Since the early seventies, concern has been growing about Amazonian deforestation. But despite decades of protest, the money has kept pouring in for new agricultural and infrastructure projects. The decimation has continued. Now, several financial backers have finally taken a stand and may pull funding for projects and industries that promote deforestation. By Jeremy Torr
The Amazon is losing millions of acres every year to cattle ranching. Courtesy WWF.
Norway, June 2020. Several major investment organizations have warned they could pull up to $3.75 trillion in assets from Brazilian companies if they continue to assist in the destruction of Amazonian rainforests.
“The dismantling of environmental and human rights policies are creating widespread uncertainty about the conditions for investing in or providing financial services to Brazil,” the group said in a letter delivered late June to Brazilian embassies in the U.S., U.K., Norway, Sweden, France, Denmark and the Netherlands. The group includes such heavyweight financial organizations as Norways’s Storebrand Asset Management, Finland’s Nordea, the UK’s Legal & General Investment Management Ltd, and Japan’s Sumitomo Mitsui Trust Asset.
Over recent months, concern has been growing at the lack of concern for the environment driven by the Brazilian president Jair Bolsonaro. The asset management arm of Nordea, has already put 100 million euros ($112m) of Brazilian government bonds in "quarantine" and has halted purchases of Brazilian sovereign debt until it sees an improvement in Brazilian rainforest conservation.
Bolsonaro was elected in 2019 on a platform of “unlocking the riches of the Amazon” and has brushed aside concerns for national parks and Indigenous reserves. He sacked the government space agency director when it released data that confirmed the vast extent of recent wildfires in the Amazon basin, and also accused environmental groups of setting the fires in order to increase the level of support for their cause.
Brazilian Environment Minister, Ricardo Salles. Courtesy RioTimes.
In May, a recording of Brazil’s environment minister, Ricardo Salles, revealed that he was keen on using the coronavirus pandemic as a cover and opportunity to slash environmental red tape while the public was distracted with more immediate matters.
And with the “burning season” approaching when land clearing and forest burning rise to an annual peak, Bolsonaro has put the army in charge of policing illegal logging and more. During the first month of Army operations in the rainforest, satellite date shows that deforestation grew 51% in Q1 2020 compared to 2019. All these warning flags have driven many fund managers to move towards cuts in funding in order to stop the rape of the Amazon.
One of the firms that could be affected by the boycott, US-based JBS Meatpacking, said in a statement that it tries hard to ensure that its suppliers conform to conservation standards, but that “JBS monitoring … covers more than 280,000 sq miles, an area larger than Germany,” which supposedly makes it hard to be certain about the provenance of its product. In fact, JBS checks all its direct meat suppliers, but none of its indirect suppliers. According to Prof. Holly Gibbs, an expert on Sustainability and Environment. issues at the University of Wisconsin–Madison, this loophole means ranchers that use cleared rainforest land for cattle but then sell them on to another, listed, rancher are not identified or blocked.
Prof Holly Gibbs says companies are increasingly stepping up to help rescue the Amazon rainforest. Courtesy H. Gibbs.
“In Brazil, cows are moved around to multiple farms before they reach the final fattening farm that sells directly to the slaughterhouse,” says Gibbs. “Cattle can be calved, reared, and fattened on properties with illegal deforestation and then simply moved to another “clean” farm — one without deforestation — just prior to sale,” she explains.
This has been despite ongoing protests from the likes of Greenpeace, Friends of the Earth and more. But the new economic big stick looks likely to have more effect. Although the president’s press office declined to comment, core Bolsonaro legislation to grant property deeds on illegally seized public land failed to pass recently. This was attributed to pressure from over 40 countries who said they would boycott Brazilian products if it was passed. Add to that the new pledge by investment funds to cut funding if the pillage doesn’t stop, and it could be that the Amazon will see a tailing off in illegal clearing – thanks to economic rather than environmental or public pressure.
“Every few weeks we see a major global corporation come forward and commit to removing deforestation from their supply chain,” says Gibbs.
“Multinational companies have long profited from the exploitation of tropical forests, but they’re now at the forefront of an environmental movement to reduce the deforestation caused by agricultural expansion.”