News in brief: Environmental groups are urging the US SEC to block the IPO of Brazilian meatpacker JBS on the NYSE due to concerns about its impact on deforestation and climate change.
Environment groups are urging the United States (US) Securities and Exchanges Commission (SEC) to oppose the initial public offering (IPO) or stock launch of worldâs largest meatpacker, JBS, in the country.
The groups have sent letters to the SEC to move against the companyâs planned listing on the New York Stock Exchange (NYSE) over concerns about its contribution to deforestation and climate change.
According to a Reuters report, the groups, which include Rainforest Action Network, Mighty Earth and World Animal Protection, have long accused JBS of exploiting the environment. Although, the food processer has repeatedly denied these claims, insisting that criminals should be blamed for deforestation.
JBS, which is a Brazilian company, expects its public listing to attract a broader investor profile, with the aim of easier access to cheaper capital. Also, it hopes it will enhance corporate governance and transparency through adherence to SEC standards for all NYSE listed companies.
The meat maker further expressed a willingness to engage with non-governmental organisations. World Animal Protection alleged that JBS did not adequately identify crop farming as a material risk factor for deforestation in its prospectus, despite the fact that it buys grains for livestock feed. It further requested that the SEC investigate claims in the companyâs prospectus and noted the absence of a clear road map to really make sure the it is not involved in deforestation.
Among other factors, cattle ranching and clearing land to sell timber or grow crops, is worsening deforestation in the Amazon rainforest.
The Brazilian meatpacking giant was at the center of controversy in 2022, after revelations contained in an audit by Brazilian prosecutors cast them in bad light. They found that JBS procured nearly 17% of cattle in Para State in the Amazon rainforest from July 2019 to June 2020 from ranches with irregularities, including illegal deforestation. The company responded by saying it had fixed the issues that led to the purchases.
The SEC, in response to protests, have promised to investigate claims. They said the issues raised will be given careful consideration in view of the commissionâs overall enforcement responsibilities under the US federal securities laws.
Additionally, the company will only be able to submit the deal for shareholdersâ approval if the planned offering complies with the commissionâs regulations.
JBS has been pursuing a US listing for the past ten years. Its efforts suffered a setback after postponement due in part to a 2017 corporate corruption scandal in Brazil. It also saw its efforts thwarted again amid the global COVID-19 pandemic. They, however, expect to see the process concluded around yearâs end.
