Exclusive Brazilian meat producer JBS says zero emissions promise ‘never was a promise’ Reuters
Stefanie Eschenbacher, Luciana Magalhaes and Simon Jessop
SAO PAULO (Reuters) – In 2021, the world’s largest meat processor, JBS, became the first of its peers to commit to reducing or offsetting all of its emissions by 2040 and ending illegal deforestation in its long supply chain that begins in the heart of Brazil’s Amazon. (NASDAQ:).
He has used terms like “commitment” and “commitment” and the slogan that “nothing less is an option” to describe his plan in talks with investors about issuing sustainable bonds and in marketing materials, including for his beef.
Nearly four years later, Jason Weller, global director of sustainability at the company in which the Batista family is the largest investor, told Reuters in a rare interview that her aim for the show was only “aspirational”.
“There was never a promise that JBS would do that,” Weller said of the net zero emissions pledge.
He also said JBS cannot control how the farms operate, although they encourage voluntary changes. In 2021, the company pledged to end the illegal deforestation of the Amazon by its livestock suppliers by 2025.
In a written statement to Reuters after the interview, JBS said: “Our climate ambitions have not changed. Any claim to the contrary is completely untrue.”
Reuters found that investors have achieved little in holding JBS to its promises over the past five years, with no shareholder proposals on the environment, few voting against Batista on any issue and almost no sustainability questions on earnings calls. .
Profits are rising on strong demand for meat, which helped push JBS’s Sao Paulo-listed shares to a record high last month.
Deforestation by ranchers is pushing the Amazon closer to a tipping point where the world’s largest rainforest will gradually stop sequestering climate-warming carbon dioxide.
According to researchers, Brazilian cattle ranchers are responsible for 80% of the current deforestation of the Amazon.
Difficulties in reducing environmental damage linked to JBS and other agricultural companies could undermine President Luiz Inacio Lula da Silva as he prepares to host global climate talks in November.
Oil majors Shell ( LON: ) and BP ( NYSE: ) are also among global companies that have scaled back their climate pledges.
“There are too few investors using their shareholder influence to get involved in this issue,” said Vemund Olsen, senior analyst for sustainable investments at Norway’s Storebrand Asset Management, which sold its JBS shares in 2017.
“It’s an issue for which the whole industry needs to find common solutions, and which also requires improved regulation and enforcement in countries like Brazil.”
In October, Brazil’s environmental protection agency fined ranches and meat producers, including JBS, for raising or buying livestock on illegally cleared Amazonian land.
SUPPLY CHAIN CHALLENGE
Environmental activists have calculated that 97% of JBS’s emissions come from greenhouse gases released by deforestation, biodiversity loss and pollution.
In the calculation of emissions, this is called emissions from changes in land use. JBS called those calculations wrong.
Although JBS reports indirect emissions in its supply chain, it excludes emissions associated with land-use changes.
“Today there is no approved format for how to calculate land-use change emissions that we have confidence in,” Weller said. JBS instead focuses on emissions from its own operations, including slaughterhouses.
Other global companies, including packaged food company Mars and grain merchant Archer Daniels Midland (NYSE: ) and Bunga (NYSE: ), have begun publishing emissions caused by land-use change.
“We don’t have the ability to mandate or force changes on the farms, nor do we have the ability to mandate and change the way our customers use our products,” Weller said.
Because of those restrictions, he said, JBS has “zero operational, contractual or legal control over its supply chain.”
However, the CEO added that “despite not having any mandate, we are acting on our supply chain, investing and driving real change.”
A LITTLE PRESSURE
Morningstar Sustainalytics, an independent sustainability rating agency, places JBS in the 95th percentile among the companies it analyzes, with a “serious risk” rating attached to its environmental performance.
Reuters found in interviews with investors and reviews of company documents that the fast-growing company faced little pressure even as evidence mounted that it was on track to miss sustainability targets.
Twenty of the company’s biggest investors declined requests to talk about the company even as demands from European companies to stop deforestation grew.
Morningstar data showed 17 funds labeled as “sustainable” holding JBS stock. All declined to discuss their involvement with the company or the rationale for their investment or did not respond to requests for comment.
Weller said JBS is committed to improving transparency and engagement with investors around sustainability.
The ability of private investors to influence the company is already limited since the Batistas hold almost half of the company’s shares. Another 21% is owned by the Brazilian development bank BNDES, which sided with the management during the vote.
Non-public advice to investors last year from proxy advisor Glass Lewis (JO:) showed that JBS scored low on climate risk mitigation and board accountability, while proxy advisor ISS also raised concerns about governance and “egregious governance practices in the context of corruption.”
During a broad anti-corruption investigation known as Operation Car Wash, which began in 2014 and involved companies across Latin America, a court banned brothers Wesley and Joesley Batista from holding management positions.
It came after they admitted bribing approximately 2,000 Brazilian regulators, government officials and politicians, including the former president, over a 10-year period.
Last April, the Batista brothers rejoined the JBS board following a shareholder vote.
