Brazilian beef group JBS is facing mounting opposition to its planned US share listing from politicians and campaigners, with New York officials now accusing it of “greenwashing”.
The state’s attorney-general Letitia James announced she was suing the American arm of JBS last week, alleging that it misrepresented its environmental impact with “fake sustainability claims to boost sales”.
The lawsuit claims that the world’s largest meatpacker pledged to reduce its greenhouse gas emissions to “net zero” by 2040 despite not having a feasible plan to achieve this goal.
James’ office said she was seeking to stop JBS USA “from continuing these false and misleading marketing practices [and] pay disgorgement of all ill-gotten profits, and penalties”.
The case is another setback for the $10bn-valued food conglomerate, which revived long-held ambitions to list its shares on the New York Stock Exchange last July.
São Paulo-headquartered JBS is not planning immediately to raise money through the move, but hopes to access cheaper capital and lift its equity valuation.
However, the proposals have drawn attacks from green activists, who accuse the company of fuelling deforestation.
Cattle rearing is a leading cause of destruction of the Amazon rainforest, along with illegal logging and mining. A study by think-tank Imazon last year found that JBS was the beef processor most exposed to the risk of buying from deforested areas in the Brazilian Amazon.
“JBS’s climate and deforestation footprint continue to disrupt its core business plans and expose it to major legal risk,” wrote Glenn Hurowitz, founder of the not-for-profit Mighty Earth.
In parallel, a bipartisan grouping of US senators recently expressed “deep concerns” over the proposed listing in a January letter to the Securities and Exchange Commission.
It urged the financial watchdog to consider how access to US capital markets might strengthen JBS’s market position, “enhance its ability to engage in anti-competitive conduct and adversely impact US farmers and ranchers”.
The 15 politicians requested regulators closely examine the accuracy of the draft filing. “Should JBS fail to cure any such disclosure deficiencies, we would ask that the SEC decline to declare the company’s registration effective.”
They also highlighted environmental concerns and past corruption scandals, which led to settlements and penalties for JBS’s controlling shareholder, J&F Investimentos, the holding entity for the Batista family business empire.
In 2017, J&F agreed to pay a $3.2bn fine in Brazil after admitting to bribing politicians. The payment was suspended by the supreme court last year. It also pleaded guilty to US foreign bribery charges in 2020.
JBS is one of the top meat suppliers in the US, with brands including Pilgrim’s Pride. Globally it is a top supplier of beef, chicken and pork, as well as processed foods, with annual turnover above $70bn.
The company said it disagreed with the New York lawsuit, adding that it had monitored a network of 70,000 potential sellers across Brazil for almost 15 years.
“Suppliers are screened daily to ensure cattle that come from properties that have illegal deforestation, embargoed areas, or forced labour do not enter our supply chain. Today, more than 14,000 potential suppliers are blocked.”
JBS further said last year it achieved a target to eliminate deforestation from its direct sellers of cattle in the Amazon and was tackling the issue in indirect supply chains.
“We will continue partnering with farmers, ranchers and other stakeholders towards a more sustainable future for agriculture that uses fewer resources and reduces environmental impact, while feeding a growing global population.”
Its proposed dual listing structure will include Brazilian depositary receipts on the local B3 bourse, where its stock currently trades.
“[This] presents a compelling opportunity for stakeholders interested in the performance and sustainable growth of the company,” said JBS.
Chief financial officer Guilherme Cavalcanti recently said JBS was “answering questions” from the SEC and that the next filing would be after full-year earnings on March 26. “We are not in a rush because we don’t need to raise capital. We are here for the long term,” he added.
J&F said: “There is no substantial information available about the organisation behind this campaign [against the JBS share listing], its agenda, or its source of funding.
“We are fully compliant with all regulations and procedures established by authorities in the markets in which we operate.”
The listing proposal must be approved by minority shareholders.
JBS has previously faced disagreements with US asset managers: Vanguard and BlackRock, its fifth- and sixth-largest shareholders respectively, both voted against its board directors at last year’s annual meeting.
BlackRock said compensation committee members had “not responded to shareholder concerns regarding remuneration policies”, adding that the company “does not meet our aspirations of having adequate climate risk disclosures”. Vanguard also voted against JBS’s fiscal council members.
JBS is just one of a spate of large foreign companies that have recently sought new US listings in search of improved liquidity and higher valuations. Already this year Kazakh fintech Kaspi and British gambling group Flutter have joined US exchanges.
Additional reporting by Nicholas Megaw and Patrick Temple-West in New York
