Until 2020, Chinese state-owned COFCO had lacked an overall inclusive forest policy for soy it produces, trades, or processes that applies to all its global operations including all subsidiaries, all suppliers, and all joint ventures. But this year the commodity trader took a major step to rectify its insufficient policies. COFCO is targeting full traceability of its soy purchases in Brazil by 2023, while also recommitting to the Amazon Moratorium. However, it has not endorsed extending the Moratorium to the Cerrado. Its commitment to full traceability came about a year and a half after its announcement at the World Economic Forum, when the trader called for stricter ESG policies in the agricultural sector and articulated the importance of committing to a zero-deforestation policy for soy. The trader is also a member of the Soft Commodities Forum and has tied a USD 2.3 billion main credit facility to sustainability targets.
COFCO’s rapid expansion into Latin America has led to frequent and demonstrable accusations of land grabs and deforestation. It currently trades about 7 million metric tons of soy in Brazil. The company’s expansion is likely to continue given the sharp increase in Brazilian soy exports to China in recent years. This could lead to greater risk of having deforestation in its supply chain and difficulty in tracing supply to both direct and indirect suppliers. As the 2023 target approaches, COFCO may see more pressure from its shareholders that have policies to curb deforestation, which include the International Finance Company and Standard Chartered. IFC said it would work with COFCO to help the company develop traceability and sustainability in its Matopiba soy supply chain.