JBS: A meaty SLB impact proposal

21 minute read

Meat processing has a major role to play in tackling climate change and, as the world’s largest meat producer, Brazilian company JBS’ sustainability-linked bonds (SLBs) present an opportunity to lead the sector in delivering positive sustainability impact.

JBS issued two SLBs in 2021 which were successfully placed in the market but criticised for addressing only a small proportion of the company’s emissions and failing to include deforestation targets.

This paper argues that an increase in the ambition of future SLB issuances would benefit both JBS and its investors. Using our options pricing approach, we demonstrate how a 25 bps lower cost-of-capital could be achieved. World cattle stock has grown by 62% over the past 60 years to feed global demand, with beef in particular being an inefficient source of protein. Latest research suggests that global livestock accounts for 16.5% of all anthropogenic GHG emissions, including methane produced by cows’ digestive processes.

Converting land for grazing purposes generates deforestation thereby destroying natural carbon sinks. It is generally acknowledged that meat production is a climate change mitigation priority.