Brazil’s JBS, the world’s largest meat firm, has been accused of greenwashing by NGO Mighty Earth over the company’s green bonds.
Washington-based Mighty Earth has filed a “whistle-blower complaint” with market regulator the US Securities and Exchange Commission (SEC) over what the NGO argues are “fraudulent” claims made by JBS for its sustainability-linked debt, or green bonds. It has called on the SEC to launch an investigation.
The NGO’s main beef is that the meat giant issued the bonds – US$3.2bn worth in four separate tranches since 2021 – against its goal to achieve zero greenhouse gas emissions by 2040. However, Mighty Earth argues the JBS target emits Scope 3 emissions generated through the supply chain and suggests the company’s emissions have actually increased in “recent years”.
Mighty Earth, headed up by CEO Glenn Hurowitz, asserts JBS’s Scope 3 footprint accounts for 97% of its total emissions. It also accuses the listed business of omitting information about the number of animals the company slaughters each year, “denying US investors vital information to make fully informed decisions about JBS’s net zero and climate-related claims”.
JBS was clear in its sustainability-linked bonds announcements the debt instruments were issued against a “commitment” to reduce Scope 1 and 2 emissions by 30% by the end of this decade as part of a wider goal to reach net zero by 2040, which includes Scope 3.
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The Paris-based Organisation for Economic Co-operation and Development (OECD) states funds raised from green bonds should be “exclusively applied to finance or re-finance, in part or in full, new and/or existing eligible green projects”.
JBS said in its latest issuance announcement on the green bonds: “The company intends to use the net proceeds to extend its debt maturity profile by refinancing shorter maturity indebtedness, in addition to covering other general corporate purposes. The ISS ESG agency was the SPO (independent opinion, Second Party Opinion) in the financial operation.”
“Lack of safeguards”
Hurowitz argued in a statement this week: “JBS seduced investors with sustainability pledges but those pledges had practically zilch to do with the actual source of JBS’s supersized climate impact.
“The fact that the meat company arguably responsible for more climate pollution and deforestation than any other in the world was able to raise $3.2bn through green bonds is an indictment of the utter lack of safeguards in the world of ESG investing. JBS’s success in duping investors shows that SEC needs to step in right away to set clear rules about what does or doesn’t count as sustainable.”
JBS provided a statement to Just Food in which it said: “It is important to highlight that while the bonds that were issued are consistent with our global sustainability strategy, they are not intended to fund the entire decarbonisation process as part of our net-zero commitment.”
The net-zero 2040 target, revealed in March 2021, includes all three emissions scopes, JBS added, explaining “the company is working with expert, internationally-recognised consultants to complete our global Scope 3 emissions calculation” with a view to submission in 2023.
Hurowitz drew attention to the Second Party Opinion – the ISS ESG Agency – which stated, according to the CEO, that the bonds “were not material to the whole corporate value chain as the KPI does not include Scope 3 emissions”.
JBS countered: “At the time the bonds were issued, it was not possible to include Scope 3 because of calculation limitations, as ISS ESG, the Second Party Opinion” acknowledged by stating: ‘While JBS acknowledges the importance of measuring and ultimately reducing Scope 3 emissions, a widely-accepted method for measuring Scope 3 emissions does not currently exist for its industry.’”
The Mighty Earth complaint with the SEC also criticises JBS for what the NGO argues is its record on animal slaughter and deforestation.
The NGO statement continued: “Our complaint – the first against a sustainability-linked bond – highlights that since 2017 JBS has concealed the true scale of its emissions footprint by failing to disclose the number of animals it slaughters every year, which are the primary source of its greenhouse gas emissions.
“These Scope 3 emissions relate to animals in its supply chain – from deforestation, methane, and land use change to rear cattle on the thousands of farms and feedlots, which directly and indirectly produce meat for JBS in Brazil, the United States and beyond.”
JBS refutes the claims. The company added: “JBS’s ambition is, and has always been, a deforestation-free supply chain in all the biomes in which we operate. For over ten years, we have made extensive investments in a geospatial monitoring system to ensure compliance with our strict social and environmental criteria for all purchases.
“We have also been totally open about the industry-wide challenge of monitoring the supplier’s suppliers and about our efforts to overcome it. Whenever a case of a producer that is not respecting our criteria is discovered, the company acts quickly to block the supplier and improve its control systems.”