In 2018, British retailers started to acknowledge the link between soy production and deforestation, with large supermarket chains enacting policies to ensure responsible sourcing.
Soy’s main use is for livestock and poultry feed, making up 67% of global use[i], with vegetable oil, additives for petrochemicals and consumption as part of a healthy diet accounting for the remainder. Global imports for soy in 2017 were 224.2 million metric tons, with China, Europe and Southeast Asia driving demand. Exports of soy in South America increased by 68% between 2000 and 2017[ii]. This increase in soy production has been linked to deforestation.
There has been some work to decrease soy-linked deforestation. In Brazil, a “Soy Moratorium” was installed in 2006, which has been extended indefinitely. This opt-in scheme by the private sector prevents the purchase of soy from land deforested after 2006. As a result, Amazon deforestation linked to soy has dropped to 1%. Brazil is also strengthening protections through a “Forest Code.” The savannahs in Brazil, however, are vulnerable to clearance because they do not have the same protections. While some progress has been made, the outlook is more challenging in Argentina, where a disconnect between central and local government legislation for forest protection has led to land clearance for crops, including soy.
Transparency through the supply chain
Although soy has received less attention than palm oil, transparency in the supply chain is a key step to holding producers to higher standards.
The World Wildlife Fund’s (WWF) Soy Scorecard 2016 showed that 51%[iii] of organizations decline to comment on their use of responsible soy, compared with 20% for responsible palm oil,[iv] demonstrating that responsible soy programs are less developed. The WWF makes several recommendations that organizations should achieve by 2020. These include:
- Ensuring that products are 100% free from deforestation and conversion of natural habitats
- Products come from environmentally- and socially-friendly sources
- Sources are certified by credible, transparent organizations such as Round Table for Responsible Soy (RTRS) or ProTerra
Only 25% of those that responded to the WWF survey were shown to be taking a leadership position on soy, with strong commitments to deforestation-free soy and most of the soy used at the time coming from certified sources.
Supply chain response
A 2019 sample analysis of the top five United Kingdom supermarket policies on soy shows a mix of aspirational ambition and time-bound targets to achieve responsibly-sourced soy. The analysis shows only two companies seeking to take a leadership position to influence government policy on sourcing this commodity.
Although responsible sourcing is both the right thing to do and central to organizations’ sustainability programs, it also supports brand and risk management. A Gartner research survey in 2017 showed that supplier compliance and suppliers’ impact on brand image were both considered significant risks (n=180)[v]. Responsible sourcing provides a mechanism to manage high-risk suppliers, territories and commodities.
The challenge for supply chain leaders is to know where to start when managing sensitive commodities. The following steps are recommended as a starting point:
- Supply Chain Mapping: Map soy used directly in products and indirectly through meat and poultry production. The next step is to develop this mapping further by checking which products are already using responsibly-sourced soy and which are not. This analysis will demonstrate the size and scope of the challenge.
- Policy: Some organizations have installed specific policies on soy, while others have updated responsible procurement policies to include soy. While either approach works, the purpose of the policy is to make expectations to suppliers clear. If partnering with other organizations (e.g., RTRS), there should be policy alignment.
- Plan: Without clear milestones and deliverables, moving to responsible soy will remain an aspiration rather than a deliverable. These plans could focus on moving to responsible soy within the larger product families, or a different approach could be to focus on a quick win and build on this learning. The deployment plan will depend on organizational culture, resources and the need to manage this risk.
- Partner: By partnering with organizations such as the Roundtable for Responsible Soy, organizations can collaboratively work toward making sure that more certified-soy products are available to the market. This gives organizations a platform to work with suppliers for mutual benefit.
It’s clear that soy is here to stay. As the global population increases, so too will the demand for this commodity. In a globalized supply chain, it is possible for supply chain professionals to make a positive impact on countries and places they may never visit.
Sarah Watt, Senior Director, Analyst, Supply Chain, Gartner