The Brazilian sugar producer with healthy soil as a KPI: Native

  • Native’s CEO, Leontino Balbo Jr, started turning his family’s sugar cane plantations into an organic, self-sustaining business in 1987.
  • Recognising its dependency on healthy soil, the firm banned chemical fertilisers, pesticides and burning and introduced practices that would work with nature and the local ecosystem’s services.
  • Native worked with scientists from universities and research institutions to identify natural indicators of soil health that it uses as key performance indicators for the business and its impact.
  • Over 20 years, the plantations’ soil fertility has improved markedly, groundwater sources have regenerated and biodiversity has ‘exploded’ – with crop yields also up by 20%.
  • By improving the resilience of the soil, the sugar cane has also become more resilient to pests and changing climate, surviving more harvests than conventionally-farmed cane.

A key part of the sustainability problem with many businesses is a lack of recognition about how fundamental social and ecological factors are to their profitability. They just don’t make it on to the accountants’ spreadsheet, except in the crudest financial terms of their ‘asset value’. But how profitable would a hi-tech company be without an educated workforce or a food manufacturer without healthy soil? They are utterly dependent on them.

This is why the unique accounting of Brazilian organic sugar company, Native, seems at once both delightfully novel and blindingly obvious. The company started life as a family-owned business in Brazil in 1946, and is now part of the Balbo Group producing 300,000 tonnes of sugar and 330 million litres of ethanol each year. In recent decades, as well as the standard metrics, their accounting processes include measurements and key performance indicators (KPIs) for their soil, looking at its nutrients, fungi and biodiversity.

That’s because Native’s CEO, Leontino Balbo Jr, was determined to adopt a regenerative, self-sustaining agricultural model when he joined the family firm in 1984, launching his ‘Cana Verde’ (Green Cane) project in 1987. The project rejected the use of chemical fertilizers, pesticides and cane-burning during harvest, mandating organic fertilizers, natural pest control and farming techniques that promoted organisms in the soil instead, such as crop rotation.

“Soil is not just a container, it's also the content of the ecosystem. It holds the biodiversity, both living and mineral, that's essential for life. If the soil loses this function, all other things are compromised,” Leontino Balbo Jr told Wired magazine, comparing the soil to a homeostatic system that regulates itself to the benefit of all parts that grow in it. “So much soil used for agriculture is dead. We need to revitalise it, to restore the energy of its ecosystem.”

Unfortunately, within the first few years, Native’s plantations saw no benefits to either their productivity or running costs. It took many more years of collaborating with various universities and research institutions to really understand the science of this ‘agroecological’ approach and adjust their farming techniques accordingly (such as using lower pressure tyres on farm equipment to avoid harmful soil compaction) before they achieved a breakthrough.

By constantly measuring every aspect of the wider ecosystem that helped sustain and regenerate the soil and then working to complement and enhance these natural systems, the soil fertility on Native’s plantations eventually improved markedly, groundwater sources regenerated, more carbon was absorbed than expelled and biodiversity ‘exploded’ over a 20-year period. Moreover, crop yields also went up by 20%.

“All these positive changes… have led to a very significant increase in the degree of environmental resilience, which is characterized by the greater resistance of plants to pests, diseases and especially the harmful effects of droughts and others climatic anomalies that are already manifesting themselves,” Leontino Balbo Jr told the Union for Ethical Biotrade.

Native’s comprehensive environmental measurements help to reinforce this natural resilience by anticipating problems with the soil and mitigating them before they lead to declining yields and wildlife. They also help demonstrate the positive impact the company’s plantations have far beyond the business, including being an important breeding ground for large cats and 45 other endangered species. So rich has Native’s understanding of its interconnectedness with nature become, that Balbo Jr once demanded the return of an anaconda that had been removed from their fields because he knew how vital it was to the healthy functioning of the plantation’s ecosystem!

Despite this obvious interconnection, business accountants often still treat environmental and social impacts as ‘externalities’ – peripheral to the main task of monitoring financial transactions, as the term suggests. But in reality, it’s money and profits that are peripheral – or at least entirely contingent – on the material welfare of people and the planet. In our current culture of profit maximization, financial measures have become the dominant objective of business, rather than following any broader purpose. Instead, companies need to decide what kind of impacts they want to have on the world, and create metrics that measure those things most valuable to them – just as Native has done with its soil.

Image of Leontino Balbo Jr taken from ‘Is this the Future of Global Food Systems?’