Significant carbon emissions associated with Chinese imports from Brazil, analysis finds
◥ Tropical deforestation is the second largest cause of anthropogenic greenhouse gas (GHG) emissions, making up around 8% of global emissions.
◥ Brazil is a leading source of soy for global markets and China is Brazil’s biggest customer. In 2017, nearly 65% of all soy exported from Brazil went to China, with an estimated 6.5 million tons of carbon dioxide — equivalent to emissions from UK power stations in 2018 — linked to deforestation for soy expansion.
◥ The analysis shows that the carbon dioxide emissions risk associated with China’s soy imports is highly concentrated in one particular region — Matopiba.
◥ Five companies accounted for nearly 70% of all the soy exported from the Matopiba region to China and the associated emission risks — Cargill (22%), Bunge (12%), joint venture Amaggi & LD Commodities (16%),Archer Daniels Midland (ADM) (8%) and Agrex (9%).
◥ Chinese companies and government can use their influence and encourage moves towards deforestation-free soy in Brazil. In doing so, China would reduce the carbon dioxide emissions risks in its soy imports and improve its long-term food security.
New analysis by environmental non-profit CDP and the supply chain mapping initiative Trase highlights how China, as the largest market for Brazilian soy, is exposed to carbon dioxide emissions risk from deforestation linked to soy expansion. China’s influence in the market could be used to play a key role in driving deforestation-free agriculture.
Tropical deforestation, which is largely the result of agricultural expansion, is the second largest cause of anthropogenic GHG emissions. It equates to 8% of all global emissions.
Trase data shows that these risks are highly concentrated in imports from the Matopiba region of Brazil – a highly biodiverse region which includes the Cerrado, one of the world’s most biodiverse savannahs. This region provided 10% of China’s soy imports in 2017, but these imports were associated with 70% of China’s embedded carbon dioxide emissions risk.
The data also shows that only five soy traders account for nearly 70% of the carbon dioxide emissions risk linked to the soy trade from Matopiba to China: Cargill, Amaggi & LD Commodities, Bunge, Agrex and ADM.
The agriculture sector, including soy production, is especially vulnerable to climate change, and deforestation can exacerbate these risks.
Climate change risks can translate to business risk for downstream Chinese companies, with climate change impacts on agriculture expected to cause serious disruption across regions and supply chains. Despite these risks, grain traders by and large are lagging in identifying and acting on these risks.
CDP data indicates the five key soy traders for China are underestimating the likelihood and potential impacts of these climate change risks. Four of these companies have shown their awareness of the impact of climate change on agriculture, or the risk from deforestation via CDP’s annual disclosure questionnaire. But their responses suggest limited understanding of the substantive financial and strategic implications these risks pose to their business.
With a key international conference on protecting nature due to take place in China later this year, the Chinese government can demonstrate its leadership by supporting existing international, national and sub-national efforts to reduce deforestation in Brazil.
Introducing policies that incentivise sustainable corporate behaviour — such as mandating the central bank to provide favourable conditions to companies in the soy trade for importing deforestation and conversion-free soy — would reduce carbon dioxide emissions risks in soy imports, as well as improve China’s long-term food security.
Andre Vasconcelos, Trase Latin America Researcher at Global Canopy said:
“China is the largest importer of soy globally and by far the biggest importer of Brazilian soy. As such, China is exposed to the risk that its demand is driving deforestation and related greenhouse gas emissions.
“Analysis of China’s sourcing patterns shows that this emissions risk is concentrated in imports from a small number of sourcing regions and a few traders. By focusing on engagement with these traders and addressing these risks, China can help to ensure soy production is not linked with deforestation and its associated emissions.”
Sareh Forouzesh, Senior Manager, Forests at CDP said:
“Deforestation-related carbon dioxide emissions linked to China’s soy imports is a major risk in China’s effort towards being a global leader in combatting the climate crisis.
“By developing and implementing solutions to drive deforestation free imports, China would both improve its overall food security and create momentum for producers in Brazil to rapidly shift into more sustainable production systems.”
Read the full report here: http://resources.trase.earth/documents/issuebriefs/CDP_China_soy_emissions_briefing_FINAL.pdf
For more information contact:
Thomas Ringheim, CDP
Helen Burley, Trase, Global Canopy
CDP is an international non-profit that drives companies and governments to reduce their greenhouse gas emissions, safeguard water resources and protect forests. Voted number one climate research provider by investors and working with institutional investors with assets of US$96 trillion, we leverage investor and buyer power to motivate companies to disclose and manage their environmental impacts. Over 8,400 companies with over 50% of global market capitalization disclosed environmental data through CDP in 2019. This is in addition to the over 920 cities, states and regions who disclosed, making CDP’s platform one of the richest sources of information globally on how companies and governments are driving environmental change. CDP, formerly Carbon Disclosure Project, is a founding member of the We Mean Business Coalition. Visit https://cdp.net/en or follow us @CDP to find out more.
Trase — Transparency for Sustainable Economies — is an initiative that uses data to track globally traded forest-risk commodities via the traders to where the commodities were produced, developed by the Stockholm Environment Institute and Global Canopy.