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: Equity analysis

To illustrate our broad expertise, covering many different economic sectors, commodities, sustainability themes and countries, this page gives an overview of the different projects executed by Profundo over the years. In the menu, you can filter the projects by thematic area. Each project is described briefly and where available the project portfolio - such as reports, brochures or presentations - is provided. Attention is also given to the exposure generated by the project in the media, in politics and elsewhere.

When you are looking for a specific report, we recommend to go to our Portfolio page.

We analyse the various human rights and other sustainability risks in international commodity supply chains and identify what different stakeholders can do to foster sustainable development of value chains in agriculture, forestry, livestock, energy, fisheries and mineral sectors.
We analyse how companies are financed by banks, shareholders and others financiers, to assess what financiers could do to foster sustainable corporate practices. Also, we dig into ownership structures and the schemes companies have set up to minimise tax payments.
We assess and benchmark responsible investment and credit policies of banks and investors and we advise on how policies can be improved and implemented through screening, voting, engagement and exclusion strategies.
We analyse the financial parameters of companies and assess how companies and their financiers could be affected in different scenarios by Environmental, Social and Governance (ESG) risks related to deforestation, climate change emissions, human rights abuses, resource depletion, health impacts and other sustainability issues.
We analyse public policies in the economic, tax and environmental domains, which could shape or restrain the sustainable transformation of the corporate and financial world, and propose alternative policies.

December 2018

December 18, 2018
Foreign Farmland Investors in Brazil Linked to 423,000 Hectares of Deforestation
Brazil is one of the top target countries for farmland investment deals, because of the potential for high yields and productivity. Following the financial crisis of 2007 and 2008, institutional investors, including pension funds, university endowments and private equity, invested heavily in newly formed rural real estate corporations. This paper describes the linkages between foreign investments in Brazilian farmland and the deforestation of this farmland since 2000, with a focus on Matopiba, the region consisting of the states of Maranhão, Tocantins, Piauí and Bahia.
December 11, 2018
USD 11B Loans to Palm Oil Industry: ESG Issues May Create Indirect Risks for Bank Investors
Since the palm oil sector is capital intensive and needs long-term financing, palm oil companies depend on bank loans. By investing in banks that provide loans to the palm oil industry, investors may indirectly face deforestation-related risks. Loans to a selection of 105 companies involved in the entire palm oil supply chain were analysed. The top 10 banks financing the palm oil sector were identified. Finally, the main investors of the top 10 banks are listed.
December 14, 2018
Deforestation Risk in Colombia: Beef and Dairy Sectors May Expose Investors
During the last two years, Colombia, the world’s second most biodiverse country, has seen rapidly increasing deforestation. This report from Chain Reaction Research discusses the political changes that led to this surge in deforestation. It then focuses on the cattle supply chain, the most important sector exposing investors to deforestation risk in Colombia.

November 2018

November 29, 2018
BrasilAgro: 5,069 Hectares of Cerrado Forest at Imminent Risk
This report builds on Chain Reaction Research’s (CRR) company profile on BrasilAgro, published in November 2017. It showed that from 2012 to 2017, BrasilAgro had cleared 21,690 ha of native vegetation in the Brazilian Cerrado. BrasilAgro has faced the risk of losing clients with zero-deforestation commitments, as well as an overvaluation of its land portfolio. This update report shows the continuation of deforestation on BrasilAgro farms since November 2017, and the associated business and financial risks.
November 21, 2018
Leakage Risks in India, 58 Percent of Palm Oil Imports Not Covered by NDPE Policies
Large palm oil refiners have adopted sourcing policies that require their suppliers to refrain from clearing forests, using peatland or exploiting people. A November 2017 analysis by Chain Reaction Research showed that 74 percent of Indonesian and Malaysian refining capacity is covered by such No Deforestation, No Peat, No Exploitation (NDPE) policies. This report looks at palm oil use in India and Pakistan. It assesses whether these countries are a ‘leakage’ market for unsustainably produced palm oil, who the main palm oil processors are and whether their activities are covered by NDPE policies.

October 2018

October 29, 2018
SLC Agrícola: Planned Deforestation Could Contradict Buyers’ ESG Policies
This report, which builds on the company profile on SLC Agrícola published by Chain Reaction Research in September 2017, reviews the company’s sustainability and business risks in the last year. The initial report showed that from 2011 to 2017, SLC Agrícola cleared 39,887 ha of land of its original vegetation, of which 30,000 ha was classified as Cerrado forest. SLC Agrícola faced potential risks of losing clients with zero-deforestation commitments, as well as an overvaluation of its land portfolio. This update discusses relevant developments that have taken place since.
October 2, 2018
Cerrado Deforestation Disrupts Water Systems and Poses Business Risks for Soy Producers
The Cerrado biome, covering over 20 percent of Brazil’s terrain, is a savannah region with high biodiversity and an important function for the water systems in Brazil. The region has experienced significant soy expansion during the last two decades. Soy expansion has been most prevalent in Matopiba, consisting of the states of Maranhão, Tocantins, Piauí and Bahia. This paper analyses the impacts of the soy sector on deforestation and water availability, and how water issues in turn can impact soy production. It investigates how the water impacts within the region may translate into business risks for soy companies operating in the Cerrado.

