JBS S.A. Dual Listing on New York Stock Exchange: A collective warning of risks to people, planet and investors

In July 2023, JBS S.A., announced a plan to restart its decade-long attempt to list shares on the New York Stock Exchange via a dual listing under a new Dutch parent company “JBS N.V.”. 

In response, last year, twenty civil society organisations across the EU, Brazil and US endorsed a briefing sent to more than 200 investors warning them about the risk to the climate, people, and investors associated with the company and its operations. 

In June 2024, JBS refiled an updated application to the US Securities and Exchange Commission (SEC). In October 2024, we updated our briefing and contacted investors again to share the key risks associated with the deal. JBS has a well-documented track record of its involvement in deforestation, human rights abuses, and land grabs against Indigenous peoples. 

The latest investor briefing found that JBS has removed reference to ‘zero tolerance’ to the invasion of protected areas, including Indigenous lands and environmental conservation zones, from its latest SEC application.

This omission has sparked serious concern. Global Witness recently reported on JBS supply chain links to the deforestation and illegal occupation of Indigenous lands belonging to the Parakanã people in Pará State between 2018-2023 in Brazil. We found Barclays earned $1.7 billion from financing JBS in that period, highlighting the financial sector's exposure to JBS's supply chain harms.

While the company is already publicly traded on the São Paulo Stock Exchange, the ability to sell its shares in New York could open up deep pockets of cash for JBS to expand, risking yet more environmental damage.

The group’s core concern relates to JBS’s proposed corporate restructure as part of the dual listing, which would hand 85% of voting rights to the Batista family  – a major increase on their current 48.48% voting entitlement as of June 2024, according to the company’s filing to the SEC.

The briefing warns that a Batista family power grab is a major risk to both investors and the planet, as it would majorly reduce the opportunity for minority shareholders to steer the company on issues like human rights protections or environmental impact.

Eighteen investors and other actors representing USD $22.2 billion have also written to the SEC warning against investment in JBS due to climate and other risks.

Key risks highlighted by the October 2024 briefing include:

•     New evidence again connects JBS’s supply chain to deforestation and the violation of indigenous rights in its supply chain in Brazil.
•     JBS’s liabilities from criminal, civil and other legal proceedings rose to $3.6 billion, up from $1.7 billion as of July 2023 when the original prospectus was filed.
•     JBS USA is being sued in the State of New York for an allegedly ‘unsubstantiated and misleading’ net zero 2040 target.
•     JBS S.A. was delisted by the Science-Based Targets initiative (SBTi) for failing to submit a climate plan.
•     ‘Controversial’ figureheads Joesley and Wesley Batista – who left the company’s management after a 2017 corruption scandal– returned to the board of JBS S.A. 
•     Lawmakers in the US and UK have publicly urged the SEC to review the listing due to ESG concerns.
•     There has been significant adverse media against the transaction.
•     JBS will likely be required to adopt a 1.5c-aligned transition plan as early as 2027 under the European Corporate Sustainability Due Diligence Directive. 
•     JBS will be required to report its ESG impact under the Corporate Sustainability Reporting Directive (CSRD) as soon as FY2025.

Key recommendations

The briefing urges financial service providers including lenders and investors to:

1. Suspend any support for and investment in JBS or its subsidiaries until they provide a credible plan to address their emissions and risk of deforestation and human rights abuses.
2. Raise public awareness of issues with the deal and JBS’s environmental and social record
3. Identify and provide any necessary redress and remedy to communities affected by the financing of JBS’s operations

Other key risks for investors raised in the briefing include:

• JBS will need to rapidly clean up its supply chain and put in place better traceability systems to comply with incoming EU and UK deforestation laws, or its products may become illegal in those markets.
• JBS plans to establish a new shell parent company in the Netherlands, a well-known tax haven, just at the time when the Dutch government says it is cracking down this corporate model.
• JBS - which has vast greenhouse gas emissions - faces potential litigation risks from setting up in the Netherlands, which is described by experts as an emerging “front-runner” jurisdiction for climate-related lawsuits.
• That JBS’ future ability to access credit may be affected by financial due diligence laws recently contemplated by the EU and UK. Both jurisdictions are conducting legal reviews to see if existing laws are strong enough to prevent the financing of companies involved in deforestation.

This page was updated on 2 October 2024, to reflect the updated briefing to investors.