Seven major European funds have joined food companies in an open letter calling on Brazil to stick to an agreement that soy production in the Amazon happens only on existing agricultural ground.

While the investors and firms that buy and use the soy commended the progress made so far, they said that deforestation due to other causes, such as cattle ranching, had increased to a billion hectares in the last year, from 460 million hectares in 2012, according to recently-published Brazilian government data.

Signatories to the open letter, coordinated by the environmental, social and governance (ESG) investor network FAIRR, wrote: “These deeply concerning figures reinforce the importance of continuing to uphold the ASM.”

Some of the UK and Nordic’s largest pension players such as Norway’s KLP, Swedish national pension funds AP2, AP3, AP4 and AP7 and the Strathclyde and Environment Agency pension funds in the UK were among signatories, alongside many food producers and retailers including Mars, Asda Stores and Carrefour.

The list also includes major asset managers such as Legal & General Investment Management, NN Investment Partners, Skandia and Storebrand Asset Management.

In the letter the signatories said that since the establishment of the Amazon Soy Moratorium (ASM) in 2006, soy production in the Amazon had increased 400%, which showed that forest protection and agricultural expansion could be compatible.

“Today, there is enough existing agricultural land to continue to increase soy production in the Amazon by an additional 600% compared to current figures,” they wrote.

In September this year, nearly 70 asset owners backed a statement calling on companies to reinforce their efforts to make sure their operations and supply chains did not contribute to deforestation.

This came as a response to the forest fires in Brazil and Bolivia and was signed by 230 institutional investors with $12.6trn (€11.3trn) in assets under management, including Norway’s KLP, with asset owners accounting for 30% of signatories.

Norway’s SWF relaxes watchful stance on Petrobras

In other Brazil-related pensions news, Norway’s sovereign wealth fund announced earlier this month that it has removed the “observation” status which had been imposed on Petroleo Brasileiro (Petrobras), because of concerns about corruption at the firm.

The move follows a recommendation by the Government Pension Fund Global’s (GPFG) Council on Ethics to take the Brazilian oil and gas firm off the fund’s observation list, because the risk of corruption had now shrunk.

Petrobras was placed under observation by Norges Bank Investment Management (NBIM), the manager of the NOK10.2tn (€1tn) fund, in 2016, on the council’s advice.

The council had advised doing so after revelations that senior executives at the company and major suppliers had for a decade operated a system where bribes had to be paid in order to win Petrobras contracts.

Though some investigations are still live, the council said it considered the risk of corruption in the company has decreased, despite the risk inherent in the fact that the Brazilian government, as the controlling shareholder, appointed a majority of Petrobras’s board members, it said.

“This assessment rests partly on the legal settlement entered into with the US Department of Justice which confirms that Petrobras has implemented wide-ranging improvement measures since the investigations commenced in 2014, and that it has undertaken to report on the further implementation of its compliance programme and internal control measures each year until 2021,” the council said.

At the end of 2018, the GPFG had NOK392.5m invested in Petrobras equities, amounting to a 0.59% stake in the company.

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