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Article

7 Jan 2022

Author:
Earthsight

Brazil: Norwegian Government Fund places Marfrig under observation “due to risk that the company contributes to serious environmental damage”

"World’s largest sovereign wealth fund finds global beef giant guilty of driving illegal deforestation in Brazil", 07 January 2022

...[T]he Norwegian Government Pension Fund Global, the world’s largest sovereign fund, placed Brazilian multinational Marfrig under observation “due to risk that the company contributes to serious environmental damage”...

Painstaking supply chain research commissioned by the Council found that between 2016 and 2019 Marfrig, the world’s second largest beef producer, with revenues exceeding $12 billion a year, had purchased cattle from embargoed farms throughout Brazil. ‘Embargoed’ farms are those where illegal deforestation has been uncovered by authorities. Strikingly, the Council identified embargoed properties in the supply chains of every single one of Marfrig’s slaughterhouses in Brazil, not only those within the Amazon region.

In addition to uncovering fresh evidence of dirty cattle in Marfrig's supply chains, the Council’s report was also damning in its assessment of the firm’s efforts to clean up. They state that Marfrig “has taken an extremely long time to react” as it is only beginning to implement systems to monitor its entire supply chain more than 12 years after promising to do so...

One of the Council’s main criticisms against the company reiterates what Earthsight and several other organisations have said for years. Marfrig and other meatpackers have been reluctant to adopt the necessary measures to monitor their indirect suppliers, the farms that sell cattle to the ranches that then supply the slaughterhouses...

Marfrig has been repeatedly exposed for links to illegal deforestation and other violations in its supply chains in the two biomes...

The Norwegian fund’s decision, while stopping short of excluding Marfrig from its portfolio for now, is a potentially important step...The action on Marfrig is the first made by the Council relating to beef, by far the biggest driver of deforestation globally.

A key question now is whether the fund will extend its investigation to other risky firms in which it still has investments. It holds a significant stake, for example, in BRF, another large Brazilian meatpacker which has been found to be at high risk of association with deforestation through its purchases of cattle and soy for feeding pigs and poultry...

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