ADM Commitment to No Deforestation, No Peat and No Exploitation

Transcription

1 ADM Commitment to No Deforestation, No Peat and No Exploitation Q Soy Oil Progress Report In Membership with The Forest Trust Q

2 Introduction ADM committed to No Deforestation and No Exploitation (No DE) in our soy supply chains in March We have been working with The Forest Trust (TFT) since May 2015 to implement this commitment, and build a traceable and transparent soy supply chain that protects forests worldwide. ADM posts quarterly progress reports in order to be transparent with the process of implementation, which will ultimately provide ADM, and the industry in general, with a credible methodology for sourcing soybeans while protecting sensitive biomes and the communities that exist where we live and work. Our hope is that ADM s No DPE work will support convergence within the soy industry on best practices for environmentally and socially sustainable soy. Activities This past quarter, we worked at the field level and on internal procedures and processes: Completed an updated 2016 soybean sourcing analysis for Paraguay, Brazil, Argentina, Uruguay, and Bolivia. Obtained shapefiles maps of 10% of our current suppliers farms in Brazil. Mapped internal systems and data collection procedures for supplier qualification, supplier registration, and soybean procurement processes in order to identify changes necessary to implement the No Deforestation Commitment Began internal discussion of scoping work on social conflicts Designed next phase of monitoring tool testing in the Brazilian Cerrado and Paraguay Atlantic Forest biomes, including definition of clusters of suppliers in medium and high risk municipalities to undertake pilot farm level monitoring Developed an Issues and Resolutions Mechanism to receive and address grievances related to the No Deforestation Policy within the soy and palm oil supply chain. Transparency and Traceability Updated Procurement and Traceability Data This quarter we calculated 2016 procurement volumes for all countries where ADM sourced soybean in South America (figures 1 and 2), with detailed analysis of procurement and traceability in our initial focus countries for implementation of the No Deforestation Commitment: Brazil and Paraguay (figure 3). The 2016 procurement analysis is the first 2

3 comprehensive collection of procurement data since the 2014 global foot printing process, and provides a basis for targeting and guiding transformation efforts, as well as identifying potential shifts in soybean sourcing. Global soybean procurement data will be published annually, and ADM will report on global soybean procurement volumes and traceability. Figure South America soybeans procurement volume share per country 4% 7% 14% 3% 72% Argentina Bolivia Brazil Paraguay Uruguay Figure 2. ADM South America 2016 soybeans procurement volume distribution by supplier type 15% 36% 8% 5% 36% Broker Cooperative Farmer Other Companies Third Party Silo For definitions of supplier types, see Q progress report 3

4 In addition to South America soybean procurement data, figure 3 shows country level procurement by supplier type in Brazil and Paraguay. ADM considers detailed analysis in Brazil and Paraguay to be important, given that certain areas within the Brazilian Cerrado and the Paraguayan Atlantic Forest were previously identified as high risk biomes, and selected as the initial focus geographies for implementation of the No Deforestation Commitment (see Q progress report for more information on risk assessment and selection). ADM is able to identify with certainty the state origin (in the case of Brazil) or department origin (in the case of Paraguay) of all soybean sourced directly from farmers. We cannot yet verify with confidence the state/department origin of soy sourced indirectly through cooperatives, brokers, traders, or third party silos as we are currently prioritizing direct supplier engagement, and have not yet initiated engagement with indirect suppliers. This indirect and direct supplier data allows us to report state/department level traceability numbers for Brazil and Paraguay for the first time, by comparing sourcing from our direct suppliers (traceable to state/department level) vs. indirect suppliers (currently untraceable to state/department level). For Brazil, 59% of 2016 soybean procurement volume is traceable, and 41% is currently untraceable. For Paraguay, 30% of 2016 soybean procurement volume is traceable to department level, and 70% is currently untraceable. Although ADM s ultimate goal is to reach farm level traceability, we view state/department level traceability in our Paraguay and Brazil supply chains as an intermediate indicator of progress. As we gain greater visibility on the precise geographic origin of supplier farms, we will report municipality and/or farm level traceability. Figure 3. ADM Brazil and ADM Paraguay 2016 soybeans procurement volume distribution per supplier type 4

