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Charting the Course Toward Zero-Deforestation

December 2, 2022

Following our commitment to eliminate deforestation and conversion of native vegetation for agricultural purposes from our supply chains by 2025, we spoke with Murilo Parada, Chief Sustainability Officer at Louis Dreyfus Company (LDC), to find out more about the journey to meeting this key target in our sustainability roadmap.

Can you elaborate on the rationale for LDC’s zero-deforestation and native vegetation conversion commitment?

“As a responsible global company, LDC continually seeks to minimize the environmental impact of its operations by adopting and promoting fair and sustainable practices.

Accordingly, our work to eliminate deforestation, and similarly our efforts to drive down carbon emissions, are not new and have been progressing for several years, with positive strides in both areas.

In that sense, the zero-deforestation and native vegetation conversion pledge we made in February 2022 is part of LDC’s global approach and long-time commitment to shaping increasingly sustainable food and agriculture supply and value chains, formalizing another important and necessary step in the Group’s sustainability and decarbonization journey, and building on important foundations put in place over the years.”

What does that journey look like, for LDC?

“With diverse and complex value chains, there is no shortage of challenges or action and improvement areas. What we see as the common priorities across supply chains and geographies are the following:

Collaboration: We need to look for shared solutions to common challenges, taking into account the realities and concerns of all supply chain participants to ensure fair outcomes: farmers, indigenous groups, governments, civil society, the financial community, customers and ultimately end consumers.

Farmer engagement: We believe that farmers are the heart of the food chain, on whose production the rest of the value chain, and all of us as global citizens, depend on for sustenance. It’s therefore crucial that we bring them into the dialogue and make them part of the solutions for mitigating global warming. In order to support them on the zero-deforestation journey, we need to understand the challenges they face, empower them to increase their yields through more sustainable practices and incentivize them to expand cultivation over already cleared or degraded land.

And emissions reductions: We must continue to do our part in driving down greenhouse gas emissions – in LDC’s own operations and beyond, across value chains. In particular, we seek to influence change upstream, at the farm level, recognizing that eliminating deforestation and native vegetation conversion linked to agriculture is among the most significant contributions we can make to the world’s 1.5°C target for the limitation of global warming.”

“It’s crucial that we bring [farmers] into the dialogue and make them part of the solutions for mitigating global warming. In order to support them on the zero-deforestation journey, we need to understand the challenges they face, empower them to increase their yields through more sustainable practices and incentivize them to expand cultivation over already cleared or degraded land.”

One of the key ‘asks’ from private sector zero-deforestation targets is to define specific deforestation ‘reference dates’, especially in relation to products considered to present a higher risk of deforestation for agriculture. Where does LDC stand on this point?

“Yes, clarity on reference (or cutoff) dates is key in setting zero-deforestation targets that are precise, actionable and monitorable for specific supply chains, such that clearance of native vegetation after this date makes the area or farm in question, and the crop cultivated there, non-compliant with zero-deforestation/conversion commitments.

Going beyond recent sectoral commitments and roadmaps, at LDC we have adopted the following reference dates: November 2016 for palm, and January 2020 for soy and other commodities.”

At LDC we have adopted the following reference dates: November 2016 for palm, and January 2020 for soy and other commodities.” 

What actions are needed in order to succeed?

“Sustainable agriculture and food production are among the world’s most pressing global challenges. To address these challenges and achieve our target, we believe in a collaborative approach that takes into account the needs and concerns of all supply chain participants, especially farmers, whose production activities are indispensable to ensure global food security, and whose methods are key to the conservation of natural resources and habitats.

LDC’s zero-deforestation commitment is fully aligned with our track record of supply chain transparency and public reporting on supply chain risks, and efforts to mitigate these – efforts that have so far successfully focused on various elements of environmental preservation that we feel will be complemented by a public commitment with a clear timeline.

Key among our efforts – past and present – is developing traceability, as an essential lever for supply chain transparency, monitoring and responsible purchase decisions. And that necessarily goes through data, and the technology to obtain, analyze and report it.

Building on this, important steps to achieve our 2025 target will include risk assessments, action prioritization based on these assessments (with a focus on higher risk supply chains and regions), external verification of our progress going forward, and of course continued public reporting.”

Key among our efforts is developing traceability […] and that necessarily goes through data, and the technology to obtain, analyze and report it.

You mentioned building on past action to advance the elimination of deforestation and conversion of native vegetation in LDC supply chains? Can you elaborate on this?

“Yes – as I said, our zero-deforestation commitment is in continuity with steps taken in recent years, such as the development of product-specific sustainability codes and policies that set out LDC’s commitment to conserve forests and native vegetation for commodities considered to be at higher risk in relation to deforestation.

In Coffee and Juice, our dedicated codes of conduct outline standards for environmental, social, safety and other practices by our suppliers.

For Palm and Soy, our sustainability policies set out LDC’s No Deforestation, No Peat and No Exploitation commitment and other product-specific standards.

