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Projects
: 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 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 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.

November 2019

November 22, 2019
Palm Oil Biofuels Market May See Shake-Up in 2020, Heightening Leakage Risks
The expansion of the palm oil industry in the last ten years was partially in response to the anticipated demand for biofuels worldwide. The expected EU biodiesel boom did not materialize, resulting in a systemic oversupply of palm oil in Southeast Asia. A number of recent policy initiatives may bring about significant shifts in the enduser markets of palm oil-based biodiesel starting January 1, 2020. The geographical markets and the sectors with growing biodiesel demand are not traditionally known for their strict sustainability demands, and therefore may pose new leakage market risks.
November 15, 2019
Procter & Gamble’s Deforestation Exposure May Affect Reputation
Procter & Gamble has a No Deforestation, No Peat, No Exploitation (NDPE) policy that covers all third-party suppliers, and it has committed to developing a traceable supply chain. P&G applies its responsible sourcing policy at the supplier group level but relies on intermediary traders to engage with non-compliant growers and ensure a clean supply chain. In July 2019, P&G changed its organization design to six Sector Business Units (SBUs). It has decentralized responsibility for supply chains across its new business units.

October 2019

October 29, 2019
Future Smallholder Deforestation: Possible Palm Oil Risk
Independent palm oil smallholders in Indonesia are facing declining yields per hectare as their trees are aging. Financial and land tenure hurdles prevent effective financing of replanting, raising the risk of increasing deforestation in Southeast Asia after a period of declining forest loss. This report evaluates the financial and other hurdlesin Indonesia and investigates plans by governments and companies to offer solutions.

August 2019

August 30, 2019
Palm Oil Growers Suspended Over Deforestation Lose USD 1.1B in Equity Value
A large majority of global palm oil traders and refiners have implemented No Deforestation, No Peat, No Exploitation (NDPE) sourcing policies in recent years. Violations of such policies have repeatedly led to suspensions of oil palm growers from supply chains. This report investigates how 15 suspensions as a result of NDPE non-compliance impacted the financial performance of four oil palm growers: Sawit Sumbermas Sarana (SSMS), Austindo Nusantara Jaya (ANJ), Tunas Baru Lampung (TBLA), and Indofood Agri Resources.
August 1, 2019
Glencore Agriculture Exposes Canadian Pension Funds to Deforestation Risks
Glencore Agriculture is an agricultural commodity trading company that operates in corn, cotton, soy, and grains markets. This report assesses Glencore Agriculture’s exposure to deforestation risks in Brazil’s soy supply chain.

July 2019

July 22, 2019
Cargill’s New Policies Insufficient to Fully Mitigate Deforestation Risks in Brazil
Cargill is the largest privately-held company in the United States and the second largest soy exporter in Brazil. In April 2018, Chain Reaction Research (CRR) concluded that Cargill’s 2030 zero-deforestation deadline allowed its Brazilian suppliers to continue deforesting the Cerrado. This report assesses Cargill’s current deforestation risks in Brazil’s soy supply chain, given recent changes in corporate policies, market conditions and deforestation trends.
July 9, 2019
28 Percent of Indonesia’s Palm Oil Landbank Is Stranded
In 2017, CRR reported 6.1 million hectares (ha) of forest and peatland remained on oil palm concessions, land that can be considered “stranded assets." This update discusses figures and trends in the palm oil industry since 2017 and argues that oil palm development on forest and peatland will remain economically unviable for the foreseeable future.

June 2019

June 3, 2019
The Neglected Risk: Why deforestation risk should matter to Chinese financial institutions
Given the important role of Chinese demand in soy production, and of Chinese financial institutions in financing and investing in the soy value chain, CDP sought to better understand the investment and lending decisions of the Chinese financial institutions involved. This research examined the financial flows from Chinese financial institutions to companies participating in the soy supply chain, identified major players, and estimated the volume of investment exposed to deforestation risk.

May 2019

May 9, 2019
Deforestation-Driven Reputation Risk Could Become Material for FMCGs
Many fast-moving consumer goods (FMCG) companies have publicly committed to a 2020 deadline to end deforestation in their supply chains. However, it is becoming increasingly clear that most FMCGs will not meet this deadline. NGO campaigns indicate increasing reputation risks for the sector. For an FMCG company, business risks related to tropical deforestation, such as market access risk, stranded asset risk, and the risk of higher costs of capital, contribute to only a small deviation in the total share value. However, reputation risk may become a much stronger value driver for them. This study explores the scientific knowledge on valuing this reputation risk.

April 2019

April 15, 2019
GPA’s (Casino Group) Beef Supply Chain Exposed to Deforestation Risks
Casino Group is a French multi-banner food retailer, with a controlling share in Grupo Pão de Açúcar (GPA) in Brazil. This report analyses GPA’s deforestation risk exposure based on beef samples collected through store visits. Chain Reaction Research (CRR) visited 50 GPA supermarkets in five Brazilian cities and inspected 500 randomly selected beef products. Data from the product labels establishes supply chain links between supermarkets and slaughterhouses located in the Legal Amazon.
April 1, 2019
Brazilian State of Tocantins: A Hotspot for Cerrado Deforestation
The Brazilian state of Tocantins is the latest hotspot for soy- and cattle related deforestation. In 2018, more land was cleared here than in any other state of the Brazilian Cerrado, a large tropical savanna biome that covers more than 20 percent of Brazil. Overall Cerrado deforestation rates have declined in recent years, but Tocantins continues to see high rates of forest loss. Soy sourced from Tocantins carries a high risk of being connected with legal and illegal land clearing. A close monitoring of the implementation of zero-deforestation commitments may mitigate risks for traders, investors and end-users of agricultural commodities from Tocantins.

February 2019

February 5, 2019
Carrefour May Face Financial Risks from Deforestation-Linked Beef Sourcing in Brazil
Carrefour SA holds a majority share in Atacadão SA/Carrefour Brasil, the largest retailer in Brazil. Carrefour’s size makes it a major buyer of Brazilian beef and may expose it to deforestation risks, as cattle contributes to deforestation in the Brazilian Amazon. This report analyses Carrefour’s deforestation risk exposure based on samples collected through store visits. Chain Reaction Research (CRR) visited 48 Carrefour supermarkets in five Brazilian cities, and inspected 480 randomly selected frozen beef products. Data from the product labels establishes supply chain links between Carrefour supermarkets and slaughterhouses located in the Legal Amazon.

January 2019

January 25, 2019
AAK Lags in Implementation of NDPE Best Practices
AAK is a vegetable oils producer, with its headquarters in Malmö, Sweden. The company has 20 production facilities worldwide, sales offices in more than 25 countries and a total workforce of 3,500 employees. In 2017, its revenue was equivalent to USD 3.2 billion in 2017. Within the world’s palm oil supply chain, AAK is positioned midstream between the largest palm oil refiners/traders and the largest consumer goods companies. The company’s No Deforestation, No Peat, No Exploitation (NDPE) strategy relies on meaningful action from the traders and refiners that supply AAK with refined palm oil. This approach fails to follow industry best practices.

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.
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