Grieg Seafood puts pressure on Cargill to address deforestation

By Jane Byrne contact

- Last updated on GMT

© GettyImages/Phototreat
© GettyImages/Phototreat

Related tags: deforestation, green bonds, sustainable aquaculture, Cargill

Grieg Seafood says it has excluded Cargill Aqua Nutrition from the proceeds of its NOK 1 billion (US$105m) green bond, which was issued last month, until its parent company, Cargill, has significantly reduced its soy-related deforestation risk in Brazil.

Green bonds enable capital-raising and investment for new and existing projects with environmental benefits. Companies are expected to comply with the voluntary Green Bond Principles published in June 2018 by the International Capital Market Association (ICMA).

Greig will use the money raised from the five-year bond​ to finance environmental projects including sustainable aquaculture and pollution control.

According to an article in the Financial Times, the Bergen, Norway based, Grieg Seafood, said the Cargill exclusion was important for its bond to achieve a ‘medium green’ rather than a ‘light green’ score from Cicero, a rating firm.

In a report​ on the Grieg bond, Cicero noted how Cargill Inc has been heavily criticized in relation to not doing enough about deforestation in its supply chain. Earlier this year, we reported on how Nestlé had stopped buying Brazilian-produced soy​ from Cargill due to deforestation concerns.

The Norwegian salmon producer still uses Cargill Aqua Nutrition outside the Green Bond as one of three fish feed suppliers.

Reputational management

Kristina Furnes, global communications manager, Grieg Seafood, told FeedNavigator:

“As a company with Brazilian soy in our value chain, we are deeply concerned about the current developments in Brazil. Deforestation in the Cerrado needs to end due to the climate crisis and also to protect the biodiversity of the vegetation and forests.

“Cargill Brazil is not in our direct supply chain, as Cargill Aqua Nutrition sources the soy product we use – SPC - through CJ Selecta, Imcopa and Caramuru.

“This is about the ownership connection. It is really important for us to emphasize that this issue here has nothing to do with Cargill Aqua Nutrition, who we consider a good partner and supplier. The issue is the current lack of progress on ground in Brazil to end soy-related deforestation, and Cargill Inc’s connection to that.

“In addition to our ethical concerns, we are unfortunately in a situation where being a customer of and in a partnership with Cargill Aqua Nutrition is a reputational challenge, due to the ownership connection to Brazil. Consumers, customers, investors and NGOs care about this issue.”

She said that Grieg Seafood is in dialogue with Cargill on the issue and that the US company is signaling progress in relation to reducing its soy-related deforestation risk in Brazil.

So we hope that the deforestation risk will be resolved. What we need for that to happen is more action, and we'll set up a recognized path [for it] to be included back into the Green Bond. There is nothing we would rather want, as Cargill Aqua Nutrition has many interesting and innovative projects that could potentially fit the purpose of the Green Bond."

Grieg Seafood ASA is one of the world’s leading salmon farmers, targeting 100,000 tons of harvest (GWT) in 2020.

Its farms are in Finnmark and Rogaland in Norway, British Columbia and Newfoundland in Canada and Shetland in the UK.

The geographical distribution of Grieg Seafood’s sales in 2019 was 53% to the EU, 16% to Asia, 15% to North America, 12% to the UK, and 5% to the rest of the world. One fifth was transported by airfreight.

The Norwegian company says sustainable farming practices are at the basis of all is operations, with it adding that the lowest possible environmental impact, and the best possible fish welfare drive economic profitability. 

‘Purchasing power’

Grieg Seafood, said Furnes, is committed to use its purchasing power to push the general soy industry in Brazil in a conversion free direction.

“Our ultimate objective is to end soy-related deforestation in the Cerrado. There is more than one way to achieve this objective. One way is the launch of the Cerrado Working Group agreement, a Brazilian-led initiative aiming at providing financial incentives to soy farmers for halting deforestation and instead expand on existing agricultural land, which is an industry-wide solution.

“We recognize that this funding is needed, and together with Tesco and Nutreco we have started raising these funds through the Cerrado Funding Coalition​.

