Whereas: Soy production is a leading driver of deforestation and native vegetation conversion (DNVC) in Brazil’s Amazon and Cerrado regions. Converting native ecosystems to commodity agriculture drives systemic risks, like climate change and biodiversity loss, and undermines ecosystem benefits critical to agriculture, including soil protection, pollination, and precipitation patterns.

ADM contributes to DNVC. ADM’s sourcing was linked to over 5,300 hectares of clearance in 2018 and 7,300 fire alerts in 2020. The vast majority of ADM’s DNVC risk–89%–is concentrated in the Cerrado. 

ADM is also severely impacted by the consequences of DNVC on agricultural production. 48.1% of ADM’s Brazil trade volume comes from Cerrado, where large-scale conversion is disrupting weather patterns resulting in higher crop failure. 

In addition to operational risk and supply chain volatility, continued exposure to DNVC may expose ADM to additional material financial risks, including: 

• Constrained access to capital: 5 of ADM's 12 largest US and EU creditors have committed to help to achieve zero net deforestation through their financing of soft commodity supply chains.
• Regulation: existing due diligence laws and developing EU legislation on DNVC may limit ADM’s ability to sell Brazilian soy to one of its largest export markets, and may constrain European banks from lending to companies linked to DNVC. 
• Market access loss: this year, 160 corporations and investors, including those representing up to 17.5 percent of ADM’s net revenue, petitioned ADM to deliver on ending native vegetation loss in the Cerrado after three years of soy industry inaction on multi-stakeholder initiatives.  

ADM’s 2015 No-Deforestation policy has done little to reduce ADM’s deforestation risk. By contrast, ADM's most significant reduction in deforestation exposure occurred after ADM joined the Soy Moratorium, an industry-wide agreement to stop buying soy grown on recently cleared land in the Brazilian Amazon, and yet ADM has retreated from a similar multistakeholder agreement in the Cerrado.

Shortcomings in ADM’s policies contribute to continued DNVC exposure. In contrast to industry best practices, ADM:

• has not committed to eliminate the conversion of native vegetation in its supply chains;
• has not committed to stop sourcing soy from land cleared after 2020 in the Cerrado;
• lacks an implementation timeline for its policies;
• doesn’t pursue traceability for its indirect soy suppliers, which account for 37% of ADM’s Brazilian supply; and
• lacks a supplier management protocol to address DNVC.

Resolved: Shareholders request ADM issue a report assessing if and how it could increase the scale, pace, and rigor of its efforts to eliminate deforestation and native vegetation conversion in its supply chains.  

Supporting Statement: Proponents defer to management’s discretion, but recommend assessment of the relative benefits and drawbacks of integrating the following: 

• Commitment to eliminate the conversion of all native vegetation in supply chains; 
• Full traceability for indirect suppliers; 
• Cutoff dates for supply chain sourcing; 
• Support for industry sourcing agreements in the Cerrado; and 
• Proactive implementation efforts, such as time-bound commitments, verification processes, including 3rd party monitoring, and time-bound supplier non-compliance protocols.

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