We used the following methodological approach to determine the 61 focus municipalities for SCF member reporting and collective action (please note the original 25 focus municipalities – most of which are still at the top of the list of native vegetation conversion to soy – remain in the scope):

• Out of the 5,570 municipalities in Brazil, focus municipalities must have at least 95% of their territory in the Cerrado.
• The area of planted soy in focus municipalities must be larger than 5,000 hectares (PAM/IBGE 2020).
• Focus municipalities must be within the region’s top municipalities as measured by
  1. Area of native vegetation converted to soy (Agrosatelite 2019/20 Soy Expansion Report, and PRODES 2018/2019) and
  2. Availability of remaining native vegetation in legal reserves suitable for soybeans.
• Focus municipalities must have at least 2 SCF members operating (sourcing or have physical presence) within their boundaries.

We will review and update our scope and focus municipalities every 3 years, according to the latest data available.

The following methodological approach is used by members individually to produce the volume key performance indicators reported annually:

1. Soy volume sourced in the Cerrado: The proportion (in tonnes) of soybean volume sourced by the member company from the Cerrado biome, in municipalities with at least 95% of its territory in the biome, compared with the total volume sourced out of Brazil by the reporting company. This information is reported as % of soy sourced in Cerrado and % of soy sourced in other biomes.
2. Soy volume sourced in focused municipalities in the Cerrado: From total in step 1, the proportion (in %) of soybean volume produced in the focus municipalities, by considering the municipality of the supplier. This information is reported as % of soy sourced in focus municipalities and % of soy sourced in other Cerrado municipalities.
3. Direct and indirect sources: From total in step 2, the proportion (in %) of soybean sourced directly from farmers and the proportion sourced from third parties, by considering the type of activity of supplier (using the supplier’s tax registry number as a source). This information is reported as % of direct sources in focus municipalities and % of indirect sources in focus municipalities.
4. Volume traceable and not traceable: From total volume of direct sources (step 3), the proportion of volume that is traceable to farm, by considering farm location information provided by supplier. Volumes are classified as traceable to farm when there is a polygon of the farm where soy was produced. This information is reported as % direct sources traceable to farm in the focus municipality. Companies will obtain at least 95% of direct soy volumes as traceable to farm starting from December 2020.

There are six variance factors to consider when reporting on soy sourcing of joint ventures (JV) associated with an SCF member company. They depend on awareness of JV operated volumes; control of JV operations; and purchasing from a JV. For each of these, there is a yes/no answer. The consolidated scenarios are:

2. When a company does not know the JV’s overall volumes because it has no control (i.e., it does not manage soy purchases from the JV):
   • If it sources from the JV: report as indirect
   • If it does not source from the JV: report volume as indirect based on the financial revenue from the JV through the mathematical rationale described below:
     • As participant of the JV, company has revenues from JV expressed in $ 000 (A)
     • Company has its own total revenue for the country expressed by $ 000 (B)
     • A/B = X% of JV revenue representativeness over the company revenue. Companies shall consider such X% as a percentage of the company’s total origination volume.
     • Companies shall add X% to the % of sourcing from the area and report as indirect.

Measuring and reporting on DCF soy will involve two indicators, each based on different data sources. Soy volumes sourced by joint ventures will integrate DCF calculations according to the established ‘Reporting methodology for soy sourced by joint ventures’ described above.

2. Reporting via publicly available information (common indicator of 61 municipalities by the SCF, not a company’s individual indicator)

Data sources:

• Farm area of each municipality (polygon): SICAR (note: only if not mass balance)
• Soy area: Agrosatelite study purchased by ABIOVE (crop year 20/21)
• Conversion: PRODES Cerrado 2020
• Average municipality productivity (IBGE/CONAB)

To calculate the percentage of DCF soy at landscape level in the 61 focus municipalities, use the following indicator: