Global investors increase environmental pressure on Brazilian agribusiness companies

By 2023, several social indicators of leading Brazilian agribusiness companies will begin to be assessed by the World Benchmarking Alliance (WBA), an entity whose investors do not hesitate to scrutinize the behavior of companies in which they invest.

In yet another sign of this growing monitoring, this week, a group of investors representing US$ 5.8 trillion in assets under management sent a warning letter to 106 companies in 18 countries that scored a zero in Human ​​Rights during a performance assessment by the “Corporate Human Rights Benchmark (CHRB).”

CHRB is organized by the Investor Alliance for Human Rights. The entity scrutinizes companies based on parameters set by the “United Nations Guiding Principles on Business and Human Rights” and the OECD’s “Due Diligence Guideline for Responsible Business Conduct.” The group claims that these are the global standards for measuring human rights corporate best practices.

Of the 230 global companies monitored, only two are currently Brazilian: Petrobras and BRF, which have a large part of their capital traded on the stock exchange. For the latest CHRB ranking, the 106 companies that scored zero received a letter from the group of 208 investors – asset management firms, public pension funds, union funds, faith-based institutions, and family funds. The letter challenged these companies to show respect for human rights in their operations and value chains, disclose a strong public commitment to human rights, provide explanations of rigorous human rights due diligence processes, and promote transparent mechanisms that allow impact remediation.

“We believe that these actions can mitigate business risks, including operational delays, reputation damage, financial losses, and legal liabilities,” the group said in the letter to the companies. “We clearly communicated our expectations in the joint letter from investors. Companies need to take this seriously. It is time to act”, says Anna Pot, from APG Asset Management, in a statement. Magdalena Kettis, from Nordea Asset Management, adds that if companies do not improve their performance in this area, investors are prepared to “motivate” those who refuse.

In the latest CHRB ranking, BRF was one of 106 companies that scored a zero, alongside Starbucks, General Motors, Honda, PetroChina, and others. For several companies, it is the fourth time that they score a zero on indicators for human rights due diligence. BRF was already on the 2020 list.

When questioned, the company confirmed that it was notified by CHRB and got in touch with the organization to understand the list criteria, each item analyzed, and possible points for improvement. Accordingly, the company said there is a meeting scheduled with the entity for next Monday.

“Contrary to what appears in the study – which we disagree with – the company already works on several Human Rights aspects.  These include reputational analysis, with the blocking of business partners that violate human rights; risk assessment, with a methodology based on the best international risk-management practices (ISO 31000:2018 and COSO ERM 2017); and direct action with managers and focal points in various regions, areas, and business units to mitigate risks, reinforce the risk culture, and seize opportunities for improvement”, said BRF.

The company also reiterated that it has a public Sustainability Policy that follows all the guidelines of the Universal Declaration of Human Rights and the Guiding Principles on Business and Human Rights. The company has also signed the UN’s Global Pact since 2007. BRF also described a series of support actions through the BRF Institute. It explained that it reports annually on the evolution of its commitments through a report available on its website.

“The company rejects any partial and superficial assessment of its practices concerning Human Rights – an extremely relevant topic for BRF. BRF reinforces that it has a global program that defines guidelines, standards, and processes, including governance, compliance, and sustainability, acts transparently per national and international rules and legislation, and operates at the highest levels of market governance,” he said.

Asked about the selection of companies, Camille Le Pors of the World Benchmarking Alliance explained that the mechanism assesses the largest global companies in sectors considered high risk in terms of human rights impacts. To be included, a company must be among the largest in its industry according to market capitalization. The list also considers a criterion of geographical balance to ensure that it represents companies from all regions of the world.

Camille added that besides Petrobras and BRF, WBA will evaluate 40 other Brazilian companies – out of a list of 2,000 companies – by 2023. Of these, 12 are from the agribusiness sector: Amaggi, one of the world’s largest soy producers; JBS, a global leader in animal proteins; Citrosuco, which covers 20% of the world orange juice market; and Cutrale, Copersucar, Cosan, Marfrig, Minerva, Aurora Alimentos, Coamo and M. Dias Branco.

Source: Valor

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