions have the ability to influence the companies in their financial portfolios and require them to become deforestation- and conversion-free. It is essential that financial institutions work to eliminate deforestation, ecosystem conversion and human rights abuses from all investments and portfolios. As demand increases and prices soar, soy buyers may be constrained in their ability to drive change: financiers may have an even more critical role to play. According to WWF research, a group of only 12 financial institutions provides US $17.2 billion in financing (lending and bond underwriting) to ADM, Bunge, Cargill, COFCO and Louis Dreyfus Company. These financial institutions are also responsible for addressing deforestation, conversion, and human rights abuse risk associated with their portfolios.

All financial institutions involved in financing or providing financial services to companies in the soy sector should ...:

Use the Soy Traders Scorecard to identify and review any risk of deforestation, conversion and human rights abuse represented by the traders assessed in their portfolio, and use the methodology to engage traders not covered in this scorecard. Also, consider the liabilities of different countries for companies that buy and resell or that finance the purchase and sale of illegally produced items. Finally, assess the risk to companies of carbon and embedded GHG emissions for soy traders as well as any downstream buyers of soy produced from deforestation.

Consider the recommendations to traders and buyers included in this scorecard as a reference list for what investee or client companies with a soy footprint should be doing, and question them on their approaches.

Within their deforestation/conversion or agricultural commodities policy, develop and disclose a soy sector policy or section.

What should this policy require clients/companies to do?

  • Commit to a robust conversion-free policy, with a 2020 (or earlier) cutoff date

  • (For producer, processor and trader clients) Make ambitious time-bound commitments and action plans for achieving 100% deforestation- and conversion-free soy supply chains and supply chain traceability to the farm level, for own operations and third-party sources as soon as possible, and by 2025 at the latest

  • Implement a robust monitoring, verification and reporting framework aligned with the Accountability Framework initiative and built in consultation with civil society organizations to measure and report on progress towards these goals

  • (For downstream clients) Procure from soy suppliers with due diligence procedures in place to ensure full legality and deforestation/conversion-free status of soy used, and to achieve 100% supply chain traceability to the crusher.

Commit to setting science-based targets for nature/science-based targets for financial institutions. For scope 3 carbon in their own institution, consider buying credible avoided or sequestered carbon insets from soy producers or traders in their financial portfolio, to provide further incentives to producers or traders that help to reduce deforestation and conversion from soy financed directly or indirectly.

Uphold high levels of transparency and disclosure. 

What should financial institutions disclose in annual or ESG reports?

  • The percentage of producer and trader clients/investee companies with all of their operations covered by a time-bound action plan to achieve 100% deforestation/conversion-free soy and traceability to the farm level.
  • The percentage of downstream clients/investee companies that procure from soy suppliers with due diligence systems in place to ensure full legality and deforestation/conversion-free status.
  • Processes for monitoring client/investee company compliance and progress on time-bound action plans, as well as steps taken in case of non-compliance or failure to make satisfactory progress towards achieving these action plans.
  • Processes for escalating engagement with portfolio companies that are not making satisfactory progress on achieving these action plans.

Commit to engaging and supporting clients/investee companies, in particular small and medium-sized enterprises, to work towards deforestation- and conversion-free commodity supply chains, through organizing client outreach, education and capacity-building programmes.

Work together with other investors, aligning messages with other shareholders on deforestation- and conversion-free soy/commodities. This may include joining and actively engaging in:

  • Multi-stakeholder collaborations for conversion-free commodities, including the Cerrado Manifesto Statement of Support signatories group
  • Sustainable investment coalitions and initiatives, such as UN Principles for Responsible Investment
  • Information and knowledge-sharing platforms.

"Financial institutions should require all clients to commit to a conversion-free policy (with a 2020 or earlier cutoff date) and to respect human rights, and set ambitious time-bound action plans to deliver this."

Policymakers in producer countries

Policymakers play a critical role in promoting deforestation- and conversion-free agricultural commodity supply chains globally, through enacting strong legislation in both consumer and producer countries that level the playing field and hold all stakeholders to the same standards. 

We call on policymakers in producer countries to:

Adopt and enforce binding legislation, policies and incentives that will require agricultural commodities to be produced more sustainably, including requirements to halt deforestation, ecosystem conversion and human rights abuses and to increase traceability and transparency.

Implement concrete financial and technical incentives to producers (conditional on cutoff dates for conversion and on compliance with biome-wide solutions) to avoid conversion of natural ecosystems, incentivize the adoption of responsible production practices, and encourage sustainable intensification and rehabilitation of degraded land on which to expand production.

Support and promote public-private partnerships aimed at ending deforestation and ecosystem conversion and related human rights abuses in commodity supply chains.

Advocate for and accelerate delivery of commodities free from deforestation, conversion and human rights abuse, as one element to implement the Paris Agreement on climate change, the Sustainable Development Goals, and the Convention on Biological Diversity.

Work together with the industry to forge national alliances and draft country-level initiatives towards sustainable commodities that prevent deforestation, ecosystem conversion and human rights abuses, and support integrated land-use planning.

Promote and implement policies for conversion-free, nature-based development pathways in high-risk regions. This can include promoting long-term conservation and restoration through sustainable, fair and participative economic use of forests and other natural ecosystems and strengthening traditional land uses and land rights.

Do not provide agricultural credit or COVID-19 recovery assistance to any producer or downstream trader, feed company, animal protein producer, brand, buyer or financial institution that has not publicly committed to these aims. 

"Policymakers should adopt and enforce binding legislation to ensure that all agricultural commodity supply chains are free of deforestation, conversion and human rights abuses."

Policymakers in consumer countries

Policymakers play a critical role in promoting deforestation and conversion-free agricultural commodity supply chains globally, through enacting strong legislation in both consumer and producer countries that level the playing field and hold all stakeholders to the same standards. 

We call on policymakers in consumer countries to:

Adopt and enforce binding legislation, policies and incentives to ensure that agricultural commodities and derived products that are associated with deforestation, conversion or human rights abuse do not enter their markets. These should apply to both companies and financial institutions.

Develop and implement clear traceability and transparency requirements along the supply chain and a robust mandatory due diligence obligation applying to companies that trade, use and finance agricultural commodities (including first importers) to assess and minimize the risk of their products and commodities being linked to the conversion or degradation of forests and other ecosystems and/or to human rights violations.

Engage in dialogue and cooperate with producer countries to support the development and implementation of financial and technical solutions including all stakeholders to support conversion-free nature-based development pathways. This may include land-use planning, support for smallholders, and actions within the country to facilitate the transition towards more sustainable food and farming systems.

Establish public procurement policies that require deforestation- and conversion-free commodities.

Advocate for and accelerate delivery of deforestation-, conversion- and human rights abuse-free commodities, following and building upon EU work on deforestation-free supply chains, the Amsterdam Declarations, New York Declaration on Forests and national commitments for sustainable supply chains.

Engage in consumer-consumer country cooperation to support producer regions in transitioning to sustainable production and avoid leakage of unsustainable products.

Adopt policies and incentives to reduce harmful consumption and waste.

Do not provide subsidies or COVID-19 recovery funding to any trader, input supplier, processor, feed company, animal protein producer, retailer, brand or financial institution that buys from or supports the production, trade or use of soy in any form that is produced from deforestation or conversion.

"Policymakers should adopt and enforce binding legislation to ensure that all agricultural commodity supply chains are free of deforestation, conversion and human rights abuses."