5 20% ADM Brazil 1% ADM Paraguay 10% 1% 20% 59% 30% 59% Farmer Third Party Silo Cooperative Other Companies Third Party Silo Cooperative Farmer Other Companies Stakeholder Engagement ADM participated in multi-stakeholder dialogue on No Deforestation strategy for soy during this quarter, as a contribution to transparency and industry convergence. ADM was able to exchange experiences and engage with CSOs, the private sector, and international institutions through this stakeholder engagement, which included a World Bank-hosted dialogue on industry mechanisms for conservation in supply chains within Latin America, as well as the United Nations Development Programme (UNDP) Green Commodities Programme in Paraguay. Transformation Incorporating the No Deforestation Commitment into Procurement Processes With TFT s support, we have made progress incorporating aspects of the No Deforestation Commitment into ADM s procurement/sourcing processes. These changes to the procurement/sourcing process are focused on the following goals: 1) achieve farm-level traceability of ADM soy, 2) obtain and register geospatial information of supplying farms in high risk areas, 3) incorporate elements of the No Deforestation Commitment into sourcing, and 4) integrate analysis provided by the remote sensing monitoring into ADM s sourcing decisions, as well as other data on social and environmental risk. This process required detailed mapping of ADM systems and processes in Paraguay and Brazil to identify decision points and information collected by each ADM department throughout the procurement process from supplier qualification and registration, to pre-finance, to ADM taking possession of soybean. This information will enhance our systems and reinforce procedures to operationalize the No Deforestation Commitment, as well as facilitate automation of data on traceability and monitoring of compliance to the Commitment. 5

6 Investigating Social Issues in Sourcing Regions To address the No Exploitation aspect of our Commitment, ADM continued to investigate indigenous-farmer conflicts in Brazil, more specifically in Mato Grosso do Sul. This research involving interviews with civil society, government, and producer associations, as well as visits to two communities accompanied by FUNAI was undertaken to better understand the nature of the indigenous-farmer conflicts in the region. As an outcome of the report, ADM and TFT are exploring avenues to partner with stakeholders to receive periodic information on indigenous land disputes that will help provide regional staff with guidelines on how to address conflict areas. 6

7 Monitoring and Verification Development of a Methodology for Remote Sensing Monitoring We have advanced discussions with stakeholders on identifying and testing best methodology to identify conversion from native vegetation to soy, in order evaluate supplier compliance with the ADM No Deforestation Commitment. The appropriate methodology and the right tool are vital for the implementation of a credible and viable monitoring system, as well as to support farmers in sustainable land use planning. During Q4, ADM chose two remote sensing monitoring tools from the five tools piloted in The two tools chosen will advance to implement a second stage of operational tool testing in a subset of ADM supplier farms. The pilot will include regional and farm level analysis of land use change in municipalities within ADM s high risk priority areas for No Deforestation implementation: MATOPIBA in Brazil and the Atlantic Forest in Paraguay. The pilot is programmed for the first semester of 2017, and the results will be used as a guide to select the best option to develop an efficient and scalable methodology to monitor farms in priority areas within ADM s supply chain. Development of an Issues and Resolution Mechanism We developed advanced development of an ADM Issues and Resolution Mechanism during Q4, including the development of procedure and guidance documents, as well as institutional arrangements for implementation. The Issues and Resolution Mechanism will receive and respond to grievances related to the No Deforestation Commitment within soy and palm oil supply chains, and will publish actions taken to address grievances. The Issues and Resolution Mechanism will be made public on ADM s Progress Tracker website during the first semester of ADM Sustainability Initiatives Supporting Implementation of the No Deforestation Commitment ADM s Responsible Soy certification Standard recognized by FEFAC and ITC EU, the program audited by an independent party*, was able to certify metric tons of SOY produced sustainably by 68 farms within 6 different states that cover most of the Brazilian Cerrado Biome Sustainable agriculture certifications (ISCC and 2BSvs) 7

