Meatpacking giant and Amazon deforester JBS bid for NYSE listing challenged

A bid by global beef-processing giant JBS for a listing on the New York Stock Exchange, giving it access to an influx of global investments, may be under threat following complaints lodged by environmental groups with the U.S. Securities and Exchange Commission. The SEC decision currently remains in the balance, with JBS aiming to join the NYSE by the end of the year.

Several nonprofit organizations, including Mighty Earth and the Rainforest Action Network, submitted letters to the SEC in August asking for the Brazilian meatpacking company’s initial public offering to be investigated and possibly rejected due to its track record of corruption and Amazon deforestation. JBS, which already lists its shares on São Paulo’s B3 exchange, recently announced it was planning to list on the NYSE by the end of 2023 to “strengthen the conditions for growth and competition with global competitors.”

But conservationists say an influx of investment could lead to an explosive expansion of the largest animal protein producer on Earth, leading to more deforestation in biomes in Brazil critical to protecting the global environment, including the Amazon.

“This is probably the single most important IPO for the climate in history,” Glenn Hurowitz, founder of environmental NGO Mighty Earth, said after lodging the submission with SEC.

“There are profound implications for the planet if JBS, the world’s worst Amazon deforester, is given the go-ahead to seek billions of dollars from Wall Street to continue tearing down rainforest, polluting on a vast scale, and driving land grabbing.”

The letters allege that JBS is making false claims about its environmental footprint and not being forthcoming about the risks associated with the company.

For example, the JBS prospectus claims it will map all its direct suppliers by the end of 2025, even though most of its cattle comes from third parties — and even though it has failed to tag cattle and track them from birth to slaughterhouse. Also, while the JBS filing mentions deforestation issues in the cattle industry, it doesn’t specify that fines and legal action may be taken against the company as a consequence, thus exposing investors to risk.

JBS, in response to the complaints lodged by the environmental groups, told Mongabay that its proposal would adhere to the SEC’s standards, and said the company is open to dialogue.

“We recognize the important role of civil society and we are always open to dialogue with thoughtful stakeholders who share our commitment to a more sustainable future,” a JBS spokesperson wrote in an email. “We look forward to enhancing our collaboration with NGOs and other key stakeholders during this next phase in the company’s evolution.”

Notorious track record

JBS, which began in 1953 as a family butcher shop in central-west Brazil, now slaughters 32,415 cattle a day in Brazil — and more than double that worldwide — under the watch of billionaire brothers Wesley and Joesley Batista.

But the company’s expansion and economic boom was propelled by more than hard work. In 2017, JBS’s holding company was fined by Brazilian courts in a historic 10.3 billion reais ($3.2 billion) leniency deal, now readjusted to 3.55 billion reais ($730 million), after the brothers confessed to bribing nearly 1,900 politicians — including former president Michel Temer.

Nor has the company kept its previous environmental commitments, even as it continues processing vast amounts of deforestation-linked beef in Brazil.

The latest beef audit by Brazil’s Federal Public Prosecutor’s Office in the state of Pará found that one in six cows purchased by JBS were connected to deforestation. The state of Pará, almost double the size of the U.S. state of Texas, accounted for 56% of Amazon deforestation in Brazil last year.

Of the 136,172 cows that failed the state-wide audit process, JBS was responsible for 93,734 — meaning the company is responsible for more than two-thirds of all beef-related deforestation in Pará state between July 2019 and June 2020.

Several other large beef companies included in Brazil’s audit were able to maintain a supply shown to be 100% free of illegal deforestation, undermining repeated claims by JBS that the deforestation issue is too complicated to control.

“The claim that cattle supply chains are too complex to do anything about is utter nonsense and suggests they should get out of the cattle business,” Hurowitz told Mongabay in a phone interview. “It is way easier to track cattle than fungible goods like soy or cocoa. A cow is a huge animal, and you can put an ear tag on it.”

The lack of tracking by the industry, something that can be easily accomplished, means that cattle laundering is rife. An area can be illegally deforested, calves born and raised in that embargoed area, then sold to a middleman who “launders” the stock to conceal its origins. These cattle then end up at meatpacking companies, which claim to be buying them from legitimate deforestation-free sources.

As recently as last year, cattle ranches encroaching on Indigenous lands in the Brazilian Amazon were found to be supplying JBS. An investigation by InfoAmazônia showed that more than 20 cattle ranches located in the Uru-Eu-Wau-Wau Indigenous Territory, in Rondônia state in the western Amazon, supplied more than 8,000 cows to JBS between 2018 and 2022. Similar stories repeat in other Indigenous territories.

At least 200,000 hectares (495,000 acres) of deforestation is estimated to have occurred within JBS’s direct supply chain since 2008, according to a 2020 study by Chain Reaction Research. An additional 1.5 million hectares (3.7 million acres) of forest has been felled in the company’s indirect supply chain.

Potential JBS IPO impacts on global climate emergency

An influx of global investment via the NYSE isn’t just dangerous for forests; it puts the planet at risk, say environmentalists and scientists.

The expansion of pastureland in Brazil should be off the table, according to leading Brazilian climate scientist Carlos Nobre, who has warned that the Amazon is close to passing a climate tipping point where the remaining rainforest could rapidly transition to savanna — releasing vast amounts of carbon and supercharging global warming.

“Any investments that contribute to the expansion of pastureland in Brazil is criminal. It’s a criminal attack on the climate emergency and biodiversity protection, and will lead to a significant increase in emissions,” he said in a phone interview.

“Finance mechanisms for cattle today should go towards reducing the size of pastureland. You can increase head count and increase productivity and profits, but not the [grazing] area,” he added, advocating for large-scale growth in the regenerative pasture sector, which today makes up just 8% of Brazil’s beef production.

Deforestation in the Brazilian Amazon could be reduced by half if the cattle industry implemented a strong zero-deforestation policy, a new study published in Global Environmental Change found.

Scientists say the focus now needs to be on stopping all deforestation, not just the illegal kind.

“Legal deforestation is also a big problem,” Philip Fearnside, a senior researcher at the National Institute for Amazonian Research (INPA) in Brazil, told Mongabay.

At the COP27 climate conference in Egypt last year, then-president-elect Luis Inácio Lula da Silva announced the incoming Brazilian government would “do whatever it takes” to achieve zero deforestation and degradation by 2030. But in a meeting with Amazon countries in Colombia in July, he downgraded that promise to include only illegal deforestation.

“There are two ways to have zero illegal deforestation,” Fearnside said. “One is no deforestation, and the other is legalizing it.”

Banner image: Cattle grazing in the Amazon. Image by Fabio Nascimento for Mongabay.

JBS is accused of misleading investors with suspicious green bonds

Citation:

Levy, S. A., Cammelli, F., Munger, J., Gibbs, H. K., & Garrett, R. D. (2023). Deforestation in the Brazilian Amazon could be halved by scaling up the implementation of zero-deforestation cattle commitments. Global Environmental Change, 80, 102671. doi:10.1016/j.gloenvcha.2023.102671

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