Suppliers failing to address forest risks in Brazil-China cattle trade

Christina MacFarquhar

Beef and leather from Brazil may be linked to deforestation, photo: Ronald Woan via, creative commons licence

Do companies at any point in the Brazil-China beef and leather supply chains have robust policies to assess and address deforestation risk?

Their deforestation policies matter because China is the world’s biggest importer of beef and leather from Brazil, where cattle production is the main direct driver of deforestation and other native vegetation loss.

But, as we showed earlier in this blog series, key processors and manufacturers in China don’t have policies on deforestation risk in their beef or leather supply chains. Nor do many important global leather companies that source leather products from China. So are the main suppliers in Brazil doing any better?

Using trade data, we found that nine processors (see table below) supply over three quarters of the Brazilian beef and leather imported by the 20 key companies we identified in China. Those nine processors also supply more than two thirds of Brazil’s beef exports to China, and to the world, and at least a third of Brazil’s leather exports to China and the world.

The nine key processors exporting beef and leather from Brazil to powerbroker companies in China

So, given their importance in the Brazil-China cattle trade, and globally, we looked for publicly-available deforestation policies on their websites.

Few policies, little assurance

Based on Global Canopy’s Forest 500 policy assessment criteria, six of the nine companies did not have any policies on assessing and addressing deforestation risk in their beef or leather supply chains on their websites.

The other three companies (JBS, Marfrig and Minerva) do have deforestation policies, but these are all limited in scope or substance. For example, they apply only to the Amazon, not to other important ecosystems such as the Cerrado, or they provide little information on important tools for implementation, such as traceability systems.

Actual implementation of these policies is another matter. At least one — that of major meat-packer JBS — has been put into question by a number of scandals. For example, in 2017, Brazil’s environmental agency, IBAMA, alleged that JBS had been knowingly sourcing cattle from illegally deforested land, violating Brazilian environmental law and the company’s own deforestation policy.

Policy weaknesses permeate global supply chains

So the weaknesses in company policies for assessing and addressing deforestation risk in beef and leather extend all the way from suppliers in Brazil to key processors and manufacturers in China, and to global car, shoe and furniture companies headquartered in Europe and the United States of America (US).

Some lack clarity on the aims and deadlines of their policies, others have no policy at all. None of the 43 companies we looked at in this series of articles appears able to guarantee that their beef or leather supply chain is deforestation-risk-free, or will be by any particular date.

Crucially, many of these companies are connected to each other in supplier-buyer relationships, so weaknesses in one company’s policy (or the lack of a policy) could reduce the effectiveness of policies of other companies in the supply chain.

Sustainable supply chains need strong, global policy chains

Company policies alone are not enough to remove deforestation from global commodity supply chains. But they are important for guiding companies’ sustainable procurement decisions. And a global chain of robust policies, starting with the producers and ending with the retailers, could have a significant positive impact.

Making these policies, and reports on their progress, public also enables third party observers to understand company intentions and actions, and help hold them accountable.

By carrying out risk assessments on their own supply chains, and working with their suppliers to implement strong, comprehensive, global policies, the 43 companies have the opportunity to address business risks related to unsustainable practices, while also providing a much-needed boost to efforts to reduce deforestation driven by the expansion of cattle ranching in Brazil and elsewhere.

Measuring true deforestation risk

Greater transparency on companies’ exposure to deforestation risk can also be achieved through data systems linking companies to particular cattle-producing regions in Brazil — and, ultimately, to actual levels of deforestation risk.

This is precisely what the supply chain transparency initiative Trase will soon provide through its new subnational mapping of Brazil’s beef supply chains.

Not all cattle ranching in Brazil is linked to deforestation, and it is not yet clear whether, or how much, demand from China is directly or indirectly driving deforestation. However, demand for cattle products (as well as for soy, which is often grown on previously cleared cattle pasture) is continuing to push cattle ranching into the Amazon and other important ecosystems such as the Cerrado.

The new Trase model will show where companies source their beef from, and the associated deforestation risk, bringing greater transparency to Brazil’s cattle supply chain. Watch this space for further updates.

The main findings presented in this blog series will soon be published as a brief.

To read the rest of the series, click on the links below:

1. The Chinese industries importing Brazilian beef, leather — and deforestation risk

2. Tackling deforestation risk in Brazilian cattle exports: 20 key companies in China

3. Beef and leather companies in China silent on Brazilian deforestation

4. Fifteen European and US companies that could help cut deforestation risk from Brazil-China leather trade

5. European and US companies need deforestation policies for Brazil-China leather trade

This work was made possible thanks to funding from NICFI, as part of CDP’s Power of Procurement project, and DFID.