Highlights, News

JBS Announces Monitoring Program Following Chain Reaction Research Report on Deforestation Risks

The Chain Reaction Research report “JBS: Outsized Deforestation in Supply Chain, COVID-19 Pose Fundamental Business Risks,” published on 31 august 2020, shows major supply chain deforestation and significant business risks associated with the Brazilian operations of JBS, the largest meat processor in the world based on sales. On 23 September 2020, JBS announced the launch of a new program to monitor its entire supply chain.

Aidenvironment conducted the sustainability and business risk analysis for this CRR report. For this we used novel methods. First, we used large datasets of animal transportation records and rural property records to locate as many of JBS’s suppliers as possible. Through string matching and other techniques, we were able to locate almost 1,000 direct and 2,000 indirect suppliers. We subsequently assessed past deforestation on these properties since 2008 and found evidence of nearly 70,000 hectares of deforestation. By extrapolating these figures, we made the conservative estimate of approximately 1.7 million hectares of deforestation in JBS’s entire supply chain since 2008.

Second, we conducted a scenario analysis to assess the materiality of the business risks associated with supply chain deforestation and with the recent COVID-19 pandemic. We identified five distinct business risks that JBS may be exposed to and assessed the financial consequences under three different scenarios: low-impact, medium-impact, and high-impact. The results, as quantified by CRR partner Profundo, range between 4.5% and 26% of JBS’s profits in 2019.

JBS’s new program to monitor its entire supply chain may be a significant breakthrough in the company’s approach to mitigating the risks identified by CRR. Full implementation of these new commitments, which include mandatory transparency requirements for its suppliers, will be closely monitored by CRR and other stakeholders.