Nordic Fund Divests $45 Million From JBS on Amazon Concerns

The world’s top meat producer is starting to see blowback from investors over its approach to Amazon deforestation.

Nordea Asset Management said Tuesday it’s divesting from Brazil’s JBS SA “over its ties to farms involved in Amazon deforestation” after a new report which suggest the meat giant has illegal ranchers indirectly in its supply chain.

“We have really seen quite disappointing performance across the environmental, social and governance spectrum“ of the company, Eric Pedersen, Nordea’s Head of Responsible Investment, said by email.

Nordea also cited JBS’s response to the Covid-19 outbreak and its past corruption scandals in Brazil.

JBS declined to comment on the divestment, but the company said it’s unfortunate Nordea didn’t contact the meat producer so that it could present all its actions and measures reinforcing its commitment to sustainability.

The company also reinforced its commitment to a supply chain that’s free of links to deforestation and said its governance standards have improved in recent years. Regarding the coronavirus outbreak, JBS said it has implemented a strong protocol for workers’ safety while ensuring continued production of food.

Amazon deforestation has surged in the past two years under the government of Jair Bolsonaro, who defends opening up the world’s largest rainforest to further agriculture and mining. Earlier this month, after foreign investors and companies expressed environmental concerns, the government decided to put a four-month ban on fires in the region. Still, Bolsonaro and his administration often put the blame on political opponents, alleging that they spread lies about deforestation, even though global scientists and experts attest to destruction of the ecosystem.

Nordea, which has €230 billion ($270 billion) under management, had about $45 million invested in its JBS stake, and buy orders have been halted since last year, according to Pederson.

“The latest news on illegal cattle seems to just confirm” poor practices on the part of JBS, Pederson said in a reference to a story published Monday by The Guardian that linked the meat producer to an illegal cattle rancher as its indirect supplier.

Nordea is part of a group of institutional investors managing about $3.7 trillion in assets that have pressured Brazil to do more to protect the environment and protect the rights of indigenous groups in the Amazon.

The group wants to “make sure that the investors’ increasing emphasis on sustainability risk is understood,” Pederson said.

©2020 Bloomberg L.P.

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