Revealed: UK banks and investors' $2bn backing of
meat firms linked to Amazon deforestation
Investigation uncovers ties between financial
institutions and three Brazilian firms connected to environmental destruction
Emma
Howard, Andrew Wasley and Alexandra Heal
Published
onThu 4 Jun 2020 09.00 BST
British-based
banks and finance houses have provided more than $2bn (£1.5bn) in financial
backing in recent years to Brazilian beef companies which have been linked to
Amazon deforestation, according to new research.
Thousands of hectares of Amazon are being
felled every year to graze cattle and provide meat for world markets.
As well as
providing financial backing for Minerva, Brazil’s second largest beef exporter,
and Marfrig, its second largest meat processing company, UK-based financial
institutions held tens of millions of dollars worth of shares in JBS, the
world’s largest meat company.
All three
meat companies have been linked to deforestation in their supply chains, though
they say they are working to monitor their suppliers and mitigate risks.
Marfrig, a
Brazilian meat company that has supplied fast-food chains around the world, was
found to have bought cattle from a farm that had been using deforested land
last year.
JBS remains
unable to monitor a significant proportion of its suppliers despite operating
deep in the Amazon, while last year Marfrig admitted that more than half of the
cattle it slaughtered originated from indirect suppliers that it could not
monitor.
According
to a joint investigation by the Guardian, Unearthed and the Bureau of
Investigative Journalism, financial data between January 2013 and May 2019
shows that HSBC underwrote $1.1bn of bonds for Marfrig and $917m for Minerva.
They also held nearly $3m in JBS shares.
Schroders
held $14m in Marfrig bonds and $12m in Minerva bonds, while Standard Life
Aberdeen held $10m in Marfrig bonds and $3m in JBS shares. Prudential UK had
$23m in JBS shares and $5m in Minerva bonds.
Banks
frequently hold bonds and shares on behalf of clients who invest through their
asset management funds.
Other
European-based institutions provided an additional $2.1bn of backing. Santander
underwrote $1.4bn worth of bonds across the three companies. Deutsche Bank
underwrote $69m worth of Marfrig bonds and loaned JBS $57m.
European
institutions also held significant shares in JBS: Crédit Agricole, Deutsche
Bank and Santander invested $37m, $12m and $7m respectively. All data was
correct as of May 2019.
The
European Commission is considering new financial reporting rules in light of
the coronavirus crisis that would require banks, insurance firms and listed
companies to disclose their exposure to biodiversity loss and pandemic risk.
Scientists have warned that deforestation is increasing the risk of new
diseases emerging.
Some of the
financial institutions told the Guardian they were engaging with the three
companies over deforestation, and could reconsider their support if they saw
insufficient progress.
The three
meat companies say they are confident that the farms their slaughterhouses
directly purchase cattle from are not involved in deforestation, but they also
accept they cannot know the origin of some animals that have passed through
other farms beforehand.
In a
statement, JBS said it had blocked thousands of direct suppliers for breaking
rules concerning deforestation and was working with the Brazilian government
and industry on solutions for monitoring indirect suppliers.
Minerva
said there was “no accessible and reliable data and statistics on the complete
cattle traceability chain” in Brazil and that it was evaluating a new tool
developed by the National Wildlife Federation and University of Wisconsin to
monitor indirect suppliers. Marfrig said it was developing a tool to combat the
risk of buying from indirect suppliers which it cannot monitor.
“No UK
financial institution should be profiting from the destruction of rainforest or
other precious habitats in Brazil or elsewhere. If the government’s claims to
global leadership on climate are to have any meaning at all, it must stop
turning blind eye to the links between UK banks and deforestation, by
introducing strong regulation, harsh penalties and strict provisions on full
public transparency of environmental and social impacts of all investment
portfolios,” said Caroline Lucas, Green MP for Brighton Pavilion.
In response
to the findings, a spokesperson for Aberdeen Standard Investments said: “There
are definitely shortcomings in supply chain monitoring for the entire beef
industry in Brazil, but these practices are improving across the industry and
investor activism plays an important role in this development ... At present,
we remain invested but this may change depending on a number of factors.”
Schroders
said it was in dialogue with both Minerva and Marfrig and that, “if we did not
see these signs of progress, we would certainly consider changing our
recommendations for these companies.”
Deutsche
Bank said it did not finance activities where there is clear and known evidence
on clearing of primary forests, areas of high conservation value or peat lands,
illegal logging or uncontrolled and/or illegal use of fire. Crédit Agricole
said it did not finance projects on deforested land with high biodiversity
value.
Prudential
UK said it was actively engaging with companies operating in the Amazon region
to find solutions. HSBC said it conducted reviews of clients for their
commitment to sustainable business practices. Santander said it conducted
annual reviews of more than 2,000 clients in Brazil, including those that are
large soy producers, soy traders and meatpackers, especially about their supply
chain.
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