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As agribusiness sets the world on fire, will global investors wait until they get burned?
Over the past few months, the entire world has watched as forest fires have wrought unprecedented destruction upon the Amazon Rainforest in Latin America.
Despite much of the responsibility for the fires sitting firmly at the feet of Brazil’s Bolsonaro regime, there is a growing recognition of the complicity of agribusiness companies. Now calls for divestment are growing, as the devastating link between international finance and deforestation becomes increasingly clear.
Civil society organizations are pressuring investors to suspend financing to global soy and beef producers that are active in the Brazilian Amazon, including Cargill, JBS, and Marfrig. Campaigns have been launched calling on retailers like Walmart and Costco to stop sourcing from companies tied to the fires that have already cleared millions of hectares of forests.
Popular outrage at the environmental destruction and violence against Indigenous Peoples sparked a Global Day of Action for the Amazon on September 5, with protests in 59 cities worldwide.
And companies are starting to feel the pressure.
Since the fires began, global brands including H&M, Timberland, Vans, and North Face have announced that they would stop buying leather from Brazil. Even governments have called for action: Finland, which currently holds the EU’s rotating chairmanship, has proposed an inquiry into banning Brazilian beef from European markets, and U.S. legislators have introduced a bill to cut foreign aid to Brazil until the Amazon crisis is resolved.
But it’s not just soy and beef production that is responsible for massive environmental destruction.
About 80% of deforestation – which is the second largest contributor to the greenhouse gas emissions responsible for climate change – is caused by industrial agricultural commodities.
The palm oil industry has decimated forests across Southeast Asia for decades, committing serious human rights abuses and destroying wildlife habitats along the way. While the Amazon burns in South America, annual forest fires in Indonesia are currently the worst they’ve been since 2015, fueled by palm oil companies that burn hundreds of thousands of hectares of forests for industrial-scale plantations. Today, toxic smog hangs over much of the region, threatening humans and wildlife alike.
Recent investor statements from the Interfaith Center for Corporate Responsibility and the United Nations Principles for Responsible Investment spell out the material risks of deforestation, associated human rights violations, and habitat destruction. While investors may be beginning to acknowledge the risks posed by deforestation, they are well aware from the fossil-free movement that divestment campaigns can directly impact companies’ bottom lines.
Fossil fuel emissions and deforestation are the largest causes of climate crisis.
Over the past decade, a concerted movement of students, faith institutions, and environmental campaigners have pushed for governments and investors to divest from fossil fuel companies.
The divestment movement has helped fuel a market shift: today, coal companies are lining up to file for bankruptcy and oil giants like Exxon-Mobil continue to underperform financially year after year. Last month, in Cape Town South, Africa, the fossil-free movement announced it had crossed $11 trillion worth of divestment commitments.
It was no coincidence that this announcement came in South Africa – where an international economic and cultural boycott played a pivotal role in bringing down the country’s racist apartheid regime. While apartheid eventually fell due to the struggle and sacrifice of generations of South Africans, it was supported by an international solidarity movement that insisted apartheid was both morally and economically indefensible.
Today, a new global movement is making the moral and economic case for urgent climate action. Last month, millions of people took to the streets demanding an end to the era of fossil fuels, protection of the world’s forests, and climate justice. They are calling on governments to take binding action to limit global warming and pushing financial institutions such as BlackRock to move away from polluting industries.
Blackrock is one of the world’s largest investors, with about $6.5 trillion in assets under management, including shares in companies responsible for deforestation in the Brazilian Amazon. A recent report found that BlackRock is a top shareholder in the 25 companies most responsible for deforestation around the world. In the past five years, its investments in deforestation-linked companies have increased by $500 million. Notably, BlackRock is the largest investor on the planet in oil, gas, and coal – the very fossil fuels that are destroying the planet and have cost the company $90 billion over a decade.
Report after report states that protecting the world’s remaining forests is essential for effective climate change mitigation.
At the same time, a new investigation reveals that the largest financial institutions are pouring tens of billions of dollars into forest destruction around the world, while consumer goods companies are failing to meet their own commitments to eliminate deforestation from their supply chains.
As the world wakes up to the realities of climate disaster, demands for divestment from the industries causing the crisis – including agribusiness – will continue to gain momentum.
The financial and moral justifications for shifting capital away from these sectors are clear. The question is, will the world's largest investors be on the right side of history – or will they wait until they get burned?
Gaurav Madan is a senior forests and lands campaigner at Friends of the Earth US.