The growing financialization of Brazilian agribusiness is enabling foreign investment in the industry most responsible for deforestation.
DEFORESTATION IN BRAZIL, including of the Amazon, has grown at an alarming clip since 1985, denuding an area just shy of the size of Texas and Florida combined. Only one phenomenon has seen a larger geographic takeover since Brazil’s military dictatorship came to an end: agriculture. New farms have taken over an area only slightly larger. The correlation is no coincidence.
The steady drumbeat of growing agriculture and deforestation has accelerated in recent years and is now poised to reach a more frenzied pace, driven in part by the search for investment returns by Americans who put money into index and mutual funds for their retirement.
Far-right President Jair Bolsonaro and his congressional allies have implemented policies that they hope will entice even more foreign investors to look past the smoldering rainforest ashes to focus on the opportunities for tax-free profits in the $359 billion agriculture industry.
Major international financial firms, eyeing a global commodities boom, have been eager to grow their agricultural portfolios in places like Brazil, the world leader in soy and beef production. Firms like BlackRock, Vanguard, and JPMorgan have pumped $157 billion into firms directly tied to deforestation in the five years since the Paris climate agreement was signed.
Deforestation is pushing two interconnected biomes — the Amazon rainforest and the Cerrado tropical savanna — dangerously close to the point of environmental collapse. The likely resulting desertification, continentwide drought, and gargantuan carbon dioxide releases would be catastrophic, scientists warn.
Dozens of the world’s largest investors have formally partnered with the climate change-denying Bolsonaro government on agriculture. Through the Climate Bonds Initiative, or CBI, an organization funded in part by global banks, they have rebranded some of the world’s most ecologically and ethically problematic companies as “green,” “sustainable,” and “climate-aligned” investments — meaning purportedly socially conscious 401(k) retirement funds can buy in. Stocks and bonds of most of Brazil’s agribusiness leaders are publicly traded on Brazilian and U.S. markets.
Even nominally “green” investments, however, can finance more deforestation. Most of the 56 percent of American households who own stock, mainly through index and mutual funds that spread investments across many assets, are financing companies directly and indirectly responsible for destroying Brazil’s tropical forests, pushing the Earth ever closer to an avoidable climate apocalypse.
The rising influence of global finance, a process known as financialization, in Brazilian agricultural practices can exacerbate social problems in the affected regions. Jennifer Clapp, a political economist at the University of Waterloo focused on global food security and sustainability, said, “This kind of financial investment has also been associated with an expansion of production in lands not previously under cultivation, which can lead to deforestation, soil degradation, and biodiversity loss.”
Big Agro, Big Impacts
In July 2019, Bolsonaro dismissed environmentalism as a “psychosis” — “only vegans,” he said, care about environmental issues. As he spoke, huge swaths of the Amazon were on fire. Land grabbers illegally cut down forests and burned them to convert them into new cattle pastures. At least 15,000 square miles of the Amazon rainforest have been destroyed under Bolsonaro’s watch, a much higher rate than under recent past administrations.
Major meat processors like JBS, Marfrig, and Minerva do not trackwhether the cattle they slaughter and export is raised on illegally deforested land, even though the methodology exists to do so. JBS, the world’s leading animal protein producer, also leads the Brazil soy and cattle deforestation tracker by environmental group Mighty Earth, with nearly 250,000 acres deforested from March 2019 to March 2021, three-quarters of which researchers labeled as “possibly illegal.” Joining them high on the list are Bunge and Cargill, U.S.-based producers of soy, 80 percent of which is used as animal feed.
Due to lax enforcement and a permissive legal system, illegally produced goods systematically mix into supply chains.[…]
Continue reading: How Your 401(k) Is Helping Destroy the Amazon Rainforest