What ADM’s Zero Deforestation Policy Will Mean for Its Supply Chain

Archer Daniels Midland is changing how it does business in a major way. This week it was revealed that the commodities giant is greening up its supply chain and establishing a zero deforestation policy across all of its global commodity supply chains. The change comes at the behest of ecology-minded investors like Green Century Capital Management Inc. and New York State Common Retirement Fund, who put on the pressure for ADM to implement such policies.

This means good things for the environment and ADM’s image—what does it mean for ADM’s suppliers? Simply, the most critical change appears to be strongly increased accountability. According to a report from Bloomberg this week, ADM is committing to increased transparency throughout its supply chain in order to better track the practices of its suppliers worldwide:

Because Archer Daniels Midland is one of the biggest food processing commodity trading companies in the world, this decision could have a significant impact on the industries it trades in. While adopting zero deforestation policies has become popular within the palm oil industry in recent years, Bloomberg Business notes that this is the first time a zero deforestation policy has been applied in the soybean industry—yet soybean production is a massive industry that has proven destructive to rainforests in South America, proving that deforestation policies are necessary for more than palm oil.

What happens to suppliers who don’t comply? They will lose the business of ADM—and considering that ADM operates 265 processing plants and 460 crop procurement facilities, losing that business could be devastating. On the other hand, that sheer size could make this move very far reaching in its ability to make a significant impact. Perhaps this move from such an industry titan will influence and encourage similar policies throughout food production industry.

[SOURCE: Bloomberg Business; Mongabay]