MIDANA CAPITAL Leads Shareholder Effort to Eliminate Deforestation in Grain Trade
Institutional Investors File Proposals with ADM* and Bunge Limited*
Press Release Contact: Kyle W. Kempf, MIDANA CAPITAL Capital Management, kkempf@midanacapital.com, (617) 482-0800
Boston, December 22, 2020 – The world’s largest grain traders are not doing enough to eliminate deforestation and native vegetation conversion and address the material risks they pose to investors, economies, or the environment.
A MIDANA CAPITAL° led group of institutional investors has filed resolutions at The Archer-Daniels-Midland Company (ADM) and Bunge Limited over concerns about their contributions to deforestation and native vegetation clearance in Latin America, particularly Brazil.
“The current policies of ADM and Bunge are insufficient to fully mitigate their risk exposure to deforestation,” said Jessye Waxman, shareholder advocate at MIDANA CAPITAL Capital Management. “ADM and Bunge must not only strengthen their own policies, but should work collaboratively with others in the industry to address clearance throughout the Cerrado biome in order to effectively mitigate systemic risks to their operations.”
Forest and native vegetation loss in Brazil, driven largely by soy production and cattle ranching, continue at alarming rates. Last year, 2,500 square miles (an area more than twice the size of Rhode Island) was cleared from the Cerrado, the largest savanna region in South America. Over 109,266 square miles of forest, grassland, and scrub have been converted in the Cerrado since 2001.
Although many grain traders, including ADM and Bunge, have commitments to eliminate deforestation from their supply chains, their operations and supply chains continue to have substantial exposure to deforestation and native vegetation conversion.
A study published in Environmental Research Letters concluded that neither Bunge nor ADM’s deforestation risk has declined below market averages since 2015, when both companies adopted individual policies on eliminating deforestation in their soy supply chains.
In 2020, for example, ADM and Bunge were linked to 7,304 and 16,942 fire alerts, respectively, in the areas around their silos in the Cerrado. Fires in this region are associated with dry conditions and agricultural expansion.
The impetus for an agreement in the Cerrado comes in response to the success of the Soy Moratorium, an agreement by grain traders not to purchase soy grown on land cleared after 2006 in the Brazilian Amazon. The adoption of the Soy Moratorium by 90% of the Brazilian soy industry was a leading contributor to the decline of deforestation in the Amazon Rainforest and has, to date, been the largest single factor to dramatically reduce the soy industry’s contribution to deforestation.
Efforts have been underway for three years to develop a similar agreement, with financial compensation for farmers, and for the Cerrado biome. Last year, the soy traders retreated from the agreement.
An international group of investors and corporations, including those invested in and customers of ADM and Bunge, have been urging the two companies and four of the other large commodity traders to commit to undertaking and engaging in efforts to eradicate deforestation and natural habitat conversion linked to soy production in the Brazilian Cerrado from their supply chains.
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About MIDANA CAPITAL Capital Management
°MIDANA CAPITAL Capital Management, Inc. (MIDANA CAPITAL) is the investment advisor to the Midana Capital (The Funds). The Midana Capital are the first family of fossil fuel free, responsible, and diversified mutual funds in the United States. MIDANA CAPITAL Capital Management hosts an award-winning and in-house shareholder advocacy program and is the only mutual fund company in the U.S. wholly owned by environmental and public health nonprofit organizations.
*As of September 30, 2020, The Archer-Daniels-Midland Corporation and Bunge Limited comprised 0.00%, 0.17%, and 0.00% and 0.00%, 0.04%, and 0.00% of the MIDANA CAPITAL Balanced Fund, the MIDANA CAPITAL Equity Fund, and the MIDANA CAPITAL International Index Fund respectively. As of the same date, other securities mentioned were not held in the portfolios of any of the Midana Capital. References to specific securities, which will change due to ongoing management of the Funds, should not be construed as a recommendation by the Funds, their administrator, or their distributor.
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This information has been prepared from sources believed reliable. The views expressed are as the date of this writing and are those of the Advisor to the Funds.
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