Nearly a year ago over 100 countries pledged to put an end to deforestation by 2030 at COP26 in Glasgow. We track progress (the lack thereof) using our Materiality Model for one of the most criticized companies when it comes to deforestation, JBS.
As we get ready for the start of Climate Week on September 19th, we look to our ESG Safeguard platform to examine some of the companies contributing to deforestation and which ones have made strides in the past year to address this issue. At COP26 in Glasgow, deforestation was a key issue that many countries agreed to address.
The company we are digging into today is Brazilian meatpacker JBS (JBSS3:BR), and from the time series below there are a few important items to unpack.
Primarily, JBS’ commitment to end deforestation by 2025 only refers to “illegal deforestation.” This does not address the legal deforestation currently allowed. Furthermore, this commitment was made over a year ago, and there has been little progress to address the issue. According to Bloomberg, as of May 2022 only 19 of 675 companies involved in cattle, timber, and palm oil, have set targets to put a stop to deforestation.
Around Climate Week last year, JBS issued a Sustainability Bond with a link to the Sustainability Roadmap for the company. A review of The Sustainability Page this year reveals no mention of deforestation. Instead, the focus is on energy and water use in the Environmental lens. Recent endeavors by the company include moving towards renewable energy and pledging to become Net Zero by 2040.
Outside of the Environmental lens, JBS ranks 204th out of 371 companies in the Food Products category for overall ESG Sentiment on our Platform since 2020. The average ESG score for Food Products is 30.6, JBS scores a -53.9 since 2020.
Furthermore, the Sentiment differential between self reported content and external news is -112.9 putting them in our Severe Greenwashing Risk category.
The risk is largely due to the heavy slate of controversy the company has faced in recent years, ranging from failing to protect workers during the pandemic to cyber attacks, and most recently big lawsuits levied by their own distributors over price-fixing. This case has been settled recently with JBS paying upwards of $25 million.
This is all in addition to the lack of action on deforestation. From a macro context, inflation has caused beef prices to rise, reducing demand for cattle products in many markets, making the price-fixing issues all the more puzzling, one would think if the company could flood the markets with cheap beef, now would be the time to do so rather than keep prices artificially high as their distributors claim.
JBS shares are down 20% since January, reflecting reduced demand due to inflation, along with the slew of controversies the company has faced in recent years. While deforestation may be the primary ESG issue the company faces, looking at other pitfalls the company has experienced points to a larger picture of how the company does business.
The market isn’t interested in another ESG story. Investors want to understand what companies are actually doing—what companies are investing. What commitments are they making towards these investments, and what milestones are they reaching? This data needs to be in real time, not just from stale annual CSR reports. This webinar, featuring our materiality dataset, demonstrated how investors can cut through the greenspeak to understand what companies are actually doing when it comes to ESG for Climate Week 2022. Watch Recording
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This communication does not represent investment advice. Transcript text provided by FACTSET and S&P Global Market Intelligence.
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