(Bloomberg) — Meatpacking powerhouses like JBS SA and Marfrig Global Foods SA have borne the brunt of watchdog efforts to root out illegal deforestation in Brazil’s beef industry. But a new report is transferring attention further down the supply chain, seeking to tie French supermarket giants Carrefour SA and Casino Guichard-Perrachon SA, plus a company controlled by Advent International Corp., to the destruction of the Amazon.
The findings from Reporter Brasil, an independent research group focused on environmental and labor issues, show that some of the Brazil units of all three chains stocked meat originating from slaughterhouses that have at one point or another obtained cattle from deforested farms.
The six-month project began with sending researchers to more than two-dozen supermarkets in each of the six biggest cities in the Amazon region, plus Sao Paulo. Reporter Brasil was able to trace samples of beef sold in these stores back to specific slaughterhouses, then reviewed the plants’ network of direct and indirect suppliers.
A store in Manaus belonging to Carrefour—which earlier this month pledged 4 million reais per year (about $735,000) to preserve a plot of the Amazon—was found to source beef from a plant owned by Frizam, a midsized meatpacker for the domestic market, according to Reporter Brasil. At least until 2019, the most recent data available, Frizam bought cattle directly from a rancher who’s been fined more than 30 times over the past 25 years for environmental crimes.
The samples represent a tiny fraction of Carrefour’s sales, and there’s no way to know if the meat on the shelf came from the offending farm. Even so, Reporter Brasil says, it shows Carrefour has room to step up monitoring if it’s serious about helping to fight Amazon deforestation.
“It’s very easy to block these kinds of transactions” by the slaughterhouses, said Marcel Gomes, executive secretary of Reporter Brasil. Supermarkets “need to demand transparency” from their suppliers.
Carrefour said that it’s constantly monitoring its suppliers and is initiating a project to analyze indirect suppliers, a key link in the livestock chain. Without addressing this specific case, the company said it has suspended slaughterhouses in the past for irregularities and refused to do business with them again until they proved conformity with best environmental practices. Bloomberg Green was unable to reach Frizam by either phone or email.
Brazil’s beef supply chain is one of the most complex in the world, with 2.5 million ranchers, 2,500 slaughterhouses, and about 215 million heads of cattle spread out over 3.3 million square miles. The government has largely left it up to companies purchasing tens of thousands of cattle monthly to police this vast and opaque network. Big meatpackers like JBS already use satellite monitoring to make sure direct suppliers aren’t part of the problem, but so far they haven’t mapped out their indirect suppliers—i.e. the breeders who sell cattle to the feeder farms that supply the slaughterhouses.
Unscrupulous ranchers who seek to circumvent environmental regulations will sometimes act as both direct and indirect suppliers, meaning they’ll supply slaughterhouses from their “clean” farms while maintaining nearby ranches cleared of forestland where many of their animals are actually raised. Reporter Brasil said in its report that it found at least six cases of such ranchers selling to slaughterhouses run by Marfrig, Minerva, JBS, and four domestic producers in the Amazon region that in turn supply meat to stores operated by Carrefour, Casino’s Grupo Pao de Acucar, and Advent’s Grupo Big.
Five of those companies—Grupo Pao de Acucar, Carrefour, Marfrig, Minerva, and JBS—say they have systems in place to monitor direct suppliers and are working to make the checks even more robust. Minerva said that the government’s practice of keeping animal transport documents hidden hinders transparency efforts across the industry, and that it recently started testing a tool called Visipec to track indirect suppliers, along with Grupo Pao de Acucar and Marfrig.
JBS, the world’s biggest meat producer, also pointed to the secrecy of transport documents as a significant challenge, and said it’s trying to overcome this via a new blockchain its suppliers will be required to use by 2025. The company “doesn’t tolerate disrespect for the environment,” it said. It also said that it asked Reporter Brasil for documents showing movement between blacklisted farms and direct suppliers, but that Reporter Brasil declined to disclose its source.
Grupo Big said its system “guarantees” the products it buys and sells aren’t related to deforestation. Advent declined to comment.
The two French supermarket operators may face additional backlash as a 2017 vigilance law forces companies with more than 10,000 employees globally to monitor their supply chains and create plans to avoid environmental, human-rights and corruption risks. While there are no hard and fast penalties for violating the law, it does put bad corporate practices into the spotlight at a time when investors are increasingly discounting stocks and bonds with unsustainable business models.
The European Central Bank, which owns Carrefour debt, is also under pressure to make sure it isn’t contributing to climate change. It’s strongly considering disclosing climate risks in its bond programs, people familiar with the plans said last week, and has taken steps to green its own investments.
“There is evidence linking Amazon deforestation and meat sold by these retailers,” said Elie Favrichon, a forest footprint officer at Envol Vert, an advocacy group that seeks to protect forests through conservation projects in France and Latin America. The French law “is a new tool, and we will try to use it as much as we can to force change.”