No sugarcoating the facts for Bunge

Bunge’s operations in Brazil (Bunge Brazil) had been accused of sourcing sugar from farms on land that is claimed by indigenous peoples. This meant there was a risk that the company did not comply with UN Global Compact Principle 2: ’Companies should make sure that they are not complicit in human rights abuses’.

Land conflicts have long been a problem in Brazil, caused by the lack of state presence in many areas, uncertainty over land ownership and historical entitlements, the power of agribusinesses, and poor management of clashes between indigenous communities and farmers.

Bunge’s involvement is related to indigenous lands in Jatayvary, in the Matto Grosso do Sul state. Five farms, totaling around 800 hectares, are on land on which prior claims have been lodged by the Guarani-Kaiowá tribe. The claim of this tribe is alleged to have been first made 30 years ago. The land was first formally recognized as indigenous land by the Brazilian National Indigenous Foundation (FUNAI), part of the Ministry of Justice, as far back as 2004.

Bunge Brazil acquired the Monteverde sugar refinery in 2008. This refinery sources sugar from the farms located on the disputed land. It is one of five sugar refineries owned by Bunge Brazil and the only one supplying sugar for ethanol production. The land rights issue associated with the refinery was escalated by the involvement of the public prosecutor in 2009. The Brazilian Minister of Justice published the declaration of Jatayvary in 2011, which set the boundaries and recognized the Guarani-Kaiowá tribe’s rights to these lands. However, the final determination of land rights remains an ongoing process between the Brazilian government and indigenous peoples. The broader issues related to the classification of indigenous peoples’ lands are ongoing and can only be resolved by the local government and on its timetable.

In our first conference call in January 2014 Bunge took the stance that until there is a final ruling, the land in question remains the lawful possession of the current owners, who have farmed it for decades. The company also stressed that all the contracts in force had been signed before the acquisition of the Monteverde plant. The company made a public commitment to terminate its supply contracts with the relevant farms in the event of a final determination in favor of the Guarani-Kaiowá, or at the end of the term of each contract.

When we started our active dialogue with the company, our main objective was for them to show that it was no longer in breach of UN Global Compact Principle 2. This meant that we expected them to withdraw from farms located on land on which indigenous peoples had made claims. We required them, among other things, to take measures to remedy and prevent breaches in the supply chain of the Monteverde sugar refinery and establish an adequate grievance mechanism.

During a conference call in January 2015, Bunge indicated that they had ceased to source sugar from the contested lands at the Monteverde refinery. The last harvest had been brought in at the end of 2014 and the machinery had been removed. This statement was subsequently confirmed in writing by the Head of Corporate Affairs. With this development Bunge has been able to lift the breach of UN Global Compact Principle 2.

In addition, the company has developed a set of measures with, among other things, a grievance mechanism in Brazil. In 2014 no complaints were filed. Bunge also responded to an Oxfam report, stating that they check every investment in new sugar production in Brazil for Indian claims to the land with the National Indian Foundation (FUNAI). With all these publications and the cessation of the contracts Bunge now fulfills our main engagement objective.

We continued our dialogue with Bunge on our other engagement objectives, which are related to risk management and transparency in Brazil, both in sugar production and in other commodities such as soy and palm oil.