By Mark S. Nelson, J.D.
The climate group Mighty Earth has filed a whistleblower submission with the SEC in which it asks the agency to investigate potential securities fraud at the Brazilian company JBS SA, one of the largest meat packing companies in the world, regarding how JBS made certain determinations and calculations about a green bond issuance. Mighty Earth said in a press release announcing its submission that JBS’s actions amounted to greenwashing.
Growing emissions. According to Mighty Earth, JBS’s issuance of green bonds or sustainability-linked bonds was premised on a goal of achieving net zero emissions by 2040, but that in reality the determinations made in creating the bonds omitted information about the company’s Scope 3 emissions, which allegedly account for 97 percent of the company’s carbon footprint.
“The fact that the meat company arguably responsible for more climate pollution and deforestation than any other in the world was able to raise $3.2 billion through green bonds is an indictment of the utter lack of safeguards in the world of ESG investing,” said Mighty Earth’s CEO Glenn Hurowitz. “JBS’ success in duping investors shows that SEC needs to step in right away to set clear rules about what does or doesn’t count as sustainable.”
According to Hurowitz, JBS’s Scope 3 emissions would include items such as animal slaughter operations, methane emissions, and deforestation. Hurowitz further claimed that JBS’s carbon footprint was growing, not declining, during the relevant time period. Hurowitz cited data showing JBS’s emissions grew between 17 percent to 56 percent over the five-year period from 2016 to 2021.
Mighty Earth’s press release also linked to a second party opinion provided to JBS by ISS ESG. That document also noted the absence of Scope 3 emissions data.
In a related LinkedIn post, Hurowitz emphasized the need to look beyond companies’ self-reported data. Said Hurowitz: “More broadly, we believe that this case shows how investors need to look at the actual performance of companies, and not just rely on self-reporting and greenwashing. SEC should explicitly require Scope 3 emissions be included in reporting.”
Hurowitz’s post later added: “I hope SEC acts. But our ultimate aspiration is that JBS and the meat industry transform so this kind of case is unnecessary.