Deforestation Poses Risks to Revenue and Farmland Assets in Environmentally Sensitive Cerrado

Aidenvironment, as part of Chain Reaction Research, has written a company profile which identifies the sustainability risks that Brazilian company SLC Agrícola is running from its land clearance and agricultural activities in the environmentally sensitive area of the Cerrado. The profile shows that the company runs the risk of losing half of its profits if its main clients step up their zero deforestation commitments, signs of which have increased with the recently published Cerrado Manifesto.

SLC Agrícola is a Brazilian company that operates 15 large farms. Much of the land is in the Matopiba region (comprising of the states of Maranhão, Tocantins, Piauí and Bahia), which is sometimes referred to as the “newest agricultural frontier.” The company purchases, clears, and converts land in the Cerrado biome for industrialized soy, corn, and cotton production. Our research, based on fieldwork around some of the farms and on GIS (geographical information systems) and financial analysis, shows that SLC Agrícola has cleared substantial areas of native Cerrado vegetation – 30,000 hectares between 2011 and 2017 – with substantial social and environmental impacts.

The Cerrado biome, a vast tropical savanna, is an environmentally sensitive area where deforestation rates are high. WWF and others recognize the Cerrado as the biologically richest savanna in the world, home to hundreds of endangered species and traditional communities. As the source of rivers and waterways, the Cerrado functions as a vital source of water for many of Brazil’s largest cities.

Very recently, civil society organizations published the Cerrado Manifesto which calls on soy producers and their investors to make zero deforestation commitments in the Cerrado. The Manifesto has received support from 23 global companies, increasing the pressure for soy suppliers to eliminate deforestation from its supply chains. Companies such as SLC Agrícola urgently need to address their sustainability risks if they want to avoid losing crucial clients and investors in the future.

For the full report and additional thematic reports and company profiles, please see the Chain Reaction Research website.

For more information, please contact Hilde van Dijkhorst.