Key takeaways
Soybean production has more than doubled worldwide over the past 20 years, expanding into a $127.8 billion market. As global demand for meat has increased, the use of soybeans in livestock feed has exploded. In human food products, soybeans are used as a cooking oil, a source of protein in meat and dairy substitutes, and as an ingredient in many processed food products.
Deforestation is the most salient, region-specific issue associated with soybean production. It is a significant driver of greenhouse gas emissions and leads to the loss of biodiversity, which impacts not only the health of the local ecosystem but also the natural populations that depend on these natural resources to survive.
In the Amazon Basin, Atlantic Forests, and the Brazilian Cerrado, carbon dioxide (CO2) emissions from land conversion are significant. Based on the Cerrado alone, this equals about 60 percent of Spain’s total emissions in 2015. While the Soy Moratorium in Brazil has reduced impacts on the Amazon, the loss of native vegetation in areas like the Cerrado that are not covered by the Moratorium remain a material business risk.
Investors should address risk in the soybean supply chain through direct engagement with their portfolio companies and by supporting relevant policies and multistakeholder collaborations. Effective implementation of a company’s policies requires promotion traceability and having a clear approach to supplier engagement, verification, and disclosure of progress.