Business Brazil's rainforest reduction drives Nestlé, H&M and others to...

Brazil's rainforest reduction drives Nestlé, H&M and others to shake supply chains

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Brazil's accelerated deforestation is pressing food manufacturers, retailers, investors and commodity traders to shake supply chains in an effort to delay land clearing and achieve environmental goals.

Nestlé SA, which aims to eliminate deforestation from its supply chain for the next three years, has stopped buying soybeans produced in Brazil from the agricultural marketing company Cargill Inc. after a review failed to track oilseeds to plantations specific, which generates concern were produced in converted land.

Hennes and Mauritz

AB, which owns the retailer H&M, said in September that it would no longer buy leather from Brazilian producers until suppliers could prove that their cattle were not raised or fed through deforested areas.

VF Corp.

, which manufactures Timberland and Vans shoes, announced a similar ban on Brazilian leather, which has accounted for about 5% of the company's leather supply.

Cargill, one of the world's leading soybean exporters and processors, said it is implementing new technologies to analyze and predict land clearing activities, and urged farmers to maximize existing fields instead of cleaning up new land. The company pledged in June to invest $ 30 million in new approaches after recognizing it and that other food companies would not meet the goal of eliminating deforestation in major supply chains by 2020.

"We believe we have a strong ethical compass, and we have an obligation to act," he said.

Ruth Kimmelshue,

Head of supply chain and sustainability of Cargill. The Nestlé change did not have a significant impact on Cargill's finances, he said.

Caisse de dépôt et place du Québec, which manages $ 247 billion for dozens of pension and insurance plans, said in October that it had sold its position in the Brazilian meat giant.

JBS SA

after environmental groups criticized the money manager for his estimated investment of $ 32 million. A spokesman for the firm said the decision followed an analysis of the meat producer's practices.

A JBS spokesman said he is committed to ending deforestation while improving the livelihoods of farmers in the Amazon. "We urge those who share the common goal of ending deforestation to look for solutions instead of criticism," he said.

A burned area of ​​the Amazon rainforest in November.

Photo:

Leo Correa / Associated Press

President of Brazil

Jair Bolsonaro

who took office earlier this year, urged farmers in his country to expand. Brazilian farmers are putting more land in the plow as the country's soybean, corn and beef exports have skyrocketed, partly because Chinese tariffs on US agricultural products have helped to reduce crops and crops. Brazilian meat

The deforestation rate in the Amazon states this year reached its highest level since 2008, according to Brazilian government data published in November, with almost 4,000 square miles of rainforest lost during the 12 months that ended in July 2019.

In response, some companies are trying to protect known brands so that they are not linked to environmental degradation. Environmental sustainability increasingly informs consumers' purchasing decisions, which pushes brands to analyze how basic ingredients and materials are produced.

Benjamin Ware,

Nestlé's global chief supply officer, who often starts his mornings by reviewing satellite images for signs of recently cleared forest areas, said the company has moved more of its soy purchases to the US. UU., Where Cargill is still a supplier, and to Europe.

The measure added costs to Nestlé because American soybeans are more expensive, he said.

Nestlé, the manufacturer of Lean Cuisine and Toll House biscuits, expects more than 90% of its agricultural supplies to be verified free of deforestation by the end of 2020, although it did not reach a previous goal to eliminate deforestation for that year. The company is now recalibrating its approach to combat deforestation, seeking more transparency from suppliers and finding ways to involve small farmers.

"Our deforestation performance is closely related to the performance of these commodity houses," Ware said, referring to grain trading companies like Cargill,

Archer Daniels Midland Co.

Y

Bunge Limited.

These companies buy crops from farmers and sell them to food manufacturers like Nestlé.

Brazilian exports of soybeans and other agricultural products skyrocketed in the middle of the trade war between the United States and China.

Photo:

ueslei marcelino / Reuters

French retail chain

Carrefour SA

Last summer he sent letters to Cargill and Bunge, as well as JBS and his rival

Marfrig Global Foods SA,

requesting the executives of those companies to explain their plans to stop deforestation in the Amazon and elsewhere.

KLP Group, the largest pension fund in Norway, in September sought plans to respond to deforestation of Cargill, Bunge and ADM, he said

Jeanett Bergan,

the head of investments responsible for the company. KLP owns approximately $ 14 million in stocks and bonds in all three companies.

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Marfrig did not respond to requests for comment. Other companies, including Bunge, said they are answering those questions. "We do not stock any recently deforested areas in the Amazon, and we have satellite technology to ensure that we can enforce our policy," said an ADM spokeswoman.

Mr. Bolsonaro has defended agricultural development and said that environmental concerns are exaggerated. Some agricultural groups in Brazil are pushing to revoke a decade-long program that limits the conversion of Amazonian lands. That sparked an open letter this month from more than 80 retailers, investment firms and other companies asking Brazil to keep the moratorium, and that leaving it "would risk our business with Brazilian soy."

UK supermarket chain

Tesco

PLC in December promised $ 13 million over five years to an economic incentive program aimed at curbing deforestation among soybean producers in the Cerrado region of Brazil, a savanna area the size of Mexico. Food industry officials expect other companies to eventually invest around $ 250 million in total to protect natural environments in the region by focusing agriculture on existing farmland.

Kevin O & # 39; Donnell,

chief of supply and sustainability of operations for

General Mills Inc.,

He said it is better to work with suppliers to improve their practices than to cut ties.

"If a General Mills and (others) move away from a region or community, there will be smart buyers in India or China who don't care about social and environmental standards," O'Donnell said.

Write to Jacob Bunge at [email protected]

Copyright © 2019 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8

. (tagsToTranslate) Cargill Inc. (t) Hennes & Mauritz (t) HM-B.SK (t) HMB.SK (t) VF (t) VFC (t) Nestle (t) H&M Hennes & Mauritz Series B (t) Archer Daniels Midland (t) ADM (t) Bunge (t) BG (t) Marfrig Global Foods S / A (t) MRFG3.BR (t) JBS S / A Ord (t) JBSS3.BR (t) Tesco (t ) TSCO.LN (t) General Mills (t) GIS (t) Carrefour SA (t) CA.FR (t) Jair Bolsonaro (t) Benjamin Ware (t) Jeanett Bergan (t) Kevin O & # 39; Donnell (t) corporate strategy (t) corporate planning (t) (t) industrial news (t) corporate social responsibility (t) corporate organizational restructuring (t) environmental (t) social (t) governance (t) supply chain ( t) policy (t) general news (t) natural environment (t) deforestation (t) sustainable development (t) sustainability (t) agriculture (t) agriculture (t) oilseeds (t) grain cultivation (t) plant edible oil (t) seed agriculture (except soy) (t) food (t) beverages (t) clothing (t) retailers (t) wholesalers (t) clothing stores (t) specialized retailers (t) textiles (t) ) consumer goods (t) food products

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