Having identified the soy supply chain as financial material topic we assigned Verisk Maplecroft, a leading risk analytics company, to conduct a research project into the soy market. The report looked into the challenges companies operating in the soy supply chain face. It examined in detail the regulatory environment in production countries with high environmental and social risks, such as Brazil and Argentina, and identified conservation and certification initiatives that are relevant to soy production. This helped us gain in-depth understanding of the entire soy supply chain and the risks associated with it.
Following on from this research, we selected eight companies in our portfolio to form an engagement peer group that reflect the entire soy supply chain, covering seed suppliers, commodity traders, food producers, fast-food restaurants and retailers. We explored their current policies with respect to soy sourcing, how they assess and manage the risks they are exposed to as a result of their involvement in soy, the extent of their transparency and disclosure, and how they engage in partnerships and collaboration to improve standards in the soy value chain. These engagement objectives formed the basis of our dialogue with these companies over the past three years. We had many discussions with the eight companies to ascertain how they manage the risks of their exposure to soy and to try to help them better manage these risks. With these findings we ultimately want to inform our clients of the progress of the companies under engagement and inform the investment decisions of our portfolio managers.
We have split this report into three sections.
We also show their progress over the three years and conclude by discussing the impact of our findings on our investment thesis for each company.