imited transparency within the soy system continues to be a barrier for many companies operating towards the end of the soy value chain. It also acts as a barrier to developing more sustainable systems for the whole soy supply chain, a commodity often linked to deforestation and land conversion. Convened by 3Keel, the Soy Transparency Coalition (STC) was founded in response. It is a pre-competitive coalition that aims to help supply chain companies and investors overcome transparency challenges in the soy sector to deliver a sustainable production system.

In 2020, The STC released a public report on the results of its first ever trader assessment. The report looked at the commitments, actions, progress and verification of 11 traders relating to sustainable sourcing of soy. This focused on topics such as deforestation, chemicals use, human rights and governance – highlighting the importance of social as well as environmental responsibility. 

All STC members (listed in the report) committed to taking action as a result of the assessment, contributing towards making a more transparent and sustainable soy system.

Approach

Traders were identified based on their significance within global supply chains and proposed for inclusion in the questionnaire process. In particular, the assessment focused on determining which traders: 

1. Have commitments to supply soy responsibly 
2. Have credible plans in place to achieve their goals 
3. Are outperforming their peers in sustainable practices 

Questionnaires were pre-filled by 3Keel with publicly available information before being sent to the relevant trader for review.

One element that makes the STC reporting different from other assessments is that we engage with traders directly as part of the process. This took the form of responses to the initial questionnaire with feedback and builds, as well as ongoing conversations about their approach and strategy. For the 2020 assessment, eight of the eleven traders engaged with the process – joining phone calls with STC members to discuss their responses and explain the nuances specific to the soy value chain. 

To make the assessments easily comparable, scorecards were produced, which were specially built to allow STC members and subscribers to apply their own judgement to the trader responses, measuring them against their own set of unique requirements. 

Key report findings

1. Transparency remains a blocker, but not with insurmountable barriers. Information requested that was claimed to be commercially confidential differed between traders, suggesting that there is scope for further disclosure in the future.
2. We found significant variation in definitions used and commitments made across soy traders, with public statements often ambiguous and exact definitions sometimes unclear.
3. Many traders continue to cite a lack of market demand for deforestation- and conversion-free soy as a barrier to increasing the volumes of certified soy in their supply chain, suggesting that demand from companies further down the value chain is not being communicated effectively.
4. Rates of disclosure of actions taken within the supply chain (e.g. action plans created, producers engaged) were generally low, meaning there was limited evidence on how traders’ commitments are leading to action.
5. Despite open criticism from many traders on the accuracy of the current publicly available data on soy sourcing, the disclosure of trader data on sourcing regions was incredibly low, with only one trader doing so. This is markedly different from commodities such as palm, where publishing of mill lists is fairly common.

What this means for…

Retail and brands – Despite increasing clarity on retail and brand requirements on soy certification and traceability, these are not necessarily reaching through the supply chain. Policies need to be geared towards generating the market signals needed for meaningful change that work through their physical supply chain to reach producers.

Livestock producers – In their position as either a feed mixer or compound feed purchaser, livestock producers are in a strong position to increase demand deforestation and conversion free soy as the primary users of soy. This could be through their feed specifications, by choosing to preferentially source from traders who meet their sustainability expectations, or by engaging directly with their suppliers to discuss the opportunities for further progress.

Feed companies – This assessment has highlighted that trader actions continue to be driven by customer demand, particularly their direct customers. As such, feed companies play an important role in ensuring that the demand signals – financial or otherwise – from downstream companies, are connected with the traders they are buying from.

Investors – Due to the ambiguity of many public commitments, care and attention should be paid to understanding what and how these relate to their risks and physical supply. This means having a clear understanding of the exact definitions used (particularly key terms such as ‘deforestation’) and demanding the transparent and consistent disclosure of progress made by traders to enact meaningful change within their sourcing regions.

This novel assessment and the recommendations within offered a great opportunity for actors across the global soy market to take action and make material changes to promote social and environmental responsibility. For more information about our work in this area, visit Commodity Supply Chains.