Soy production is a leading driver of native vegetation conversion (NVC) in South American biomes such as the Amazon, Cerrado and Gran Chaco. This conversion of forest and non-forest ecosystems to commodity agriculture drives systemic risks such as climate change and biodiversity loss, undermining ecosystem benefits critical to agriculture. According to the IPCC,1 all plausible pathways for limiting global warming to 1.5°C require that carbon emissions linked to land use change reach net zero before 2030. While the Amazon biome has taken center stage in global efforts to address climate change, NVC of non-forest ecosystems, such as the biodiversity-rich savannas and grasslands of the Cerrado and Gran Chaco ecoregions, is a major source of carbon emissions. 2

ADM acknowledges the importance of reducing greenhouse gas emissions related to its business activities (2021 10-K). However, 50.2%3 of ADM’s Brazil soy volume in 2021 came from the Cerrado, which has already lost half of its native vegetation to agricultural conversion. 4 Yet, ADM’s No Deforestation Commitment5 contains no time-bound commitment to eliminate other forms of NVC, thereby omitting key conversion risks in this predominantly non-forest biome. The COP27 Agricultural Sector 1.5°C Roadmap, endorsed by ADM, also lacks a time-bound target to eliminate NVC from soy production. Many of ADM’s competitors have nonetheless demonstrated superior NVC risk mitigation by adopting practices aligned with Accountability Framework Initiative (AFi) guidance, 6 exposing ADM to reputational and competitive risk. For example, Bunge, Amaggi and Louis-Dreyfus Company have committed to eliminating NVC within the scope of their 2025 no-deforestation commitments.

Furthermore, over 4,000 companies are working to reduce emissions through the Science Based Targets initiative, which recommends that NVC be eliminated by 2025. As companies such as Unilever, 7 Colgate-Palmolive, 8 and Kerry Foods9 enact commitments to eliminate supply chain NVC by 2025, ADM may become a nonviable supplier. In addition, 35 investors with $8.9 trillion in collective AUM committed to eliminating deforestation from agricultural commodities in their portfolios, 10 including explicit removal of NVC.11 ADM may face capital constraints if it does not eliminate NVC. Fundamentally, ADM’s contribution to NVC exacerbates financial risk by degrading the systems upon which agricultural productivity depends. Moreover, by excluding NVC from the company’s 2025 No Deforestation Commitment, ADM lags the standards of peers, investors, and global standard-setting bodies, thereby exposing the company to operational, competitive, and reputational risk.

1 https://www.cambridge.org/core/books/global-warming-of-15c/mitigation-pathways-compatible-with-15c-in-thecontext-of-sustainable-development/051AC891C0952E62DEF2510593BC1C10
2 https://www.landcarbonlab.org/news-updates/supply-chains-zero-land-conversionclimate?utm_source=linkedin&utm_medium=land+%26+carbon+lab&utm_term=11df82ec-cec6-4da8-b062- fd764957d5e2&utm_content=&utm_campaign=cop27
3 https://wbcsdpublications.org/scf/partner-adm-june-2022/
4 https://www.woodwellclimate.org/half-of-the-cerrado-is-already-gone-heres-what-that-means-for-the-climate/
5 http://assets.adm.com/Sustainability/ADM-No-Deforestation-Policy_210323_141338.pdf
6 https://accountability-framework.org/the-framework/topics/deforestation-and-conversion/
7 https://www.unilever.com/planet-and-society/protect-and-regenerate-nature/deforestation-free-supply-chain/
8 https://www.colgatepalmolive.com/en-us/sustainability/our-sustainability-policies/soy-procurement-policy
9 https://www.kerry.com/content/dam/kerry/en/pdf/about/policies-and-statements/deforestation-and-conversion-freepolicy-global.pdf