September 2018

September 21, 2018
ADM: Matopiba Sourcing Could Link Company to Deforestation
Archer Daniels Midland (ADM) is a large multinational trader and processor of agricultural commodities. In 2017, it generated USD 60.8 billion in revenue and USD 1.6 billion in net profit and employed over 31,000 people. ADM owns more than 30 silos in Brazil, as well 13 oilseeds processing plants. It also has operations in eight Brazilian ports. ADM sources a portion of its soybeans in the Cerrado, a vast biodiverse savannah region facing high rates of soy expansion and conversion of native vegetation. This could expose ADM to deforestation risks in its supply chain.

July 2018

July 25, 2018
Private Equity Investment in Consumer Goods Industry Could Jeopardize Zero-Deforestation Efforts
Producers of food, detergents and personal care products buy 90% of global palm oil products and have been pushing for No Deforestation, No Peat and No Exploitation (NDPE) policies over the past years. However, the increasing role of private equity in this Fast-Moving Consumers Goods (FMCG) sector could jeopardize zero-deforestation efforts.The unsuccessful bid by Kraft Heinz on Unilever - an FMCG leader in sustainability - was a wake-up call.

June 2018

June 21, 2018
Shadow Companies Present Palm Oil Investor Risks and Undermine NDPE Efforts
Since 2013, companies, governments, investors and civil society have taken steps to stop deforestation, fires, peatland development, and mitigate labor and human rights risks in the palm oil sector. These transformative actions include the adoption of No Deforestation, No Peat, No Exploitation (NDPE) sourcing policies, sustainable management policies, government moratoria, stop work orders, and supply chain transparency. Chain Reaction Research reports that 74 percent of SE Asia’s palm oil refining capacity is now covered by these NDPE policies. However, deforestation continues and unsustainable palm oil continues to be produced, traded and consumed. Ten companies caused 75 percent of all palm oil-related deforestation in Indonesia in 2017. Together, these companies deforested 40,000 hectares (ha). This paper discusses how the use of related corporate entities and opaque ownership structures contributes to the ‘leakage’ of unsustainable palm oil to global markets.

May 2018

May 3, 2018
The Financing of Leakage Refiners
Shareholders and Loan Issuers Include International Financial Institutions with Palm Oil Policies. In total, 52 company groups operate as ‘leakage’ refiners. Based on this list of non-NDPE palm oil refiners – or leakage refiners - the financiers of 16 companies servicing leakage markets are analyzed in this paper.

April 2018

April 26, 2018
Cargill: Zero-Deforestation Approach Leaves Room for Land Clearing in Brazil’s Maranhão
This research for Chain Reaction Research shows that Cargill’s approach to zero-deforestation supply chains still leaves room for ongoing land clearing by its suppliers in Maranhão. This could result in a number of business risks, including reputation risks and market access risks.
April 18, 2018
TH Plantations and PT Synergy Oil Nusantara: Leakage Risks At Plantation and Refinery
Lembaga Tabung Haji is a Malaysian Islamic financial institution, with over USD 16 billion in assets under management. TH Plantations (THP) is Lembaga Tabung Haji’s publicly traded palm oil arm, with 32 palm oil plantations in Malaysia and Indonesia. It has a total landbank of 102,000 ha, of which 61,104 ha is planted. The company is also a joint venture partner in PT Synergy Oil Nusantara (PT SON), a large palm oil refinery at the port of Batam, Riau, Indonesia. This facility has a capacity of 1 million tons per year. It is one of the largest ‘leakage’ refineries in SE Asia.

March 2018

March 16, 2018
Tunas Baru Lampung: Contested land and peat clearing could drive substantial value loss
Analysis by Chain Reaction Research found that an estimated 75% of the landbank of Tunas Baru Lampung, a publicly listed Indonesian palm oil and sugar producer, is contested. 10 percent of TBLA’s revenues are at risk from non-compliance with their clients’ No Deforestation, No Peat and No Exploitation (NDPE) sourcing policies.
March 14, 2018
Global Green Finance Index 1
This Global Green Finance Index, the first edition in a series which will chart the progress of the world’s financial centres towards a financial system that delivers sustainable development, and values people and the planet as much as profit. Profundo has written a discussion note for this project.

January 2018

January 24, 2018
ESG discrepancy between soy growers and financiers creates risk of more expensive financing
The large-scale expansion of soybean cultivation in Brazil has been identified as one of the key drivers of deforestation in the last 20 years. The Cerrado, which is a particularly biodiverse and carbon-rich biome, has been rapidly converted. Prior analyses by Chain Reaction Research have found that soy producers face financial risks from ongoing involvement in this Cerrado deforestation.
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