Waitrose backs zero-deforestation soy initiative
- We are supporting the Responsible Commodities Facility's inaugural soy initiative, along with other major supermarkets
- The initiative aims to incentivise farmers to grow soy responsibly and sustainably
- Farms will help to conserve around 11,000 hectacres of native vegetation in the Cerrado region of Brazil, under threat of deforestation
UK supermarkets Tesco, Sainsbury’s and Waitrose this week invested US$ 11 million in the Responsible Commodities Facility (RCF), a new system of financial incentives for farmers in Brazil who commit to deforestation- and conversion-free (DCF) soy cultivation.
The RCF will provide finance to 36 farms in the Cerrado region of Brazil, producing 75,000 tons of soy per year (for four years), resulting in the conservation of around 11,000 ha of native vegetation, 4,200 in excess of legal reserves.
The Cerrado, which lies mostly in Brazil, is the world’s most biodiverse savanna, and it is under threat from high levels of deforestation, mostly driven by the expansion of soy cultivation. All farms in the trial stage will be located in the Matopiba, Goiás and Mato Grosso regions, areas at risk of deforestation and biodiversity loss.
After an initial 12-month trial phase, it is expected that the Responsible Commodities Facility (RCF) will be scaled up to include hundreds of farmers across Brazil, helping to protect vast tracts of native Cerrado vegetation in Brazil conserving biodiversity, water quality and carbon stocks.
An independent Environmental Committee composed of; UN Environment Programme (UNEP), The Nature Conservancy (TNC), BVRio, WWF, Conservation International (Brazil), Proforest and Instituto de Pesquisa Ambiental da Amazonia (IPAM) will review and provide input into the environmental management of the facility.
The RCF is run by Sustainable Investment Management Ltd (SIM), a signatory of the IFACC initiative (Innovative Finance for Amazon, Cerrado and Chaco), and complies with the IFACC Environmental and Social requirements. IFACC is an initiative led by TNC, the Tropical Forest Alliance (TFA) and UNEP to accelerate the flow of finance to producers in the region and to expand production of beef and soy without further clearing of forests and native vegetation.
Along with those contributing financially to the first programme, which also includes sponsorship from US cocoa and chocolate product manufacturer Barry Callebaut, many more major international soy buyers participated in the design of the RCF. It is hoped the trial stage will provide valuable insight into how the mechanism works in practice on farms and inspire other organisations and businesses to lend their support.
The initiative is financed through a first-of-its-kind approach: dollar-denominated green bonds (CRAs - Certificates of Receivables from the Agribusiness) registered in the Vienna Bourse. The capital raised will be used to offer low-interest loans to farmers who comply with its eligibility criteria, and commit to zero deforestation of native vegetation, over and above their legal reserves, preventing negative climate impacts and loss of habitat. The operation was coordinated by Sustainable Investment Management (SIM) working with Opea, through Planeta Securitizadora, and Traive in Brazil.
Pedro Moura Costa, SIM CEO, explains why the programme is needed and its intended impact, “Crop finance is a key part of soy farmers' business models and there is a huge appetite and market for green finance. By directing this flow of green finance we can support soy production while rewarding the voluntary conservation of native vegetation.
“The urgent need to reduce GHG emissions from deforestation requires a new flow of financial resources to those at the frontline of agricultural production. At the same time, it is important to reconcile the objective of conservation with that of economic production, so that one complements the other.
"The RCF intends to solve these problems through its innovative new financial model and to unlock these large flows of green investment to do good, by supporting sustainable agriculture and protecting forests in a financially sustainable way that, importantly, rewards farmers.”
The funders of the RCF Cerrado Programme 1 commented;
Ken Murphy, Tesco Group CEO said: “We’ve been driving industry action on tackling deforestation for a number of years, including playing a leading role in the formation of the UK Soy Manifesto last year. We’ve also made a commitment that by 2025 we will only source soy from whole areas verified as deforestation-free. To help us meet this goal it’s vital we provide practical, financial support to farmers in Brazil committed to the production of zero deforestation soy and the conservation of native vegetation.
"This initiative highlights the need for the whole food industry to come together and support the protection of critical ecosystems like the Cerrado. We urge more businesses and organisations to join us in providing funding for the RCF, to aid its roll-out in future years.”
Simon Roberts, CEO at Sainsburys, said: “During COP26, where Sainsbury’s was a principal supermarket partner, we signed the WWF Retailers’ Commitment for Nature, with a collective aim to halve the environmental impact of UK shopping baskets by 2030 and tackle deforestation, supporting our commitment to achieve 100% deforestation and conversion free supply chains by 2025.
"To limit global warming to 1.5 degrees and achieve the goals set out in the Paris Climate Change Agreement, it is vital that we protect and restore forests and ecosystems such as the Cerrado in Brazil.
"It’s why we are proud to join forces with others to help fund the Responsible Commodities Facility, investing in the sustainable production of soy, using green finance to reward farmers for protecting wildlife and biodiversity in the Cerrado.”
James Bailey, Executive Director, Waitrose, said: "We're delighted to be one of the leading investors supporting this inaugural fund and applaud Tesco and Sainsbury's for their leadership on this also.
"Waitrose is committed to doing our part to protect and restore nature, and we have set a bold commitment to source all our key raw materials responsibly by 2025, including deforestation and conversion-free soy.
"The scale of the challenge to halt the loss of biodiverse ecosystems like the Brazilian Cerrado requires innovative new approaches. We hope this pilot fund will demonstrate the huge opportunity for green finance to incentivise responsible farming practices that ensure we protect our global forests.
"Achieving this potential, however, will require broader uptake, and I'd therefore appeal to fellow food sector businesses and to financial investors to join us in supporting and investing in this extremely important initiative to help protect the Cerrado, before it's too late."
Commenting on the wider environmental implications of the initiative, RCF Environmental Committee member and initiative development partner, Susan Gardner, Director, Ecosystems Division at UNEP, added; “Global demand for soy production is driving significant deforestation.
“Practical financial solutions like the Responsible Commodities Facility incentivise farmers to decouple commodity production from deforestation and land conversion practices, leading to enhanced landscape restoration, climate mitigation, adaptation and biodiversity protection in line with the United Nations Sustainable Development Goals and the UN Decade on Ecosystem Restoration. A great example of how farmers can be effectively incentivized would be for all the companies that have signed up to the Cerrado Manifesto Statement of Support to materialise this commitment through funding this facility.”
The Nature Conservancy, Director of Agriculture Finance, Greg Fishbein also said: “RCF will create tangible climate and biodiversity impacts by offering farmers who can legally clear their forests a clear financial incentive not to do so. This is exactly the type of mechanism we envisioned when we created IFACC – one that can leverage commercial finance to support farmers in their transition to climate-friendly production models.”
The RCF complements other responsible soy production initiatives such as the Cerrado Manifesto - a commitment to reduce deforestation from soy production signed by major consumer retailers and primary production groups, and the UK Soy Manifesto. The RCF is part of the Consumer Goods Forum’s Forest Positive Coalition Portfolio of Landscape Initiatives (2021) and is a member of the Innovative Finance for the Amazon, Cerrado and Chaco (IFACC).
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