Follow the Money to the Amazon

Who is profiting from the development that led to these fires?

The scale of the crisis is unfathomable: the skies of Sao Paulo darkened with smoke from the Amazon aflame thousands of miles away. A terrifying climate double whammy is upon us: As the forest burns, the trees release stored carbon in the form of greenhouse-gas-inducing carbon dioxide; and as these forests vanish, we lose the carbon-storing potential of the trees. It may seem there's nothing we in the United States can do, but the drivers of this destruction, including agribusiness and their financiers, are more closely connected to us than we may realize – heightening our responsibility to act.

In response to the global fury at these fires, Brazilian President Jair Bolsonaro has played up his nationalist rhetoric: What right does the rest of the world have to tell us what to do with our forests? But this is not about foreigners telling Brazilians what to do with their natural resources. This is about people around the world standing up for the Amazon's globally vital ecosystems in solidarity with indigenous people who call those forests home.

The most recent report from the Intergovernmental Panel on Climate Change made clear that the global food system is a significant contributor to the climate crisis, to the tune of nearly one-third of all emissions. Most of that is from what climate experts call "land use change," when, for instance, formerly biodiverse Indonesian peatland is converted into plantations for oil palm destined for the bellies of cars in the form of biodiesel fuel or the bellies of people in the form of processed foods. Or when carbon-rich rain forest is cleared to make way for cattle or soy destined for industrial meat operations around the world. Land-use change is on hyperdrive as the Amazon burns.

There are as many as 80,000 fires blazing in Brazil, more than half of them in the Amazon. The Brazilian minister of the environment may be tweeting that the fires are driven by "dry weather, wind, and heat," but experts disagree. "The blazes are surging in a pattern typical of forest clearing, along the edges of the agricultural frontier," Science magazine reported. This deforestation has been encouraged, in turn, by Bolsonaro, who has repeatedly said the Amazon should be open for business – for mining, logging, and agricultural purposes.

But this isn't just about one rogue head of state. To get to the underlying forces of much of the world's deforestation, from the lush Amazonian rain forest or the carbon-rich peatlands of Indonesia, you need to follow the money: Who is profiting from the development that led to these fires?

Earlier this year, the U.S-based nonprofit Amazon Watch, which has worked closely with indigenous groups in South America for over 20 years, published an analysis showing that "foreign investors have enormous influence over what happens in the Brazilian Amazon ... Big banks and large investment companies play a critical role, providing billions of dollars in lending, underwriting, and equity investment."

These investors have helped stoke the growth of the beef and soy industry in Brazil, irresponsibly and inexorably, regardless of their intention, putting the Amazon in the crosshairs of agribusiness. In recent years, Brazil has emerged as the world's largest exporter of beef and soy. Brazil accounts for roughly 20 percent of the global beef-export market. Together, Brazil and its nearest rival, the United States, account for 83 percent of the global soy export; its biggest markets are found in the EU and China. (As trade wars intensify between the United States and China, observers worry that demand for these Brazilian products will only grow.) Cattle ranching accounts for 80 percent of rain-forest destruction in Brazil, according to the Yale School of Forestry. As the soy-export market grows, so does demand for land to grow the commodity – another key driver of deforestation.

In its research, Amazon Watch found that just a handful of global financial companies have been profiting from these exports. The global agribusiness giants Archer Daniels Midland (ADM) and Bunge dominate Brazil's soy-trading market. Their major shareholders include Vanguard, State Farm, BlackRock, State Street, and T. Rowe Price. Collectively, these financiers own more than $9 billion of investments in these two companies. The privately-held U.S.-based Cargill and Netherlands-based Louis Dreyfus are the other two companies that dominate global grain trade. As for the banks providing lines of credit to these agribusiness giants, five provide the lion's share: BNP Paribas, JPMorgan Chase, Barclays, Bank of America, and Citigroup. Together, these banks "provided more than a billion dollars in credit apiece," according to Amazon Watch.

The major Brazilian beef companies – JBS, Marfrig, and Minerva – also have significant investments from foreign sources. JBS, for instance, has investments from Capital Group, BlackRock, Fidelity Investments, and Vanguard, while three banks – Santander, JPMorgan Chase, and Barclays – provided the company with nearly $1.2 billion in underwriting in the past five years.

Global companies do more than simply provide financing for agribusiness interests in Brazil. Consider the U.S.-based investment firm Blackstone (not to be confused with BlackRock), owned by a mega-donor to both Senate Majority Leader Mitch McConnell and President Donald Trump. According to The Intercept's Ryan Grim, Blackstone has been a major force behind huge agribusiness and infrastructure projects in Brazil, including a controversial highway and a major port – all in former rain-forest areas and all to expand agribusiness export markets. "Blackstone has also launched two funds dedicated to buying farmland in Brazil and other South American countries," Grim stated in his newsletter.

And yet Blackstone has tried to spin itself as climate-conscious, issuing a statement to The Intercept that read, in part, "Blackstone is committed to responsible environmental stewardship." Similarly, earlier this year, the BlackRock CEO Larry Fink urged his fellow executives to think beyond the bottom line. "Companies must demonstrate their commitment to the countries, regions, and communities where they operate," wrote Fink, "particularly on issues central to the world's future prosperity." Meanwhile, Fink has exulted the "significant opportunities" for investors in Brazil. And after Bolsonaro's election, he announced the expansion of BlackRock's operations in the country. (Keep in mind this is a regime that has openly celebrated the country's two-decade-long military dictatorship, has called land defenders "terrorists," and lamented ecological land protections that "hinder development.")

Other companies doing business in Brazil have publicly pledged to address deforestation in their sourcing, but reporting on the ground raises questions about whether these commitments are being realized. Cargill, for instance, has "pledged to eliminate deforestation" and ADM has committed to "no deforestation" in its "most critical supply chains." But the advocacy group Mighty Earth reported as recently as July 2019 that Cargill's trading is "closely associated with deforestation." And just last year, the grain-trading giants Cargill and Bunge were fined millions for buying soy from land that had been embargoed for illegal deforestation in Brazil. "The bad business practices of these leading actors send signals that their suppliers can continue to violate the law and continue to be rewarded with access to global markets," Christian Poirier of Amazon Watch told me.

I stopped eating beef decades ago, inspired by the concern for biodiverse hot spots and the evidence that industrial beef wastes precious land and other resources to grow feed for livestock, not for people. As the climate crisis worsens, dialing down demand for industrially raised meat is certainly crucial. But so is upholding the rights of indigenous peoples who protect the Amazon; exposing financial institutions that profit from rain-forest destruction; and condemning elected officials bankrolled by these institutions. Consumer action and regulation are needed to ensure that companies don't just make nice-sounding climate pledges but actually change their business practices up and down their supply chains.

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