On February 28th, New York Attorney General Letitia James sued JBS, the largest meat company in the world, under Executive Law Section 63(12) – a broad law used to address cases of civil fraud. More specifically, she is accusing them of ‘greenwashing’ or making statements to sound more environmentally friendly than they are.
In 2021, JBS made a commitment to reach net zero emissions by 2040. Attorney General Letitia James says this statement is “unsubstantiated” and “unachievable” without reducing production and that their marketing campaigns “in effect, provide environmentally conscious consumers with a ‘license’ to eat beef.”
It is true that JBS has had a rocky decade, with the company being accused of bribery, corruption, deforestation of the Amazon rainforest, and trespassing on indigenously-owned land.
The company’s U.S. subsidiary is based in Colorado, so what has earned them the unwanted attention of the Attorney General’s office in New York? JBS has plans to be listed on the NYSE before the end of the year, and plenty of activists, politicians, and oversight groups are pushing back.
JBS may have a complicated record, but this case isn’t a slam dunk for the State of New York.
Just Be Sustainable?
JBS is based in São Paulo, Brazil and sells products in 180 countries. In 2022, they reported net income of $3 Billion, and they have the capacity to process over 200,000 cattle, 500,000 hogs, and 45 million chickens a week… in the U.S. alone.
Being a large meat producer makes JBS as welcome to environmental advocates as big oil. Livestock is responsible for 57 percent of food industry emissions and 14.5 percent of total global emissions.
Cattle contribute to deforestation when grazing, so their impact on the environment is a double swing; they emit gas while digesting, and they reduce the number of trees available to filter those gasses out of the air. In 2021, the year they made their net zero commitment, JBS reported 71 million tons of carbon dioxide equivalent emissions, more than the country of Ireland.
James says that claims posted on JBS’ website and statements they made in a New York Times ad in 2023 have no basis in fact. Therefore, the messaging constitutes deceptive business practices and false advertising. To quote the complaint: “When companies falsely advertise their commitment to sustainability, they are misleading consumers and endangering our planet.”
She is asking them to stop making the claim, undergo an audit, and pay a penalty of $5K per infraction.
Judging Baseline Suitability
I pulled the complaint and read it, and the logic behind the charges is very interesting.
Attorney General James alleges that JBS has not successfully baselined its current emissions and so therefore the company cannot make specific commitments about how much they will reduce their emissions on what timeline.
The commitment is to achieve net zero by 2040 – that is 16 years away. Even so, James says they won’t make it. She points out that the costs associated with reaching net zero are exorbitant: “there are no proven agricultural practices to reduce its greenhouse gas emissions to net zero at the JBS Group’s current scale, and offsetting those emissions would be a costly undertaking of an unprecedented degree.”
The fraud charge is connected to how the company’s promises might influence consumer spending. Again, quoting the complaint: “One study found that consumers are willing to pay more—up to 30 percent more—for products with net-zero greenhouse gas emissions.”
I am assuming that as the case moves forward, James will need to prove that JBS did charge more and that doing so was tied to their sustainability claims.
Judgment on Both Sides
The New York Attorney General’s office is not the only entity pushing back on JBS’s net zero claims.
On June 30, 2023, Better Business Bureau’s National Advertising Division recommended JBS stop making the claims. Then the National Advertising Review Board upheld the finding.
They may be in agreement, but don’t seem to have any teeth. The State of New York and FTC would be the ones giving teeth to the Better Business Bureau and National Advertising review Board’s findings and recommendations.
Earthjustice has “submitted a comment” to the FTC complaining about greenwashing and using JBS as an example, and 15 U.S. Senators – including people on both sides of the aisle – sent a letter to the SEC in January cautioning against allowing JBS on the New York Stock Exchange.
As bad as the misalignment between JBS’ actions and messaging may look, there are legal questions to be answered about whether it truly rises to the level of civil fraud.
J.W. Verret is a professor at George Mason University’s Antonin Scalia Law School. He was interviewed by the Wall Street Journal for a piece on the story. He points out that while the company’s net-zero claims might not be credible, it isn’t consumer fraud because it has nothing to do with the meat products that the company sells. “If they said beef was a certain cut and it wasn’t, that’s consumer fraud,” he said.
JBS may be the largest meat producer in the world, but they are not the only ones working to address sustainability concerns. The USDA signed off on a “climate-friendly” beef designation used by Tyson – and they didn’t have a baseline either. Tyson worked on the program with Deloitte, but there is no reliable way to measure the 10 percent reduction in emissions they promise, so it is something of a vanity designation.
All large companies in all industries are working hard to meet environmental expectations.
According to an article in the New York Post, half the world’s 2,000 largest publicly listed companies state they aspire to net zero by 2040. Unfortunately, very few of them have concrete plans about how to get there, and many of them are already listed on the New York Stock Exchange.
The Attorney General of New York has a big case to prove, and you can bet that the rest of the companies listed on the exchange will be watching closely.
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