About the Cerrado
The Cerrado, an area that contains tropical forests, woodlands, and grassy savannah, in Brazil, is one of the world’s most important biomes. It is home to 5% of the planet’s biodiversity and is responsible for sequestering 13.8 billion tonnes of carbon. The Cerrado is the birthplace of many of South America’s most important rivers and is necessary for the proper functioning of water and rainfall cycles in South America. Several local and indigenous communities depend on the Cerrado for their livelihoods.
Today, this savannah has lost 50% of its original area to agricultural expansion, primarily driven by expanding production of beef and soy, a key animal feed ingredient. The region represents 60% of Brazil’s soy production. If this rate of destruction in the Cerrado continues, 480 plant and animal species are expected to become extinct by 2050. It will drive changes in the region’s rainfall patterns, impacting agricultural productivity. The destruction of even a third of the remaining pristine land would equate to the loss of around 8.5 billion tonnes of carbon dioxide sequestration. In essence, any further loss of this biome presents a significant threat to the global economy, agricultural productivity and to local communities.
The Brazilian Forest Code, introduced in 2012, requires farmers and landowners to conserve 80% of their forests and native vegetation, while in the Cerrado, landowners are required to conserve 20% of native vegetation. However, there is an abundance of existing unused agricultural land suitable for soy production, due to complex land speculation processes, that means further deforestation for soy production in the Cerrado is not necessary. Market solutions are required to provide farmers with fair financial incentives to produce soy on existing agricultural land.
In September 2017, over 60 Brazilian NGOs, including WWF-Brazil, TNC, CI-Brazil, Greenpeace Brazil, IPAM (Amazon Environmental Research Institute) and Imaflora (Institute of Agricultural and Forest Management and Certification), released the Cerrado Manifesto, a call for “immediate action in defence of the Cerrado by companies that purchase soy and meat from within the biome, as well as by investors active in these sectors.”
Statement of Support for the Cerrado Manifesto
In October 2017, 23 global brands signed the Statement of Support (“SoS”) for the objectives of the Cerrado Manifesto. The Statement recognised the need to prevent further deforestation in the Cerrado to mitigate future risks associated with climate change and agricultural resilience in this important agricultural production region. It is convened by a Steering Committee, chaired by Tesco and including Ahold Delhaize, APG, Avara Foods, CGF, FAIRR, Grieg Seafood, Nestlé, Nutreco, PRI, Robeco, Sustainable Investment Management and Unilever.
The Funding Coalition
The SoS signatories engaged with the Grupo de Trabalho do Cerrado (GTC), a Brazilian multi-stakeholder forum led by the Brazilian soy industry and civil society, to understand how they could support Brazilian-led initiatives. The GTC highlighted the importance of creating fair financial incentives for farmers to go beyond regulatory requirements and take part in conservation efforts. So, the SoS launched the Cerrado Funding Coalition, the goal of which is to provide the funding necessary to create financial incentives for farmers to transition to producing soy only on existing agricultural land. Companies that depend on Brazilian soy in their supply chains, foundations and governments, are invited to join the coalition. Stakeholders are also invited to lead the development of an effective and fair mechanism for creating financial incentives for soy farmers. A possible solution has been proposed which includes payments for farmers to incentivise conservation. Modelling by supply chain experts suggests this would require US$250 million. The Coalition aims to raise US$250 million, recognising this as an indicative value of the resources that may be required to address the issue.
So far, Tesco, Nutreco, and Grieg Seafood have confirmed they are willing to contribute to the fund. Further details on the Funding Coalition can be found here.
How investors can get involved
- Sign the Statement of Support for the Cerrado Manifesto: Investor signatories will receive regular updates on the engagement and be invited to engage with relevant companies, government or non-profit stakeholders as the need arises.