In response to the extent of the fires seen in the Amazon basin over 2019, M&G’s Corporate Finance and Stewardship team analysed the issues relating to soft commodity-driven deforestation and the associated investment impacts. Alongside this, the team undertook a project to understand the extent of M&G’s exposure to these risks across our public equity and fixed income holdings. Using this, the stewardship team, along with investment teams, prioritised companies and began a series of thematic engagements, including with food processing company Marfrig.
Objective:
To better understand Brazilian food processing company Marfrig’s sustainability strategy – specifically in relation to deforestation in the Amazon biome.
Action:
Engagement with the head of sustainability to understand the details of Marfrig’s deforestation policy and how the company can demonstrate transparency and traceability in its supply chain. Animal welfare, waste and effluence, and bribery and corruption were also areas of interest covered in this process.
Outcome:
Marfrig was clearly able to explain the strategies in place to ensure it was sourcing cattle from deforestation-free farms. We followed up with the company post-engagement to get further detail on the key performance indicators used to measure success, and will continue to monitor the situation.
Further information:
Marfrig recognises that this is a complex issue and with 15,000 farmers supplying the company, it is very difficult to conclude that there were no breaches of its policy. The company is investing in innovation, satellite technology and working with leading non-governmental organisations (NGOs) such as IDH (The Sustainable Trade Initiative) to develop more sustainable farming methods, and was able to clearly articulate a strategy for dealing with the related risks, including clear oversight of such issues.
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