The Amazon Soy Moratorium and Its Implications for Sustainable Commodity Supply Chains

The Amazon Soy Moratorium (ASM), a voluntary agreement established in 2006 to curb deforestation linked to soy production, has long been a cornerstone of sustainable supply chain initiatives in Brazil. By prohibiting the purchase of soy from land deforested after July 2008, the moratorium decoupled soy expansion from forest loss in the Amazon biome. According to a report by Reuters, soy is now responsible for just 0.2% of direct deforestation in the Amazon, with over 98% of soy cultivated in the region complying with ASM provisions [3]. This success has enabled soy exports to surge by 500% in the Amazon biome while avoiding large-scale forest destruction [6].

However, the ASM’s effectiveness has been undermined by a critical shift in deforestation patterns. While the Amazon remains protected, soy production has increasingly encroached on the Cerrado biome, a biodiversity-rich savanna. Data from supply chain monitoring studies reveals that companies adhering to zero deforestation commitments remain exposed to deforestation in the Cerrado, where enforcement of environmental policies is weaker [4]. This geographic displacement highlights a systemic challenge: sustainable supply chain frameworks often fail to account for regional variations in governance and enforcement [3].

Recent developments threaten to unravel the ASM’s progress. In 2025, Brazil’s anti-monopoly agency Cade ordered a temporary suspension of the moratorium, citing competition concerns [1]. Simultaneously, the Supreme Court upheld legislation in Mato Grosso that revoked tax incentives for companies participating in the moratorium [1]. These actions have opened an estimated 10 million hectares of land—roughly the size of Portugal—to legal deforestation [2]. Conservation groups warn that dismantling the ASM could "supercharge deforestation" and erode Brazil’s credibility as a leader in climate action, particularly as it prepares to host COP30 [2].

For investors, the ASM’s fragility underscores significant ESG risks. The suspension of the moratorium increases the likelihood of deforestation-linked soy entering global supply chains, exposing companies to reputational damage and regulatory scrutiny. A 2024 analysis by the World Resources Institute found that 95% of agricultural deforestation in the Amazon was illegal, with fires accounting for 60% of tree cover loss [3]. Companies failing to meet deforestation-free commitments risk losing access to ESG-focused capital, as asset managers increasingly prioritize climate-aligned portfolios [1].

Conversely, the ASM’s challenges also present opportunities. Investors can capitalize on innovations in supply chain transparency, such as satellite monitoring and blockchain traceability, which are gaining traction in the soy sector [4]. Additionally, the moratorium’s partial success in the Amazon demonstrates that multi-stakeholder agreements can drive systemic change—a model that could be replicated in other commodity sectors.

The ASM’s future hinges on balancing economic growth with environmental stewardship. While the moratorium has proven effective in the Amazon, its limitations in the Cerrado and recent legal setbacks highlight the need for stronger, more inclusive governance frameworks. For ESG investors, the key lies in supporting companies that go beyond compliance, integrating deforestation risk assessments into their supply chains and advocating for policy reforms that address regional disparities in enforcement.

Source:
[1] What Brazil's soy moratorium fight means [https://apnews.com/article/brazil-deforestation-soy-moratorium-1bf704a344838f875f6278bf25cc1195]
[2] Brazil authorities suspend key Amazon rainforest protection measure [https://www.theguardian.com/environment/2025/aug/21/brazil-authorities-suspend-key-amazon-rainforest-protection-measure]
[3] Fires Drove Record-breaking Tropical Forest Loss in 2024 [https://gfr.wri.org/latest-analysis-deforestation-trends]
[4] Using supply chain data to monitor zero deforestation commitments [https://www.academia.edu/119064532/Using_supply_chain_data_to_monitor_zero_deforestation_commitments_an_assessment_of_progress_in_the_Brazilian_soy-sector]