At a global level, we have also created a Carbon Solutions Platform to advance LDC’s company-wide decarbonization roadmap, which includes actions to drive down emissions in our own operations and across value chains, engaging with and supporting business partners to do so from origin to destination.”

How will you address remaining challenges or obstacles to supply chain traceability?

“We are joined in our conviction and efforts by a growing body of stakeholders, including legislators, customers, consumer goods companies, financial institutions and others who are increasingly making similar public commitments, which facilitates necessary collective action across relevant product lines – such as supplier engagement and incentivization, supply chain traceability and monitoring, and external verification of positive impacts up and downstream in our value chains.

We have been engaging with our business partners and other stakeholders for several years in this respect, and our work to advance traceability has progressed significantly, with a focus on product lines and geographies that present a higher risk for deforestation:

For palm, we have reached close to 100% traceability to supplying mills and are making good progress on traceability to plantation (72% for global volumes).

For soy, we have conducted deforestation and conversion risk assessments for key origination countries, giving us insight into focus areas for our due diligence work. In Brazil’s Cerrado biome, we have reached 100% traceability to farm for direct sourcing in the Soft Commodities Forum’s 61 Focus Municipalities and are progressing very well for other municipalities identified as high risk by LDC. In Argentina, over 50% of our soy sourcing is certified for sustainable biofuel programs, and therefore free from deforestation from 2008, providing a great foundation for further traceability and due diligence in high-risk municipalities.

For coffee, we continue to map supplying farms through the roll-out of our Coffee Supplier Code of Conduct, to meet demand for low carbon, traceable, responsibly produced coffee. Our existing work with certification partners, and our own Responsible Sourcing Program, are key to ensuring verified deforestation-free supply chains.

And for juice, we are well placed to trace and track the origins of all the fruit we process, managing farms in Brazil that grow roughly 40% of the fruit, and working directly with third party fruit suppliers of the remaining volumes to adopt the same environmental, safety and social standards we apply in our own operations.”

Farmer with young coffee plant

Will LDC stop buying from suppliers found to be operating in breach of zero-deforestation commitments, or who legally cleared vegetation after the stipulated reference date? Or will LDC move away from regions where deforestation is a prominent risk for agriculture production and expansion?

Our approach has always been an inclusive one – that means instead of boycotting farmers found to be operating outside the bounds of our commitments, we choose to collaborate and engage with them, encouraging and supporting them to take corrective actions and compensation measures for positive impact.

We want to help them improve and adopt practices that support their goals as well as ours, and encourage them to make similar environmental commitments, since forest and native vegetation conservation, combined with low-carbon and regenerative agricultural practices, are in the interest of the long-term viability and productivity of farms, and therefore benefit farmers themselves. This said, in cases of continued non-compliance despite outreach and collaboration to support a change in practices, we reserve the right to suspend suppliers from approved supplier lists.

Likewise, we feel that redlining high risk areas eliminates our influence on these. We want to be part of the solution alongside farmers themselves, and that means remaining engaged in high-risk geographies and leveraging positive change through engagement and collaboration.

As the world’s population continues to grow, so the need to provide sustenance to that population also grows. As a leading merchant of agri-commodities, we believe we have an important role to play in finding fair and tangible solutions for more sustainable food and agricultural production.

That means acting on our own operations and supply chains, including through commitments to eliminate deforestation and native vegetation conversion, and more broadly through sectoral collaboration with peers, producers, government agencies and other key stakeholders.”

Do you think our zero-deforestation commitment will restrict LDC’s sourcing operations and future expansion?

“Quite the contrary. We believe that having an effective system in place to detect and eliminate deforestation through engagement with supply chain partners will support future business – it will reinforce our relationships with both customers and suppliers, as we work together to safeguard the long-term viability and productivity of agricultural land, and farmers’ access to international markets.

With growing conviction and commitments from stakeholders worldwide, we also consider that setting time-bound targets for the elimination of deforestation will provide additional incentive to advance necessary actions for positive change across supply chains, such as traceability, monitoring, evaluation and verification, and of course supplier engagement.”

What, in your view, is the single most important success factor in achieving zero-deforestation and native vegetation conversion for agricultural purposes?

“The objective behind our zero-deforestation commitment is to make commodity production more efficient, productive and sustainable in terms of land-use, by supporting and incentivizing farmers to intensify crop production over land already cleared for other purposes, such as pasture, rather than through land deforestation or conversion for agriculture.

So I cannot emphasize enough the need for effective farmer support and incentives, which must go hand in hand with zero-deforestation production beyond legal requirements, which is why we are actively formulating and deploying individual and collective solutions in partnership with the financial sector, value chain partners and public sectors.

Climate change is already hitting yields, which is in nobody’s interest, and this trend will accelerate if nothing is done. That’s why acting to conserve forests, native vegetation and biodiversity is key to reduce global emissions, protect farmer livelihoods, support lasting economic development, and ultimately shape a more sustainable food system for the benefit of current and future generations.”

“Acting to conserve forests, native vegetation and biodiversity is key to reduce global emissions, protect farmer livelihoods, support lasting economic development, and ultimately shape a more sustainable food system.”


 

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