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

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.

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

Soybean production has led to the degradation and conversion of forests and grasslands, which results in the loss of biodiversity. The three main ecoregions most affected by soybean production in South America are the Amazon Basin, Atlantic Forests, and the Brazilian Cerrado. Based on the Cerrado alone, carbon dioxide emissions from land conversion are estimated to equal about 60 percent of Spain's total emissions in 2015.   

In the Amazon, an area of the world that plays a vital role in regulating the global climate, soybean production has historically been a major driver of deforestation. In the Cerrado grasslands, a global biodiversity hotspot that stores substantial amounts of carbon and is a key source of the water critical for Brazil’s agricultural productivity, soybean production has already contributed to conversion of more than half the savannah. Estimates predict the possible destruction of a further one-third of the Cerrado by 2050 if current conversion rates continue.

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

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.