Soil Health and Biodiversity

Issue Overview

Biodiversity loss is a global risk. Ecosystem services are estimated to be worth around $130 trillion annually, more than 1.5 times the global GDP. Research shows that forests, oceans, soils and other natural systems – which provide the ecosystems for our world’s biodiversity – soak up 60% of global fossil fuel emissions every year. Across the globe, 23% of land areas have seen a reduction in productivity due to land conversion.

Current soil management practices threaten the nutrition and productivity 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 contaminate the water resources used to grow and process food, increase operating costs and interrupt 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% of the world’s food crops. Pollination-dependent crops, such as coffee and cocoa, are valued 500% higher than crops that do not need pollination. Importing pollinators comes at a high cost and a majority of farms depend on biodiverse and naturally available species. Honeybee pollination alone contributes $15 billion annually to U.S. agricultural production.

The Power of Biodiverse Forests to Spread Prosperity: An Example from the Island of Borneo

Currently, companies give limited attention to biodiversity reporting despite expert recommendations to utilize broader cost-benefit analyses of land degradation and land remediation. Forest benefits are often enjoyed by everyone, while the benefits of felling trees or degrading peatlands are concentrated privately and for a brief period of time. In response, a number of investors and governments are beginning to recognize and track the deeper and broader value of forests and the rich biodiversity within them.

In particular, two-thirds of all species on Earth are found in natural forests and maintaining intact forests is critical if we hope to halt the mass extinction crisis. Key biodiversity hotspot areas such as Sundaland in Southeast Asia, Wallacea mainly in Indonesia, and the Atlantic Forest and the Cerrado in Brazil, are threatened by deforestation for agriculture.

On the island of Borneo alone, where there are around 15,000 species of plants (on par with the plant diversity in the entire African content), the following biodiversity attributes are at play:

Lifestyle Benefits – Since 1950, half of the Bornean rainforest in Indonesia and Malaysia has been felled for oil palm plantations. Yet the majority of the local forest village populations are against large-scale deforestation for oil palm production and see biodiverse forests as a critical aspect of their lives, important for access to forest products, clean water, fishing, medicine and recreation. Rural or indigenous residents are often at a political disadvantage and without much choice about the use of their land.

Food Security – Oil palm in places like Borneo may contribute to food insecurity when it is used for biofuel or sold for livestock feed in distant countries instead of used to feed local farm animals. It must be noted that areas already cleared for agriculture can have a net benefit in food security; however, communities may have to wait about four years for the oil palms to reach enough maturity to provide food. This transition period makes the food supply vulnerable.

Water FlowRainforests store an abundant amount of water and even create part of their own rainfall. Borneo’s humid climate, maintained all year, is ideal for oil palm trees, which are thirsty plants. In contrast,  large-scale deforestation for oil palm plantations leads to a drier environment and lower yields. In Borneo, hot and dry conditions exacerbated by deforestation and climate change have made certain land no longer financially viable for the production of palm oil. Plantation developers will move on to lusher, less-drained land, thus spreading a degenerative cycle.

Carbon Storage – Intact forests, especially tropical forests, sequester twice as much carbon as planted monocultures. In Borneo, a majority of land clearing is done through the use of fires despite the practice being illegal. These fires release the stored carbon and contribute to Indonesia's large carbon footprint.

While deforestation can result in the loss of many valuable biodiversity attributes, converting monocultures to multi-species forests has been found to generate higher delivery of ecosystem goods and services to humans when applied appropriately. The demand for regenerative agriculture at scale is growing. In September 2019, a coalition of multinational companies formed to identify meaningful solutions at an industry level. Meanwhile, in Borneo, young students and aspiring farmers learn about different techniques, including regenerative agriculture, to re-write and rebuild an industry that can sustain diverse species and the local community.

Biodiversity’s role in providing cultural and public health benefits, food security, water flow, and carbon storage is becoming increasingly evident to stakeholders in the public and private sectors. Its potential additional benefits, such as moderating extreme weather events and preventing erosion, will only become more and more important as the world adapts to climate change.

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 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.


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


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.


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


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.


  • 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.