Updated with response from JBS on Oct. 2.
Eighteen investors managing $22 billion have co-signed a letter asking the US financial regulator to stop Brazilian meat giant JBS from listing in the US following concerns around transparency that are refuted by the corporation.
Signed by Green Century Capital Management, Trillium Asset Management, and As You Sow, the letter urged the Securities Exchange Commission (SEC) to decline JBS’s listing attempt.
However, JBS said allegations in the letter about its transparency on Scope 3 emissions were “patently false”.
“JBS publishes its sustainability report annually, which highlights the company’s environmental, social and governance strategy, and its impact working with multiple stakeholder groups around the world, in addition to all three scopes of its GHG emissions,” it told Carbon Pulse (see full response below).
JBS has been trying to list its shares on the US stock exchange for the last decade to open up the potential for more investment, but has faced repeated delays, in part due to environmental concerns. It is already listed on the Brazilian stock exchange.
“Another failed attempt to initial public offering (IPO) in the US would reinforce concerns about JBS’s governance, integrity, and environmental impact, potentially discouraging future investors,” Alexandria Reid, head of forests at NGO Global Witness, told Carbon Pulse.
JBS removed ‘zero tolerance’ for invading protected areas from its recent SEC application, according to an investor briefing led by Global Witness and supported by advocacy group Mighty Earth.
The omission raises concerns as JBS has been recently linked to Indigenous land invasions and deforestation in Brazil, according to the activist organisations.
The billionaire Batista family would hold almost 85% of voting rights if it listed in the US, up from 49% in June, limiting investor influence on environmental decisions, they said.
The concentration of power raises governance concerns, while the deal structure weakens protections typically available to investors, they said.
“While technically legal, such extreme supermajority voting rights would amount to an unprecedented governance issue,” Annie Sanders, director of shareholder advocacy at Green Century Capital Management, told Carbon Pulse.
“This move would severely limit investors’ ability to uphold their fiduciary duty as well as influence the company on pressing global risks such as climate change and nature loss,” said Sanders.
“A BAD SIGNAL”
JBS has sidestepped its ‘Net Zero by 2040’ target, now calling it ‘Climate reduction goals by 2040’, the investor briefing said.
Furthermore, the Science-Based Targets initiative has delisted JBS from the platform, removing its net-zero target.
“We believe the SEC must scrutinise this plan closely to protect both US investors and the environment, not least because it sends a bad signal to the market that a company operating in a high-risk sector can dilute its human rights protections so far into the IPO process,” said Reid.
JBS RESPONSE
JBS said it sees the US listing as an opportunity for sustainable growth, while maintaining robust disclosures.
“The dual listing will further increase scrutiny of JBS’s already robust governance,” it said.
“The F-4 filed by JBS with the SEC for the registration of the company’s debt was declared effective in July 2023.” The F-4 is a form to facilitate the registration of certain securities by foreign issuers.
“As a result, today JBS is a public reporting company in the US and subject to the information and reporting requirements of the US Securities Exchange Act of 1934, and other US federal securities laws, as well as the compliance obligations of the Sarbanes-Oxley Act of 2002.”
“JBS has more than a decade-long history of measuring, monitoring, and recording direct and indirect GHG emissions and voluntary reporting.”
“Our emissions are calculated based on international standards. We have carried out a comprehensive analysis of the company’s global inventory, including Scopes 1, 2 and 3, and obtained third-party limited assurances for our global scope 1 and scope 2 GHG inventories.”
“Our detailed disclosures can be found at jbsesg.com. In addition, since FY 2015 JBS has also reported its GHG emissions to the CDP, the globally-recognised industry standard and platform for companies to report GHG emissions.”
The investors who signed the letter are:
- Green Century Capital Management
- Sisters of St. Francis of Philadelphia
- Newground Social Investment
- Figure 8 Investment Strategies
- Trillium Asset Management
- Future Group
- Maryknoll Sisters
- Ethos Foundation
- As You Sow
- SharePower Responsible Investing
- Natural Investments
- Transformative Wealth Management
- Impact Investors
- Farm Girl Capital
- NorthFork Financial
- Greenvest
- Adasina Social Capital
- Horizons Sustainable Financial Services
Investor interest in nature ramped up in this year’s voting season, boosted by some of the first calls for standard-aligned biodiversity disclosures, with financiers hailing a surge in awareness despite rising corporate resistance.
By Thomas Cox – t.cox@carbon-pulse.com
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