The Chain: JBS Backtracks on Transparency as Reputation Risks Grow


October 15, 2019

Meatpacker JBS has stopped providing specific details that show the origins of its beef supply. JBS’ “Trust From Origin” website was intended to provide a greater level of transparency by giving the names of the farms where its sourced beef is produced. But the company’s information now provides only the general area of the source of supply instead of actual coordinates that can identify the exact location of farms, according to an investigation by ((o)) eco, a publication run by Brazilian NGO O Eco Association.

JBS’ system had previously provided sufficient data to determine whether JBS was purchasing from protected areas or areas that were illegally deforested. In response to ((o)) eco, JBS said that it is complying with relevant laws and that independent audits show 100 percent compliance with environmental and social standards for its operations in the Amazon. In late August, JBS’ CEO, while speaking in São Paulo, defended his company’s sustainability efforts by noting that it monitors 450,000 square kilometers in Brazil to ensure that it is not purchasing cattle from areas that are deforested.

JBS’ decision to limit transparency comes at a time the meatpacking industry in Brazil is seeing closer scrutiny for its associations with increasing deforestation risks in the Amazon. Besides JBS, other meatpackers such as Marfrig, Minerva, and BRF SA have been singled out for connections to deforestation and corruption. BRF SA, for instance, recently admitted to bribing food inspectors. Eighty percent of Brazil’s beef supply is consumed domestically, but the country is the largest beef exporter. The industry expects the export market to grow, particularly to China and the Middle East, providing financial incentives to increase its supply. Minerva, for example, is seeking a joint venture in China to boost beef sales there.

The decision also comes at the heels of the Amazon fire crisis that saw clouds of smoke throughout the region and alarming quantities of carbon released into the world’s atmosphere. These fires also burned within JBS’ supply chain. In total, NASA issued 145,482 fire alerts in September alone within JBS’ potential buying zone. The slaughterhouses in Colider (MT), Agua Boa (MT), and Araguaína (TO) saw the most alerts.

Figure 1: Fire alerts within the potential buying zones of selected JBS slaughterhouses

Source: NASA VIIRS, Imazon

Satellite analysis confirms that these fires also burned on farms that are known to supply JBS directly.

Figure 2: Fires at Fazenda Cabocla (Cumaru do Norte – PA) between 6 September 2019 – 11 September 2019

Figure 3: Fires at Fazenda Terra Verde (Canabrava do Norte – MT) between 18 September 2019 – 23 September 2019

JBS’ history of corruption

JBS has a long history of corruption and charges of deforestation in its supply chain. Chain Reaction Research (CRR) found, in investigative reports, that major Brazilian retailers – Cencosud, Carrefour, and GPA – were purchasing deforestation-linked products from slaughterhouses owned by JBS and other meatpackers. A Reporter Brasil investigation, published in September, found that JBS and Marfrig bought from farms in protected areas in Para, where the highest number of fires took place this summer. In 2017, JBS faced a number of scandals. The U.S. government banned imports of Brazilian beef after finding that supply from JBS and BRF SA did not meet safety standards. JBS stopped production in seven Mato Grosso do Sul plants as a result of legal reasons. IBAMA, Brazil’s environmental agency, suspended two of JBS’ processing facilities for sourcing cattle from illegally deforested areas.

This spotlight on JBS and other meatpackers increases reputation and financial risks for companies purchasing from farms in the Amazon. Investors have communicated to CRR that they plan to engage JBS and other major meatpackers on their roles in limiting deforestation in the Brazilian Amazon. NGO campaigns have highlighted the growing risk to the financial community in holding shares in or providing loans to companies associated with deforestation. Financial institutions may see reputation risks from links to deforestation. Global Witness criticized Capital Group and BlackRock, two major shareholders in JBS, for not being signatories to PRI’s investor letter that called on companies operating in the Amazon to ensure their operations do not increase deforestation. Amazon Watch, in a report earlier this year, called on banks and asset managers to formulate zero-deforestation policies and transparency initiatives in order for sectors tied to deforestation, such as the beef industry, to eliminate deforestation.

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