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Created on: 2019-09-11 10:24:31
Last update: 2020-11-25 09:07:31 BankTrack
Marília Monteiro Silva, Forest Campaigner
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listed on Brazil Stock Exchange
Marfrig's controlling shareholders are MMS Participações and its members. MMS Participações is controlled by Marcos Antonio Molina dos Santos and Marcia Aparecida Pascoal Marcal dos Santos, each with a 50% stake. Marfrig's complete shareholder structure can be accessed here.
Marfrig, established in 2000, is among the three major meatpackers in Brazil, along with JBS and Minerva. The company was the second-largest exporter of beef from Brazil in 2017. It is headquartered in São Paulo and has an operational base in 11 countries. Marfrig exports to over a hundred countries and is the second-largest beef producer in the world. It has a global slaughtering capacity of approximately 31.2 thousand heads/day.
Why this profile?
Marfrig's major sourcing regions are linked to high deforestation risks and CO2 emissions from cattle deforestation in the Brazilian Amazon and the Cerrado biome. Although the company admitted that 53% of its cattle in the Amazon are sourced from indirect suppliers, Marfrig still does not have a system for monitoring secondary and tertiary suppliers, and so does not exclude suppliers that continue to clear forests, and that are responsible for illegal cattle ranching in reserves and Indigenous territories.
What must happen
Banks should not renew or take on new financing agreements with Marfrig until and unless it fully eliminates deforestation and land rights abuses from its entire supply chain, as the company is highly implicated in deforestation in the Amazon and Cerrado.
Environmental and climate impacts
Animal agriculture Meat and dairy products have the greatest damaging effects on the environment. Animal agriculture - livestock and animal feed - is responsible for approximately 60% of food-related climate emissions and is the most significant driver of deforestation. Much of this forest conversion occurs in South America, particularly in the Amazon but also in dry woodland biomes such as the Gran Chaco – South America’s second-largest forest – and the Cerrado.
Deforestation Two agricultural activities, cattle ranching and soy production, are the leading drivers of deforestation in Brazil. Ranching alone leads to approximately 80% of Amazon deforestation, with 80% of Amazon forests cleared since 2014 being occupied by cattle. Brazil’s cattle herd exceeds 200 million heads and generates USD 123 billion annually. The economic and environmental implications of these commodities extend to the global market: Brazilian soy accounted for 14.3% of the country’s total exports, generating USD 31 billion in 2017 while cattle exports accounted for about USD 5.4 billion.In fact, Brazil leads the world in exports of both commodities. If the world continues to provide a market for these commodities, these industries will enjoy considerable economic incentives to aggressively expand activities to the detriment of forest protections and indigenous land rights.
Marfrig, JBS, and Minerva are the three leading beef processors in Brazil and have major operations in the Amazon rainforest, where they account for around 70% of all cattle slaughtered. Although Marfrig Greenpeace's Cattle Agreement to commit to zero-deforestation, it did not sign the Term of Conduct Adjustment (TAC) in the state of Pará, meaning that it does not deliver audits to the Federal Ministry in Brazil. Marfrig has used a voluntary self-declaratory mechanism for its suppliers called a Request Form of Information (RFI) since 2013. 53% of its cattle in the Amazon are sourced from indirect suppliers. However, Marfrig still does not have a system for monitoring secondary and tertiary suppliers, and so does not exclude suppliers that continue to clear forests, and that are responsible for illegal cattle ranching in reserves and Indigenous territories. The company says that it has no systematic verification of indirect suppliers amid “the lack of a nationally implemented public traceability policy [which] makes it difficult to implement such a verification.
Six banks - Santander, BNP Paribas, BNY Mellon, Itau Unibanco, Caixa Economica Federal and Crédit Agricole - hold equity investments in Marfrig. See below for more details.
Three banks - HSBC, Santander and Morgan Stanley - provided underwriting services to Marfrig between 2013 and 2018 totalling USD 2.4 billion. See below for more details.
Brazilian development bank BNDES holds 33.75% of Marfrig's shares.
Several investment funds hold equity shares in Marfrig. See below for more details.