Tuesday 19th September, London – Civil society organisations from Brazil, the EU and US with expertise in anti-corruption, climate change, and human rights have today joined forces to issue a warning to more than 200 investors, urging them to steer clear of meat company JBS’s attempt to dual list its shares on the New York Stock Exchange.
The group’s core concern relates to JBS’s proposed corporate restructure as part of the dual listing, which would hand 85% of voting rights to the notoriously corrupt Batista family according to the company’s filing to the US Securities and Exchange Commission – a major increase on their current 48.8% voting entitlement as of August 2023.
The briefing warns that a Batista family power grab is a major risk to both investors and the planet, as it would majorly reduce the opportunity for minority shareholders to steer the company on issues like human rights protections or environmental impact.
The world’s biggest meat company, JBS, has a well-documented track record of its involvement in deforestation,
human rights abuses, and land grabs against Indigenous peoples.
Ashley Thomson, Senior US Policy Adviser said: “President Biden has pledged half a billion dollars to keep the
Amazon standing - but allowing meat giant JBS to list its shares on the New
York Stock Exchange would be like giving the fox the keys to the henhouse. This
deal is a risk to the Lula Administration’s target to stop deforestation by
“JBS's actions have immediate consequences for those that
experience the company’s deforestation and human rights first-hand, and
long-term impacts for our shared climate. Any governance changes that might
result in less oversight or transparency over this behemoth of a company should
raise a hundred red flags – especially since those in power have consistently
failed to correct JBS’s abysmal record over the decades.”
Global Witness’s Twitter bot – which tracks Amazon deforestation linked to JBS’s indirect supply chain – detected an average of 64 football pitches of deforested land every single week in 2022.
Back in 2017, the Batista firm J&F Investimentos – which holds the family shares in JBS – agreed to pay a record breaking US$3.2 billion in penalties in Brazil for its role in “the largest corruption inquiry in history”. Corruption probes saw Joesley Batista admit to bribing more than 1,800 politicians.
J&F Investimentos agreed in October 2020 to pay a further $256 million criminal penalty over charges it violated federal anti-corruption laws by using funds obtained through a bribery scheme to expand its U.S. operations.
The SEC described the Batista’s “profound failure to exercise good corporate governance” and “brazen misconduct” in a separate bribery settlement announced the same day.
This same family is now seeking to cement near total control the company, which posted US$71.5 billion revenues in 2022, (R$374.9 bn) and whose shareholders include BlackRock, Vanguard, Santander, Credit Suisse and HSBC.
The move could set back the Lula Administration’s ambition to
stop deforestation by 2030, as the voting rights of the company’s second
largest single shareholder, BNDES – the Brazilian Development Bank – could
decrease from over 20% to just 3.86 % under the deal.
Fifteen NGOs signed the briefing, which states: “JBS is choosing to adopt an even more complicated and opaque corporate structure which will likely make it harder for victims of human rights abuses and other stakeholders to seek remedy and redress by legal or other means, because of the many jurisdictions involved.”
Other key risks for investors raised in the briefing include:
- That JBS will need to rapidly clean up its supply chain and put in place better traceability systems to comply with incoming EU and UK deforestation laws, or its products may become illegal in those markets.
- JBS - which has vast greenhouse gas emissions - faces potential litigation risks from setting up in the Netherlands, which is described by experts as an emerging “front-runner” jurisdiction for climate-related lawsuits.
- That the company is already on the hook for $1.7 billion in potential fines and penalties from ongoing legal proceedings and complaints.
That JBS’ future ability to access credit may
be affected by financial due diligence laws recently contemplated by the EU and UK. Both jurisdictions are
conducting legal reviews to see if existing laws are strong enough to prevent
the financing of companies involved in deforestation.
JBS is already publicly traded on the São Paulo Stock Exchange, but the ability to sell its shares in New York could open up deep pockets of cash for the company to expand, risking yet more environmental damage.
The briefing urges financial service providers including lenders and investors to:
1. Suspend any support for and investment in JBS or its subsidiaries until they provide a credible plan to address their emissions and risk of deforestation and human rights abuses.
2. Raise public awareness of issues with the deal and JBS’s environmental and social record
3. Identify and provide any necessary
redress and remedy to communities affected by the financing of JBS’s operations
Thomson added:“JBS and its owners have already received multi-billion-dollar fines for corruption-related offences since 2017. Our briefing now reveals the company is on the hook for an additional $1.7 billion in potential fines and penalties from ongoing complaints.
“Those that already prop up JBS – like Bank of America, BlackRock, Citi and Barclays – are well aware of the global harm that their financing of the company causes. They must take accountability and compensate any victims of JBS’s supply chain harms.
“New financiers should steer clear while they can. Investors should suspend support until JBS puts forward a credible deforestation, human rights and emissions reduction plan.”
When approached for comment, JBS said the “dual listing proposal will create opportunities for our company, team members, shared communities and all stakeholders. The proposal accelerates our efforts to enhance corporate governance and transparency through adherence to Securities and Exchange Commission (SEC) standards and the formation of a majority independent board.”