Building a more sustainable cattle supply chain in both Brazil and China

By Jane Byrne

- Last updated on GMT

© GettyImages/oonal
© GettyImages/oonal

Related tags deforestation Soy Brazil China

China is highly exposed to ecosystem damage in Brazil but collaboration between the two countries has the potential to transform the entire sector, according to supply chain transparency experts.

Pasture for grazing cattle is impacting natural ecosystems, with Brazil's 2020 beef exports linked​ to 340 million tons of emissions through deforestation.

China is the largest importer of Brazilian beef, reads a World Economic Forum review​.

“Although more than 70%​ of the beef produced in Brazil is consumed domestically, in recent years a growing proportion has been exported to China, with the volume of this trade quadrupling​ between 2010 and 2020," outlined Andre Vasconcelos, Trase global engagement lead, Global Canopy, Erasmus zu Ermgassen, researcher, Trase/UCLouvain and Yuan Zhang, China specialist, Tropical Forest Alliance. 

However, through robust tracing and monitoring frameworks, stakeholders can meticulously track the movement of food products throughout the entire supply chain, enabling them to address any links to deforestation effectively, they stressed.

Industry groups are increasingly adopting data-driven methodologies to implement aligned strategies for deforestation- and conversion-free (DCF) sourcing, noted the authors. 

An example is the Consumer Goods Forum Forest Positive Coalition (CGF-FPC), which is in the process of devising a methodology to categorize soy origins based on risk levels​. This classification relies on data concerning the location and concentration of deforestation associated with soy cultivation.

Similarly, the French Ministry for Ecological Transition provides companies with a risk assessment dashboard​ in relation to soy imports, one that was developed by Trase.

Moreover, there are existing initiatives in Brazil, such as the Beef on Track​initiative and Para State’s Cattle Integrity and Development Program​, that aim to support and accelerate the fulfillment of commitments within the beef chain.

DCF soy sourcing 

In November 2023, Chinese trader COFCO International and Modern Farming Group signed a US$30 million purchase order for soy from Brazil, incorporating a DCF sourcing clause for the first time. This alliance was followed by a memorandum of understanding for the supply of DCF soybeans to Sheng Mu Organic Dairy.

Leveraging data and monitoring solutions can contribute to building a more sustainable cattle supply chain in both Brazil and China. But to maximize the benefits of monitoring, fostering cooperation between Chinese buyers and slaughterhouses implementing these systems is essential, argue the Tropical Forest Alliance and Trase experts.

Furthermore, as the sector intensifies traceability efforts to meet the disclosure requirements of the EU’s deforestation regulation, this will reduce barriers for importers in China and elsewhere to access similar information, they added.

Trase ​provides data and insight to empower companies, investors, and governments to address tropical deforestation.

The Tropical Forest Alliance​ is a multistakeholder partnership platform established to support companies through the ongoing global transition to deforestation-free supply chains for commodities including palm oil, soy, beef, and paper/pulp.

Voluntary efforts fall short on deforestation progress

Digging deeper into regulation in this space, and the Global Canopy’s 10th annual Forest 500​ report, published last week, showed that, while new laws to curb deforestation linked to commodities purchased by companies is now in place in the EU, other key markets, including the US and the UK, need to follow suit.

"And the laws need to be strengthened to include financial institutions, due to the influence they can exert over companies."

Over the last 10 years, the Forest 500 project has gathered 1.3 million data points on the 350 companies and 150 financial institutions with the most influence on commodity-driven tropical deforestation. Chief among the lessons learnt in that time, according to the review, is that voluntary action by the private sector is not working.

The Forest 500 report tracks the policies and performance of the 350 most influential companies and 150 financial institutions most exposed to deforestation risk in their supply chains and investments.

"Almost a quarter (23%) of the companies and financial institutions that have featured in each of the 10 annual assessments since the Forest 500 was established have still not published a single commitment on addressing deforestation."

The report also reveals that 37% of Forest 500 companies have published a deforestation commitment for at least one commodity but not for all of the commodities they are exposed to and have influence over. This includes brands Aldi, Domino’s, Inditex and Walmart.

"Nearly two-thirds (63%) of companies that have set commitments are failing to publish adequate evidence of their implementation, including Adidas, Starbucks, and Gap."

Financial sector

In 2014, just 11% of financial institutions in the Forest 500 had published a deforestation policy. Ten years later, the authors noted, that figure has risen to 45%. But this means that the majority (55%) of financial institutions with the highest exposure to deforestation in their portfolios are still yet to set a single policy, they wrote. 

"Eighty-five percent of financial institutions still do not have a publicly available policy for all the four highest risk commodities, which drive two thirds of tropical deforestation."  

The report maintains that the human rights abuses linked to deforestation are being largely ignored across the board - 28 companies that have been continuously assessed since 2014 have scored 0 for human rights in the Forest 500 every year.

"The same is true for financial institutions. Australia and New Zealand Banking Group Limited (ANZ) was the only financial institution that required its clients and/or holdings to have a zero-tolerance approach for violence and threats against forest, land, and human rights defenders in their supply chains."

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