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One of the major global trends linked to the process of globalization is the expansion of agro-industry into the humid tropics. Although agro-industry is an important source of income for Brazil, it is also leading to the displacement of local populations and extensive clearing of native vegetation. In this context, we focus on a second trend resulting from globalization in which financial institutions have demonstrated increasing concern with environmental and social responsibility, notably through the inclusion of environmental and social conditions in loans to the agricultural sector. In this article, we provide an assessment of the potential for this type of economic instrument to help reduce the negative impacts of agro-industrial expansion, and how the different actors who are shaping this debate (non-governmental organizations, industries, the finance sector, government) can best help to realize this potential. We evaluate this broader question through the lens of two International Finance Corporation loans to Brazil's Grupo Maggi, the world's largest independently-held soybean exporter. We identify four areas in which private sector self-regulation can improve to realize environmental and social performance goals: (a) Financial institutions and firms can increase the clarity, quality, timeliness, and regularity of monitoring and reporting; (b) Civil society can develop a more sophisticated approach to distinguishing between companies and initiatives that essentially maintain the status quo and those that are trying to improve; (c) Civil society can help to develop simple, standard measures of environmental and social performance of agricultural lands for use by financial institutions and firms in establishing environmental and social management systems; and (d) Governments can develop strong regulations that capitalize on voluntary regulation mechanisms' flexibility and efficiency, as well as developing incentive systems for producers and firms that demonstrate high social and environmental performance in their operations. [ABSTRACT FROM AUTHOR]

Industrial production of beef, soybeans, cotton, and biofuels is expanding into the tropical latitudes of South America and may soon reach tropical Africa in the most important agricultural transition since the Green Revolution. This shift is driven by the shortage of land suitable for expansion of cultivation and grazing in the temperate zone, increased global demands for agricultural commodities, the rising price of petroleum, and technological advances. At risk are some of the world's most ecologically and culturally-rich landscapes in the world, such as the Amazon rainforest, the Cerrado woodland complex, and African savannas. A strategy for reducing the negative ecological and social impacts of this transition could harness the rising environmental and social standards imposed by many importers and purchasers of agricultural commodities, similar reforms underway among "Equator" banks, growing corporate governance, and Brazil's prominence in international diplomacy. Integrated certification of commodity sanitation, compliance with rigorous environmental standards, and sound labor practices could become the norm for participation in commodity markets. These reforms in agro-industrial behavior could be reinforced by trade agreements and strategic support from non-governmental organizations. [ABSTRACT FROM AUTHOR]