Soy Toolkit Interview with Morgan Gillespy, CDP

Proforest spoke to Morgan Gillespy, Global Director, Forests at CDP. CDP is an international not-for-profit that drives companies and governments to reduce their greenhouse gas emissions, safeguard their water resources and protect their forests. Over 8,400 companies are reporting via its platform, in addition to 920 cities, states and regions.

Soy is one of the commodities that CDP focuses on as part of its forest work. In addition to providing this reporting platform for supply chain companies, this organisation works in key producer and consumer countries to raise awareness on these issues and to really drive action forward.

Morgan’s role focuses on driving disclosure on transparency and action on the topic of deforestation. Her team collaborates with different stakeholders, from companies, financial institutions, international and national policymakers.

Can you tell us more about your role at CDP, and the organisation’s work on forest risk commodities?

You don’t need me to tell you that the single largest cause of deforestation and forest degradation globally is commercial agriculture. The unsustainable production of supply chains of these commodities present significant business risks in addition to negative environmental impacts on land, on water, on biodiversity, and in fact contributing to climate change.

At CDP, we act on behalf of 515 investor signatories, these are large financial institutions that support our work. They currently represent $96 trillion of assets under management. In addition, we're supported by 19 purchasing companies. CDP Forest provides a framework for action through a questionnaire that we issue to these companies on annual basis.

This framework for action supports companies on how they can measure, and therefore manage, their forest related risks and opportunities. We encourage them to transparently report on their progress, and then to commit to proactive action for the restoration of forests and ecosystems. Our work focuses on five critical forest risk commodities; cattle, palm oil, rubber, timber, and soy. Just last year, we also began collecting data on biodiversity impacts focusing on the metals and mining sector. Across these commodity and biodiversity impacts, in 2019 we had 543 of the world's largest publicly listed companies, most impactful companies, engaged in these sectors that reported via the CDP platform.

What are some of the barriers to sourcing responsible soy? How can brands overcome them?

That’s such a big question and there's so many different ways you could answer. As you know CDP is a data organisation, and I want to frame my answer from that data perspective. Last year, of those 540 odd companies that reported, 106 of them reported on soy specifically. We had a data analysis of 106 companies in 2019, and of that sample 44 (about 42% of them) identified risks with the potential to have a substantive financial or strategic impact on their operations. These risks range from physical risks, such as droughts or floods impacting production, to regulatory risks and there were also reputational risks.

This is something that we're seeing quite a lot today, and what's happening in Brazil. Overcoming these risks to ensure responsible sourcing of soy is challenging, but CDP’s framework questionnaire focuses on a number of actions to support companies in doing this.

I want to talk just about two. Firstly, we think that all companies need to have a policy. You think that's such a simple thing to do, to have a public policy on how you deal with your forest risk, but a robust, publicly available policy that includes a commitment to eliminate deforestation and/or conversion is actually pretty rare. We had 58% of companies report having some sort of policy in place last year - almost two thirds. But only 20% actually have a policy that includes this critical commitment to eliminate deforestation.

Secondly, it is difficult for customers and investors to really decipher between sustainable sources. The biggest demand for soy is for animal feed, and therefore it's hidden in the end products. This is really one of the reasons that we believe that certification is such a great mechanism for those engaged with the soy supply chain. Making sure that certification is robust, for example what the Roundtable on Responsible Soy is doing is really critical.

Unfortunately, our data shows that certification in the soy sector is still far from the norm. In 2019, only five companies reported having at least 90% of their soy certified from a no deforestation compliance certification, and less than a third (about 31%) use soy certification at all. That sounds really bad, but it's even worse when you compare it to 73% of companies that are using certification for timber products and 77% of companies that are using it for palm. Therefore, there's a lot of opportunities within the soy sector specifically to drive this forward.

What milestones must be achieved this year by the retail and food sector to meet deforestation and conversion-free soy commitments?

I’m going to go a little off-piste here, but I think that if the COVID crisis has really taught us anything, it's that we are so deeply interlinked in a way that perhaps we knew, but we didn't really feel before. The same is true for companies in the soy sector.

“We must accelerate collaborative action across the entire value chain, ensuring that purchasing companies are working with their suppliers to find practical solutions to face their specific challenges.”