8 3rd parties certified according to ISCC standards for Renewable Biofuels in the EU, 20 farms that produce over 150,000 metric tons of SOY in the state of Bahia (Cerrado Biome). In Paraguay, 350,000 ton of soy were certified under ISCC and 2BSvs standards. TNC s CAR initiative in Correntina, Bahia (Brazil) This initiative, sponsored by ADM and led by The Nature Conservancy (TNC), involved several stakeholders who joined efforts to implement the CAR in every single farm in Correntina, a large soy producing municipality in the state of Bahia. The CAR (Cadastro Ambiental Rural) is a digital cadaster of the farm and is considered as the initial step towards environmental compliance. Sustentagro - Forest conservation in rural properties in Paraguay together (with Solidaridad, IDH) A partnership between ADM + Solidaridad and IDH, Sustentagro, is a program that promotes conservation of forests within rural properties. Over 15,000 hectares of private natural forests were mapped in farms that decided to join the initiative committed to protect and improve the conditions of these Atlantic Forest remnants. The program rendered two books soon to be published: "Importance of Forests" and "A Methodological Guide for Forest Enhancement," which will be a valuable guide to other producers willing to promote the conservation and forest management of private forests. SPVS (Soc. de Pesquisa em Vida Selvagem) Biodiversity Program with COPERDIA s smallholders in Brazil In association with SPVS and FFI, an extension program was developed to engage smallholders associated to the COPERDIA COOP in the state of Santa Catarina (Brazil). With practical information and best practices technology accessible to smallholders, the workshops promoted the conservation of Atlantic Forest remnants with focus on the rich biodiversity this biome supports. SOJA PLUS with ABIOVE/APROSOJA ADM sponsored the SOJA PLUS workshops in the Brazilian states of Minas Gerais and Mato Grosso. These workshops, very popular with farmers, teach how a property efficiently managed and in compliance with local labor and environmental legislation leads to better economic results. 8

9 Sustainable and Best Management Practices (BMP) assessments with suppliers in Paraguay A total of 175 assessments that cover over 130,000 hectares were carried out in the field with soy producers to discuss production committed to: Transparency: working with integrity Life: respecting others The environment: protecting our future Business: caring for the present The community: building a better place to live, work and invest. As a result, four technical guides were developed and will be available soon: Good Agricultural Practices, Environmental Legislation, Good Labor Practices, and Good Environmental Practices. Topics of interest Connecting Forests Program with NGO A Todo Pulmon and Itaipu Binacional ADM Paraguay joined the Connecting Forests Program, a program sponsored by the Itaipu Binancional Forest Conservation Fund and implemented by NGO A Todo Pulmón. The program provides seedlings to reforest degraded areas in farms surrounding protected areas/parks that can act as a buffer, and also by creating natural corridors along watercourses that have lost their riparian forests. In total, 7 counties in 3 different states will receive close to 280,000 native species seedlings. So far, 154 ADM suppliers have enrolled in the program and have committed to reforest close to 600 hectares. Doing it Right Program with NGO Aliança da Terra (Brazil) Did you know that already 458 farms that sum close to 1 Million hectares of productive area in Brazil, went through social, environmental and best practices upgrades to guarantee a more responsible sourcing? Conclusion The past quarter of No Deforestation work was notable for progress at the field level and in ADM internal systems. Important changes to ADM s internal systems began to capture existent sourcing information, and compare this data with areas of risk identified in the social and environmental risk assessment previously carried out to support implementation of our 9

10 Commitment. We also made strides in our process of identifying the remote sensing tools best suited to ADM s needs, and developing an operational next phase of testing these tools in a sample of farms. In the coming semester, we will begin to implement concrete training and local activities with both stakeholders and ADM staff, with the objective to develop internal capacities and provide tools to integrate the No Deforestation Commitment into ADM s core business operations. We will continue to invest in projects that contribute to protecting, expanding, and sustainably managing forests and other ecosystems, Furthermore, we will continue working directly with growers to improve sustainable agriculture practices at field level and raise awareness about forest protection. This is our fifth public Progress Report. We welcome feedback and comments from our interested readers at responsibility@adm.com. 10