Report links financial giants to deforestation of Paraguay’s Gran Chaco

Guireja, an Ayoreo woman, sits outside her house that she was forced to abandon as a result of logging in Paraguay. Image by Survival International.

The Gran Chaco is also home to large mammals, many of them threatened species, such as jaguars (Panthera onca), Chacoan peccaries (Catagonus wagneri) and lowland tapirs (Tapirus terrestris). The boom in Paraguay’s meat and dairy industries has contributed to loss of habitat for many of these species, with few public policies focused on the sustainable conservation of the region’s important biodiversity hotspots.

“The many complaints that we make about illegal logging in our territories are not accepted or taken into account by our institutions,” Romero told Mongabay. “The greatest evil we have in the country is precisely corruption, and it covers all public institutions.”

In response to the allegations in the Global Witness report, Minerva said “there is no illegal deforestation, use of labour analogous to slavery or child labour and environmental embargoes in the Minerva Foods supply chain.”

It also denied any relationship with Yaguarete Porá, saying the supplier is “not registered in the Minerva Foods database,” and that there “were never purchases of the referred rancher.”

However, in Yaguareté Porá’s global impact report published in 2021 and seen by Mongabay, the company reports having sold products to Athena Foods, Minerva’s Chile-based subsidiary.

Frigorífico Concepción did not respond to requests for comment.

Cattle ranch in Gran Chaco. Image by Peer V via Wikimedia Commons (CC BY-SA 3.0).

Read more: Paraguay weighs natural gas drilling in Médanos del Chaco National Park

No pulling back

According to the report, even after reports of deforestation in the supply chains of Minerva and Frigorífico Concepción were made public by Earthsight in 2020, financial institutions maintained or even “accelerated” their investments in the two companies.

“Rather than there be any kind of indication of banks pulling back, we found examples of these banks doubling down and increasing their investments,” Veronica Oakeshott, head of forests campaign at Global Witness, told Mongabay.

The value of Santander’s holding increased by 1,000%, far outpacing the stock price increase and suggesting they bought more shares between 2020 and 2022. It also earned nearly $500,000 providing financial services such as bond underwriting to Minerva, as did HSBC and J.P. Morgan.

Santander was the only bank that responded to Mongabay, stating it doesn’t “knowingly finance any activity that leads to illegal deforestation or incursions into Indigenous territories.”

During the same period, Dutch pension fund APG and French bank BNP Paribas have seen the value of their shares in Minerva nearly double, at a time when Minerva’s share price increased by a similar amount. APG’s shares increased in value from $7 million to $13.7 million, while BNP’s increased from $740,000 to $1 million. Neither company provided comments in response to Mongabay’s requests.

Deforestation alerts between 2001 and 2020 in and around PNCAT are shown in pink.

Both BlackRock and Vanguard have maintained their investments in Minerva since the Earthsight report but the value of their shareholdings have slightly decreased by a few hundred thousand dollars.

However, both American companies have maintained million-dollar and increased investments in the meatpacking company since deforestation by Yaguarete Porá in the PNCAT was ruled illegal in 2018. Between September 2019 and December 2022, BlackRock’s shareholding in Minerva increased nearly fivefold to $4.78 million, far outpacing the company’s stock price increase and suggesting they bought more shares between 2019 and 2020.

During the same period, U.S. investment manager Vanguard saw the value of its shares in Minerva almost double, from $4.54 million to $8.56 million, at a time when Minerva’s share price increased by a similar amount.

When approached for comment, Vanguard told Mongabay that its investment team “engages with portfolio company boards and executives to understand how they oversee, address and disclose financially material risks, including environmental risks such as deforestation.”

It added that “Vanguard is a signatory to CDP Forests, an effort to advocate for better disclosure of material deforestation risks by public companies.”

Claudio Benitez (second to the left), leader of the Ñu Guasu Indigenous group, poses among other men from his community. Image by Matteo Fabi.
U.N. biodiversity commitments in the air

At the United Nations Biodiversity Conference (COP15) in Montreal last December, many companies pushed for a new global agreement that would require large and transnational businesses and financial institutions to assess and disclose their biodiversity risks, impacts and dependencies throughout their value chains and portfolios.

BlackRock was one of the organizations that pushed self-reporting measures. Bank of America, which underwrote a $285 million bond for Frigorífico Concepción in 2021, the year after Earthsight’s report linked it to deforestation, also pushed for mandatory reporting of risks, dependencies and impacts for the private sector. Neither company responded to requests for comment.

“This report highlights the need to urgently transform our economic system by including the true value of nature and people alongside financial performance in decision-making and disclosure,” said Eva Zabey, executive director of Business for Nature, a coalition of businesses and conservation organizations.

“Businesses must act now to assess and disclose their material impacts and dependencies, set meaningful science-based targets, transform their business models by avoiding and reducing negative impacts, regenerate and restore nature and advocate for more ambitious public policies.”

Children playing in Chaidi, one of the 10 communities of the Ayoreo people that inhabit this area of Chaco in Paraguay. Image by Pánfilo Leguizamón.

Nearly all of the financial companies named in the report are signatories to the Net Zero Asset Managers initiative or members of the Net-Zero Banking Alliance (the only exception is Vanguard, which left the asset managers’ initiative at the end of last year). Both schemes require members to commit to reaching net-zero greenhouse gas emissions by 2050, as well as set targets to eliminate and reverse commodity-driven deforestation from their portfolios, according to Global Witness.

Critics say that because these commitments are voluntary, they fail to guarantee appropriate action.

“The continued exposure of these financial giants to deforestation and human rights abuses, despite their voluntary commitments to net zero, shows the need for governments to put laws in place to end the problems linked to these portfolios,” the report says.

“There have been a great number of voluntary agreements over the years,” Oakeshott added. “Time after time, unfortunately, they don’t meet their targets.

“This is not about information — information which is within the public domain. It’s about mechanisms to incentivize action,” she said. “And if those are not profit mechanisms, then they have to be legal mechanisms.”

Citations:

Milán, M. J., & González, E. (2022). Beef–cattle ranching in the Paraguayan Chaco: Typological approach to a livestock frontier. Environment, Development and Sustainability, 1-26. doi:10.1007/s10668-022-02261-2

Mereles, M. F., Céspedes, G., Cartes, J. L., Goerzen, R., De Egea-Elsam, J., Rodríguez, L., … Cacciali, P. (2019). Biological corridors as a connectivity tool in the region of the Great American Chaco: Identification of biodiversity hotspots in the ecoregions of the Paraguayan Chaco. Research in Ecology, 2(1). doi:10.30564/re.v2i1.1324

Banner image: Jaguars still roam the Chaco, but they require large tracts of contiguous forest to survive and reproduce. As forest is destroyed, fewer of these intact landscapes exist. Photo by Eduardo Merille via Flickr (CC BY-SA 2.0).

Related listening from Mongabay’s podcast: We look at how agroforestry, an ancient Indigenous technology that is increasingly being adopted by farmers around the world, can help solve many of the major environmental issues we’re facing, from deforestation and biodiversity loss to climate change. Listen here:

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Banking, Banks, Beef, Corporate Environmental Transgessors, Corporate Responsibility, Corporate Role In Conservation, Corporations, Deforestation, Drivers Of Deforestation, Environmental Law, Finance, Food, Food Industry, Forests, Human Rights, Indigenous Communities, Indigenous Culture, Indigenous Peoples, Indigenous Rights, Land Rights, Law, Meat, Supply Chain, Tropical Forests

Latin America, Paraguay, South America

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Publish date : 2023-04-13 03:00:00

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