Responsible Business

Soybeans

As the world’s most efficient source of protein per hectare, an important ingredient for both human and animal nutrition, and a rich source of biofuel, soy production has expanded tenfold in the last 50 years to meet demand, which is expected to continue to grow rapidly

It is crucial that the world meets this growing demand, which follows rising global consumption of meat and food in general, while preserving ecologically valuable biomes, thereby contributing to the United NationsSustainable Development Goal (SDG) 12: Responsible Consumption and Production.

“To achieve more sustainable soy production, it is essential that all soy value chain participants work together, in line with SDG 17: partnerships for the goals. Collaboration among all stakeholders – starting with farmers, as the heart of the food chain – is the key to driving lasting change.”

André Roth

Head of Grains & Oilseeds

Sustainability Policy & Mapping

Although we also source soy from North America, the main sustainability risks we face are with soy purchased from Brazil, Argentina and Paraguay, where our priority is to help conserve areas rich in biodiversity, such as the Cerrado, Gran Chaco and Amazon biomes.

In 2018, we launched our global Soy Sustainability Policy, detailing our commitment to work with all our supply chain stakeholders to prevent conversion of native vegetation in areas of high ecological value, and reinforcing our ‘No Deforestation, No Peat, No Exploitation’ commitment.

In 2019, we shared this global soy policy with all our major suppliers operating in areas deemed to be at high risk of deforestation, and pursued policy communication in 2020 to reach suppliers in all regions where we operate.

Mapping supply chains being crucial to ensure traceability for direct sourcing activities, in 2020, we increased the number of direct suppliers mapped in Brazil and Argentina, mapped land use dynamics in northern Argentina and mapped our sourcing profile in Paraguay.

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Progress in Brazil

Our work toward more sustainable soy supply chains includes incentivizing producers in Brazil to preserve native vegetation.

After launching a preferential financing line in 2019 to incentivize producers to expand over existing pasture or degraded land, rather than convert native vegetation, in 2020 we focused on efforts to enhance pick-up among producers.

Traceable Supply Chains

We source approximately half of the soybeans we process in Brazil directly from producers. To meet traceability to farm standards defined by the World Business Council for Sustainable Development’sSoft Commodities Forum, the GPS coordinates of a farm where soy was produced must be available and the farm must have an Environmental Rural Registry (CAR – Cadastro Ambiental Rural) number.

Our target for 2020 was to trace 50% of directly sourced volumes in Brazil to farm level, with a focus on areas at higher risk of deforestation – a target which we exceeded by 38%, with the following figures as of end of November 2020:

  • 3% of soy volumes sourced from the Cerrado are from the 25 priority municipalities defined by the SCF (which is 0.8% of total volumes sourced in Brazil), of which LDC is present in two in Mato Grosso State.
  • For sourcing in these high-priority municipalities, LDC has 100% polygon level traceability to farm for direct sources.
  • For Brazil as a whole, LDC currently has 88% traceability to farm for all direct purchases, and traceability to municipality for remaining volumes.

Certified Soy

In 2018, we set up our own sustainable agriculture certification scheme in Brazil, and since then have been working with farmers to achieve compliance with this program, helping to build a certified supply chain that links our sustainability ambitions with customer requirements.

To this end, we encourage pursuit of certification by sharing best practices, promoting sustainable production and working with farmers on socio-economic risk analyses. We have also certified some of our own Brazilian assets under Roundtable on Responsible Soy (RTRS) criteria, which guarantee a transparent flow of certified soy.

In 2020, we made our first sales of RTRS volumes of soy credits and physical products through mass balance, strengthening the certified soy chain and helping to connect our customers with sustainably produced soy.

To meet the demands of European customers and biofuels markets, we also expanded the scope of supply chain certification per the European Commission’s Renewable Energy Directive (EU RED), which sets out criteria for the import into the European Union of raw material (as soy) for biofuel production.

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Progress in Argentina and Paraguay

In 2020, 87% of LDC’s soy origination in Argentina came from deforestation-free verified sources. The remaining volumes came from the Gran Chaco, 17% of which we certified as Biomass Biofuel Sustainability Voluntary Scheme2BSvs.

We are working alongside The Nature Conservancy  (TNC) to improve our risk analysis tool and provide incentives for producers not to expand cultivation over Gran Chaco native vegetation, such as a premium for sustainable soy and credit lines with low interest rates. 

Traceable Supply Chains

Using open-source data, we also mapped the current state of Paraguayan deforestation, our conclusion so far being that Paraguay’s soybean production has a 75% low-risk and 24% medium-risk deforestation profile since 2004.  

In 2020, we mapped approximately 90% of Argentine soy suppliers through the elevator channel, focusing on the Campo Largo area (Gran Chaco). This mapping identified areas of native forest, any recent deforestation and legal categorization of land.

