Brazilian meat giant JBS accused of misleading investors

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A small activist group called Mighty Earth is taking on Brazil-based food giant JBS over whether its “green” bonds are worth that earth-friendly money.

In 2021, JBS, the world’s largest meat company and giant food processor, sold $3.2 billion worth of “green bonds” tied to the company’s sustainability goals. If JBS fails to meet its greenhouse gas emissions targets, it will be penalized and pay bondholders a “step-up amount or premium payment,” the company said.

On Tuesday, Mighty Earth filed a complaint with the Securities and Exchange Commission that JBS has already failed to meet its emissions targets. Mighty Earth wants the agency to impose fines and sanctions on the Brazilian company, which it says has been involved in deforestation or neglect by its suppliers.

“We see JBS as one of three linchpin companies to transform the entire meat industry,” said Glenn Hurowitz, Founder and CEO of Mighty Earth. “It has the highest emissions of any company in agriculture to date.” The company’s methane emissions are higher than France, Germany, Canada and New Zealand combined, the group said.

JBS disputes the allegations. It said $7 billion would be “channeled” into sustainability. It plans to get enough solar power for all its Swift & Company stores, a US company it acquired in 2007. It has entered into a partnership with DSM, the European health and nutrition agency, to reduce methane emissions from its cattle herd. And the company plans more than $1 billion in capital spending over the next decade to reduce greenhouse emissions intensity by 30 percent.

Nicky Richardson, a spokeswoman for JBS, said in an email that the company hopes to reduce its Scope 3 emissions — climate impacts caused by suppliers and other entities that the company does not directly control.

“While we recognize the importance of measuring and ultimately reducing Scope 3 emissions, a widely-accepted method for measuring Scope 3 emissions does not currently exist for our industry,” JBS said in a filing.

The complaint came this week, as the SEC expected from April Unveiling of a new rule on climate-related disclosures. Environmental organizations hope that these rules will increase transparency by requiring companies to issue periodic reports on climate-related risks and their impacts on the environment.

In some cases, the SEC has already acted on this front. Last November, the SEC charged Goldman Sachs Asset Management with marketing two of its mutual funds and one of Goldman’s separately managed accounts, which featured environmental, social and governance investments. To settle the charges, GSAM agreed to pay a $4 million fine.

But the new SEC rules must address a broader issue of how companies calculate emissions from sources they don’t own or control.

“This is a great example of why investors desperately need standardized climate finance risk disclosures,” said David Shadburn, government affairs advocate for the League of Conservation Voters. “The company was able to benefit from a sustainability-linked bond and greenwash itself to potential investors.” He said 90 percent of JBS’s emissions come from its supply chain.

Deforesters are plundering the Amazon. Brazil is letting them get away with it.

JBS does not dispute the need for corporate action to slow climate change. In March 2021, the company commitment To achieve net-zero greenhouse gas emissions By 2040.

“Climate change is the most pressing issue facing society today and could negatively impact future generations if bold action is not taken immediately,” the company said separately in a “framework” released to bond investors in June 2021. “This issue also poses significant risks to our business, our producer partners, customers and consumers.”

The mighty earth argues for further revelation. It says that for a meat processor like JBS, the total animal slaughter figure is an “inevitable component” of the company’s total greenhouse gas emissions. Despite this, JBS has concealed its total number of animal slaughters since 2017, the group said.

JBS says it did not mislead investors. Richardson said in an email that its bonds were tied only to Scope 1 and 2 emissions and then only to emissions intensity, meaning emissions could rise even as the business did.

“Importantly, these bonds are not intended to finance the full decarbonisation process,” Richardson said. He said they were “clearly designed and structured” to deal with JBS facilities under the company’s control.

“We must start with components over which we have direct control and which have robust and reliable measurement guidelines,” the company said in a filing.

But the company is calling for time to stop the destruction of tropical forests caused by beef production. The company says it will not stop deforestation throughout its supply chain until 2035.

Takeaways from the Post’s investigation into deforestation in the Amazon

Last November, J.B.S admission It bought about 9,000 cattle from illegal farms in the Amazon. JBS said it was the victim of a fraud.

Founded in 1953 in western Brazil, JBS has expanded from Brazil and Argentina to the United States and beyond. Although not well known, it acquired Cargill’s pork business, Smithfield Foods’ beef business, and most of Pilgrim’s Pride’s chicken production.

In 2017, JBS was drawn into a financing and bribery investigation in Brazil. In the past five years, it has settled four price-fixing cases in the United States and paid $27 million for violations of the Foreign Corrupt Practices Act.

Mighty Earth says that JBS “selects what to disclose about its greenhouse gas emissions and to whom.”

The company said JBS is considering tapping the U.S. capital market for a public offering, but disputes over emissions could make that difficult.

“JBS wants US dollars from our capital markets,” said Kevin Galbraith, an attorney at Mighty Earth. “At the same time, they don’t want the regulatory scrutiny that would accompany it.”

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