Soil Health and Biodiversity

Issue Overview

Converting land with high conservation value, including grasslands, forests and marshes to food production impacts biodiversity and reduces the capacity of natural ecosystems to provide benefits critical to agriculture, including watershed and soil protection, as well as pollination and climate regulation.

Current soil management practices threaten the productivity and sustainability of food systems. About one-third of soil worldwide is moderately to highly degraded due to erosion, nutrient depletion, acidification, salinization, compaction and chemical pollution. These factors deplete and pollute water resources used to grow and process food, increase operating costs and disrupt overall supply chains due to lower and less dependable crop yields.

Pesticides and herbicides used in agriculture can also negatively impact essential services provided by insects, bats and birds, which pollinate 35 percent of the world’s food crops. Struggling bat and bee populations threaten to lower agricultural productivity. Honeybee pollination alone contributes $15 billion annually to U.S. agricultural production. 

Commodity Exposure to Soil Health and Biodiversity Issues

Business Risks Associated With Soil Health and Biodiversity Impacts

Market

In October of 2011, Coleman Natural Foods terminated its contracts with six poultry growers in Pennsylvania. Performance standards and failure to comply with Coleman’s organic and pesticide-free regulations were cited as the cause for the dropped contracts.

IMPACTS

  • Loss of contracts due to environmental impacts
  • Deceased sales due to shifting customer tastes

Litigation

In January of 2017, Ecuador’s Esmeraldas Provincial Court ruled against the company Los Andes and Palesema Oil Palm in the matter of planting oil palms trees in the place of indigenous plants. Los Andes was forced to pay restitution to local villages and to adopt planting restrictions in the future.

IMPACTS

  • Legal action resulting from compromised biodiversity
  • Monetary compensation to parties affected by biodiversity loss

Priority Commodities

Among the most commonly sourced commodities profiled in Engage the Chain, impacts on soil health and biodiversity are significant in the production of beef, fiber-based packaging, palm oil, and soybeans. 

The following summarizes how the production of beef, palm oil, and soybeans contribute worldwide to impacts on soil health and biodiversity. It is important to consider that the scale of the impacts depends on the practices used by individual producers, as well as regional and local conditions.

Beef

Beef production expansion has led to the degradation and conversion of forests and grasslands, which results in the loss of biodiversity. 

Overgrazing, soil compaction from cow’s hooves and poor agricultural practices can degrade topsoil and organic matter, which can take decades or centuries to be replaced. On the other hand, sustainably managed beef production can achieve conservation benefits in some regions. Grazing can maintain the health of grasslands, improve soil quality with manure, and preserve open space and wildlife habitat. Additionally, carbon is sequestered in the grasses and soils of grazing lands.

Within Brazil, cattle ranching is one of the leading drivers of deforestation. Researchers have estimated that up to 75% of the Brazilian Amazon’s deforestation is associated with land speculators transforming forest into pasture.  

Palm Oil

Production of african oil palm, a high yielding and relatively inexpensive vegetable oil, nearly doubled between 2003 and 2013. Its expansion in Indonesia has resulted in habitat conversion, degradation, and fragmentation of this species-rich landscape.

This habitat area is home to highly threatened species, including orangutans, tigers, elephants and rhinos. As these animals become restricted to smaller forest fragments, human-wildlife conflicts are more common. The natural forests converted to oil palm plantations also provide many “ecosystem services,” such as water, food and fuel to local indigenous communities.

Soybeans

Cutting down and plowing up natural habitats for soybean production leads to the loss of biodiversity. These impacts are of particular concern in countries that are homes to some of the most biodiverse places on the planet, including Brazil, Argentina and Paraguay.

In the U.S., largely driven by demand for biofuel feedstocks, millions of acres of important grasslands in the Great Plains have been converted to cropland in the last several years leading to reductions in biodiversity (e.g., bird populations) and the loss of soil carbon.

Soil erosion is a problem because it leads to both loss of valuable topsoil and contamination of waterways with agrochemicals and fertilizers. While soybeans require far less commercial fertilizer than other commodities such as corn or wheat (because soybeans can “fix their own nitrogen” in the soil), fertilizer may nonetheless wash off fields, leading to nutrient pollution and “deadzones” that are devoid of life and a growing concern around the world.

Since the late-2000s, much of Latin America’s agricultural expansion has been through clearing vegetation in Brazil’s Cerrado for soybeans. The Cerrado is a biodiversity hotspot with high species diversity and endemism, and includes woodlands, shrublands and riparian forests.

Priorities for Investor Engagement

Investor Initiative for Sustainable Forests: The Investor Initiative for Sustainable Forests works with investors to assess investment risks and opportunities associated with deforestation and develops effective strategies for engaging with companies whose practices contribute to global greenhouse gas emissions.