Brazilian Banks Will Not Finance Meat Producers Linked to Deforestation

Published: 06 June 2023

Amazon Cow DeforestationCattle within a cleared area of land. (Photo: Bruno Kelly/Amazônia Real, Flickr, License)

By Vinicius Madureira

Credit lines to Brazil’s meat producers that are linked to deforestation may be numbered as the country’s banks have agreed to require meatpackers and slaughterhouses to implement environmental monitoring for suppliers who raise cattle in the Amazon region, the Brazilian Federation of Banks (Febraban) announced.

The group believes that involving financial institutions will strengthen the effectiveness of efforts to combat deforestation. In 2021, Brazilian banks provided over US$4 billion to the meat processing industry.

Isaac Sidney, the President of Febraban, said that banks “are at the center of (Brazil’s) supply chain,” and that the move “will encourage actions to foster an increasingly sustainable economy.”

The financial sector “is aware of the need to advance in managing and mitigating social, environmental, and climate risks in business dealings with their clients, while also directing more resources towards financing the transition to the Green Economy,” he said.

By December 2025, meat companies that purchase cattle from the Brazilian Amazon suppliers are expected to implement a “traceability and monitoring system” that should disclose information on any type of embargo due to illegal deforestation, overlap of land ownership within protected areas, as well as the registration of cattle ranchers and the recording of animal acquisition information.

Meatpackers are required to disclose their plans for traceability and monitoring by the end of this year.

However, large industries see the move as a way to “outsource socio-environmental responsibility” onto the agribusiness sector - something Febraban denies. Small and medium-sized business owners fear it may disproportionately impact smaller meatpacking companies, potentially making it difficult for them to compete in the market.

According to local media reports, Abiec, a trade group that represents major companies in the industry such as JBS, Marfrig, and Minerva, said that banks should extend their requirement for environmental compliance to all their customers when granting credit, including farmers.