What we think really needs to happen is to accelerate collaborative action across the entire value chain, ensuring that purchasing companies are working with their suppliers to find practical and pragmatic solutions to face their specific challenges. Here, our data has some positive news. It shows that almost three quarters of companies (around 71%) within the soy sector are already working with their direct suppliers to improve their capacity to source sustainable materials. As we've just discussed, investing in certification where suppliers are to pay a premium to secure, not only zero deforestation, but also a range of social and environmental standards is one of the ways of doing that.

Another example of such collaboration is emerging approaches towards addressing deforestation across entire jurisdictions or landscapes. Mato Grosso is often dubbed as one of the leading examples of such efforts at jurisdictional level. We need more companies to engage with these interventions so that we can achieve greater impact.

Lastly, we're seeing several leading companies investing in action on the ground to really secure sustainable sourcing districts, for example, by the Cerrado Funding Coalition. With enough actors this initiative could stimulate more immediate action to stop deforestation by spreading the increased production costs for foresters, commodities throughout the supply chain, and also by financially incentivising farmers to produce soy sustainably. That collective action for us is really that critical milestone that needs to happen this year.

China is Brazil’s biggest customer, what risks and opportunities has CDP found that soy buyers in this region should be aware of?

Despite COVID-19 and the African swine flu, China's meat consumption and its demand for soy has not reduced. Brazil is a key supplier to China and so therefore, China and Brazil need to think about long term agricultural sustainability.

The other side of this is that China does have increasing reliance on Brazil to sources its soy, particularly as it's been shifting away from sourcing from the United States. In doing so, China increases its own exposure to deforestation risks, and those potential impacts.

Chinese buyers really need to think through how they can continue to source sufficient quantities of soy at the right price for the long term. That will likely require working closely with their suppliers to identify and leverage opportunities that are linked to the sustainable production of soy.

“To address risks, companies must not only purchase sustainably sourced soy, but also invest in sustainable production to ensure long-term access.”

In terms of addressing the risks, we think the opportunity lies not only in the company's decision to purchase sustainably sourced soy, but also in investing in the sustainable production of soy to ensure long term access. We also think that it's really prudent to act now. Forest production related efforts would be particularly marketable in China, as they're very much in line with the country's ongoing environmental efforts. For example, the government has led a ‘grow more trees and create larger forests’ movement for a few decades now. Consumer awareness across this issue is pretty high so there's an opportunity for companies to really jump on board and include an ecologically important country like Brazil into this topic. It would support Chinese companies in building greater recognition for its customers, leading to a win-win result for everyone involved.

The Soy Toolkit is a free online resource for organisations looking to source sustainable soy. How do you see the 5 key elements supporting companies in their efforts?

CDP is hugely supportive of the Soy Toolkit, it includes five elements that really guides companies to develop sound policies, commitments and implementation plans. It should be of no surprise that those five steps actually closely correspond to CDP's forest questionnaire, so enabling companies to report on that progress of implementation.

I wanted to highlight three [elements]. Firstly, we firmly agree that the first and most critical step is to ensure companies understand the risks. Our questionnaire outlines the components that we consider to be best in class as it relates to risk assessments.

For example, they [companies] should include other local actors or indigenous communities in the risk assessment. They should be looking in the long term - beyond six years to understand physical risks and how that we should be shifting long term sourcing supply. Our data suggests that companies aren't yet really focusing on this very easy kind of first step. Only 20% of the soy companies that reported by CDP in 2019 had undertaken a risk assessment that includes full coverage of both their direct operations and supply chains, and also considered risks beyond six years - that's quite worrying.

One of the other steps in the Toolkit is engaging with suppliers, that’s part of the collaboration effort that we think is so critical as we move into this year and beyond.

Finally, we believe that high quality, relevant and comparable information is the fundamental basis for environmental action - being able to monitor progress, verify the positive impact of the actions and report publicly on this is critical. Without transparency, there can be no accountability. If we don't have accountability, our sustainability efforts are really going to ring hollow both from an NGO, and also from a company perspective.

“Companies should dive into the Soy Toolkit and use CDP's forest questionnaire to report on their progress.”

We really think that companies should dive into the Soy Toolkit, and then use CDP's forest questionnaire to report on their progress. We are both here (CDP and Proforest) to support companies on their journey, and we really encourage them to take that critically important first step. We're also going to be working more closely with Proforest this year to promote the Toolkit to companies, so watch this space for more information on our resources and on our webinars.

For companies interested in furthering their responsible soy sourcing commitments, we are offering free training from the expert team behind the Soy Toolkit.

Please email us at soytoolkit@proforest.net and we’ll be in touch.