International retailers, food groups and investors including Tesco, McDonald’s, Unilever and Lidl have called on soyabean traders to divest from the commodity linked to deforestation in Brazil’s Cerrado region.

In letters to Archer Daniels Midland, Bunge, Cargill, Louis Dreyfus Company, Cofco International and Glencore-affiliated Viterra, 160 groups demanded the end of trading soya from areas in the important biodiversity hotspot cleared after 2020. The signatories of the Cerrado Manifesto Statement of Support warned they would impose sanctions if the traders failed to commit to the cut-off date.

Tesco confirmed its offer of £10m to tackle deforestation caused by soya production in the region, made before talks with traders broke down late last year. The UK retailer and two other companies — Grieg Seafood of Norway and Nutreco, a Netherlands-based animal and fish feed company — said they would compensate local farmers for not further expanding their fields.

More companies have rejected soyabeans from Brazil because of the risk of deforestation. Last week, Bremnes Seashore, a Norwegian salmon producer, announced that it would exclude Brazilian soyabeans from its fish feed.

Grieg this year targeted Cargill for its links to soyabeans grown on deforested land. The Norwegian company issued green bonds worth NKr1bn ($114.5m), stipulating that proceeds were not used on Brazilian soyabeans from the trader.

“We’re seeing a movement in Europe where companies are turning away from Brazilian soy,” said Sarah Lake at environmental campaigner Mighty Earth.

The Cerrado, known as an upside-down forest for its deep root network, has become one of the least protected regions in Brazil despite being an important carbon sink. It produces about 60 per cent of Brazil’s soyabeans, or 20 times the amount produced in the Amazon.

Tesco said it would disburse the money to farmers over the next five years. Anna Turrell, Tesco’s head of environment and co-chair of the Sos steering group, said: “We source much of our soy from the Cerrado region, so it’s vital we play a leading role in protecting this biodiverse region for future generations.”

Unilever said: “Action by the traders is urgently needed to end the conversion of the Cerrado’s valuable forests and native vegetation for soy. For the sake of the Cerrado’s future, we urge the traders to play their crucial role by setting a 2020 cut-off date across the Cerrado biome.”

One obstacle to stopping cultivation in the Cerrado is Brazilian law, which requires farmers in the region to keep only 20-35 per cent of the forest on their land intact — the rest they can deforest. By contrast, in the Amazon, they must protect 80 per cent.

Soya from Brazil makes its way into meat sold around the world, as it is one of the main ingredients in animal and fish feed. Over the past few years retailers, food groups and investors have negotiated with traders and farming organisations as they themselves have come under pressure to eliminate deforestation from their supply chains.

Tesco was recently criticised after an investigation revealed that its chickens were fed soya from Cerrado sourced through Cargill. The UK supermarket did not comment on whether it would end its relationship with the grains company, adding that it would “consult with independent experts and review our approach to engagement . . . in light of recent events”.

Cargill said progress on the ground to address deforestation in South America needed accelerate, adding: “The best route will be working hand in hand with our customers and with farmers, who must be part of the solution.”

Bunge said it was “dedicated to a sustainable supply chain” adding that it had a public commitment, since 2015, to eliminate deforestation from all its supply chains by 2025.

Cofco could not be reached for comment; ADM, LDC and Viterra did not respond to requests for comment.

This story has been amended to include a comment from Bunge

​Letters in response to this article:

Tesco could do more to stop Brazil’s deforestation / From John Sauven, Executive Director, Greenpeace UK, London N1, UK

​Brazil’s farmers should be paid not penalised​ / ​From Fred Arruda, Ambassador of Brazil to the UK, London SW1, UK