Thanks to extensive certification programs in Argentina, more than half of soy volumes that enter our General Lagos plant can be traced back to farms.

Certified Soy

Working with TNC, we have also improved the risk analysis tool we use and hope to implement it for all farms in Argentina and Paraguay in 2021.

Going forward, we will carry out the same mapping and risk analyses in Uruguay and Paraguay, and extend land-use dynamics mapping beyond our current sourcing areas in Argentina, to seek solutions that avoid deforestation. Our targets have been amended accordingly.

Biodiesel and Soybean Oil Markets

Our significant Biomass Biofuel Sustainability Voluntary Scheme (2BSvs) and International Sustainability & Carbon Certification (ISCC-EU) programs to provide certified sustainable biodiesel and other soy derivatives require:

  • that production of biofuel feedstock does not take place on land with high biodiversity
  • that land with high carbon stock has not been converted for biofuel feedstock production (since the cut-off date of January 1, 2008)
  • traceability and chain of custody, mass balance throughout the supply chain
  • biofuel production leads to sufficient greenhouse gas emissions savings, as defined by the EU

Due to the impacts of Covid-19, decreased fuel usage led to reduced certified biodiesel sales. In response, we are trying to increase the number of destinations we reach with our products.

Partnerships for Sustainability

Soybean, Soybean Oil and Soybean Meal Markets

In 2020, we obtained chain of custody certification for our facilities in:

  • Argentina: Timbúes and General Lagos
  • Paraguay: C.A.I.A.S.A, Trociuk and Santa Maria

In 2020, we made our first purchases and sales of RTRS-certified soy in Paraguay, established our own third-party verified, deforestation-free soybean meal supply chain in Argentina, and brokered our first sales of this certified non-deforested Argentine soybean meal, which began shipping in early 2021.

We are extending the same scheme for third-party verified, deforestation-free soybean meal in Paraguay and Brazil in 2021.

In our 2019 sustainability report, we expressed an ambition to purchase 300,000 MT of deforestation-free soybeans annually in Paraguay from 2022. However, as most soy is not sourced directly from producers, we will have to amend this goal.

In Argentina, we remained part of several collaborative efforts to prevent soy sourcing from protected areas in the Gran Chaco:

  • Vision Sectorial del Gran Chaco (ViSeC), a multi-stakeholder initiative addressing soy production and conservation in the Argentine Gran Chaco, through which LDC and other members of Argentina’s Edible Oils  Association (CIARA – Cámara de la lndustria Aceitera de la República Argentina) are working with the public sector to comply with National Forestry Law, and to create sectoral plans for a collective commitment to achieve deforestation-free chains.
  • TNC, which is helping us create a solution to monitor areas of high biodiversity, identify where deforestation is taking place for soy, and create incentives that could alter producer behavior. The initial focus is on the Argentinian region of the Gran Chaco.
  • The Argentine Carbon Neutral Program, working to certify Argentine export products and, alongside other industry players in Argentina, to set a default greenhouse gas emission standard for Argentine soybean cultivation.

In Paraguay, we similarly remained a participant in several programs and associations, including:

  • The United Nations’ Green Commodities program, until it ended in 2020, offering a merchant’s perspective on industry issues and helping to promote sustainable practices.
  • The Paraguayan Chamber of Oilseeds Processors (CAPPRO – Cámara Paraguaya Procesadores de Oleaginosas). In 2020, thanks to a US$40,000 grant administered by CAPPRO, two cooperatives were certified as sustainable producers, with another three due to be certified in 2021.
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Looking to 2021 and Beyond

In addition to detailing progress on our efforts in Brazil, Argentina and Paraguay in our sustainability reports, we also update our sourcing profile regularly via our global website and report twice-annually on soy sourcing from priority municipalities in Brazil, as defined as by the WBCSD’s Soft Commodities Forum (SCF).

Looking forward, we will continue to do so while protecting key areas, by participating in strategic alliances with partners such as:

We will also continue to develop our global Soy Sustainability Policy through supply chain mapping and risk assessments for all sourcing in Brazil, Argentina, Paraguay and Uruguay, moving toward full traceability to farm for directly sourced soybeans.

In 2021, we will pursue our traceability efforts despite the technical and logistic challenges posed by Covid-19, and will continue to engage with business partners to encourage responsible expansion of soy cultivation.

Targets

Reach 50% traceability to farm in Brazil for direct purchases

50%

Completion: 2020

Status: Exceeded (88%)

Map land use dynamics in northern Argentina

Completion: 2020

Status: Complete

Map current sourcing profile in Paraguay and Uruguay

60%

Completion: 2020

Status: Complete

Amended Target

Expand preferential financing program in Brazil’s Cerrado & Argentina´s Gran Chaco biomes

Completion: 2020-2025

Status: In Progress

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