- The proposal by activist investment funds Green Century Capital Management and Storebrand Asset Management was approved with 98% of the votes.
- Bunge’s decision follows those recently made by other big companies such as Procter & Gamble’s, Archer-Daniels-Midland Company, and JPMorgan Chase.
- According to Green Century, the measure would help the Brazilian Cerrado, a savanna ecosystem known as “reverse forest” due to its extensive root system that stores large amounts of carbon.
In an unprecedented vote, 98% of shareholders of commodities-trading giant Bunge Limited have voted in favor of a proposal made by activist investment funds to strengthen the company’s non-deforestation policies.
Green Century Capital Management, which tabled the proposal with Storebrand Asset Management, said in an announcement that the voting took place at Bunge’s annual meeting of shareholders on May 5. The company is considered one of the “Big 4” traders of agricultural raw materials in the world, among them soybeans from Brazil, where the crop is associated with high rates of deforestation.
In what Green Century called a “rare show of support,” Bunge’s board of directors recommended that shareholders vote in favor of the resolution.
“The company plans to produce a report that aligns with the requests outlined in the proposal. However, Green Century and other investors are urging the company also to adopt policies that effectively address its material risks related to deforestation,” Green Century said in a press release.
“We are encouraged by the board’s support, but we will be vigilant to ensure the company takes comprehensive steps to eliminate deforestation and conversion of native vegetation in the company’s soy supply chain,” said Leslie Samuelrich, Green Century’s president.
“The vote should be a signal to other companies in the Brazilian soy supply chain that investors are on high alert about these risks,” she added.
The unprecedented display of investor support at Bunge’s annual meeting closes a successful season of stakeholder engagement on the issue of preventing deforestation. In the past month, Green Century has announced significant commitments from Archer-Daniels-Midland Company and JPMorgan Chase on deforestation.
The vote at Bunge comes after shareholders at Procter & Gamble’s October annual meeting scored the second-highest deforestation-related shareholder victory in history. That result was also ensured by a proposal from Green Century.
“Deforestation is a leading driver of climate change and jeopardizes the productivity of our agricultural system. Bunge’s consistent association with deforestation in its Brazilian soy supply chain poses material financial risks to the company and significant systemic risk to the global economy, making it a critical issue for the company to address,” Annalisa Tarizzo, shareholder advocate at Green Century Capital Management, told Mongabay in an email.
According to Tarizzo, the results of this vote are non-binding, “so we must next ensure that Bunge adopts strong policies that reduce its exposure to deforestation. Green Century will continue to engage directly with Bunge to urge company representative to take comprehensive steps toward eliminating deforestation from the company’s soy supply chain.”
Tarizzo said Bunge can take two key steps to reduce deforestation: first, adopt a best-practice supplier non-compliance policy that uses a “suspend then engage” approach.
“The ‘suspend then engage’ approach to supplier non-compliance was pioneered by palm oil giant Wilmar. It means that a company will temporarily suspend any supplier found to be contributing to deforestation and then engage that supplier to develop a time-bound course of action for remedying their violation of the company’s no-deforestation policy,” she said.
“At the present, Bunge only engages suppliers once soy has been planted on deforested land, not when that land was first deforested, which suggests that the company is currently purchasing from suppliers who have contributed to deforestation. Bunge should change its policy to require supplier engagement at the first indication of deforestation, regardless of whether or not soy has been planted,” Tarizzo said.
The second strategy would be adopting a 2020 cutoff date for soy grown in the Brazilian Cerrado, a wooded savanna region south of the Amazon in Brazil that’s currently facing high rates of land-use change.
“Bunge sources from this region and should commit to not purchasing soy grown on land in the Cerrado that was cleared of forest or native vegetation after 2020 (i.e., adopt a 2020 cut-off date),” Tarizzo said. “There is movement in the market already from some Brazilian soy traders, as well as some client companies, who have adopted similar policies, and Bunge should position itself as a leader among the pack by following suit.”
The Cerrado is a savanna ecosystem known as a “reverse forest” due to its extensive root system that stores large amounts of carbon. Preserving existing carbon sinks is essential to combat climate change.
Samuelrich said investors and companies have in recent years come to understand that deforestation is a climate risk driver and must be addressed. “The victories of the past few months make this the spring of investor-driven business action on deforestation,” she said.
Deforestation is a significant source of global greenhouse gas emissions. Yet under Bunge’s no-deforestation policy, the company’s soy supply chain continues to be associated with deforestation in Brazil, particularly in the Cerrado region.
Banner image: Soy field with one Brazil nut tree standing in the Amazonian state of Rondônia. Image by Shanna Hanburry.