“Another way to the objective is that traders implement a cut-off date for their own companies, including a recognized MRV system.

“We have, together with the rest of the salmon industry, been certifying the soy we use in our feed according to ProTerra or RTRS for many years. However, this has not led to our objective, so we must use our market power to push towards the goal,”​ she added.

NGO reaction 

In response to the move by Grieg Seafood, Mighty Earth CEO, Glenn Hurowitz, said:

“This news is just the latest blow to Cargill’s bottom line, as a growing number of consumer-facing companies are unwilling to associate their hard-earned brands with Cargill’s sullied reputation. Cargill has responded with the usual vague statements and commitments that never seem to find their way beyond a piece of paper. Major supermarket chains like Costco and Casino should take notice: Cargill hasn’t changed and doing business with deforesters is a liability that your customers will no longer accept.”

Cargill claims 'significant progress’ made

Commenting on the Grieg Seafood move, Daniel Sullivan, a communications spokesperson for Cargill Protein and Animal Health, told us that, beyond Cargill’s aqua nutrition business, which purchases soy in salmon feeds that is 100% ProTerra, RTRS or organic certified, the broader Cargill business has made significant progress in sustainable soy sourcing, which is documented in its mid-year Soy South America progress report​. 

“At Cargill, we are committed to transforming our supply chains to be deforestation-free while protecting native vegetation beyond forests. We know there is work to be done – and we’re accelerating our efforts in this area, including a focus on innovative solutions that are economically viable for farmers.”

In the past six months since it published its first sustainable soy report​, Sullivan said Cargill has made “meaningful progress” in respect of responsible soy purchasing including the following actions:

  • Mapping 100% of its Brazilian supply chain with georeferenced single points – completing the project six months of schedule. Cargill said georeferenced single points allow the company to identify the locations of its direct and indirect suppliers, a critical step toward effectively protecting forests and native vegetation.
  • Calculating the estimated share of its soy in Brazil grown on land that is deforestation- and conversion-free, 95.68%, by analyzing data from external sources about both crop growth and changes in land use, using 2008 (Forest Code) as a reference point.
  • Expanding its direct engagement with farmers in Brazil, including the launch of a new partnership with the largest farmer association in the state of Bahia.
  • Continuing to grow its Sustainably Sourced and Supplied certification program in Brazil and Paraguay, providing a large market for soybeans grown through verified sustainable methods. Farmers who commit to this program, said Cargill, pledge to produce their crops by using the best agricultural practices, protecting worker welfare, and managing greenhouse gas emissions under a continuous improvement process.

Cargill's perspective on its work in the biodiverse regions of the Amazon and the Cerrado

Amazon

"We have firmly upheld the Brazilian Soy Moratorium in the Amazon since 2006, when we partnered with industry and environmental organizations to implement this voluntary agreement to not purchase soy from lands in the Amazon biome that were deforested after July 2008. This effort has contributed to the 80% decline in deforestation in the Amazon in the last decade and was extended indefinitely by the industry in 2016. Recent increases on deforestation rates in the Amazon, despite of the Soy Moratorium, show that soy is not a key driver for land conversion on that biome." 

Cerrado

"Our commitment to find lasting solutions for protecting forests and native vegetation in the Cerrado – in ways that are economically viable for farmers – has not wavered. As the heartland of agricultural production in Brazil, the Cerrado feeds major markets in both Europe and Asia. The frontier region in the northern part of the biome is the region most at risk of native vegetation conversion to crop production. 

"The solutions that protect this native vegetation require engaging with the local farming communities. Cargill’s work is centered on eliminating deforestation and protecting native vegetation beyond forests, while taking into account social and economic implications in these farming communities.

"Along with our industry, farmers, local governments and customers, we have accountability for transforming the food supply chain, and we are engaging with stakeholders every day to make progress. In addition to the actions we are taking on our own, we are also actively engaged in industry solutions through ABIOVE, ANEC and the Soft Commodities Forum."​ 

Related topics: Sustainability, Policy

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