McDonald’s has ties to deforestation and labor abuses in Brazil’s Pantanal wetlands and in the Amazon rainforest, which plays a crucial role in regulating the world’s climate, according to a report published Wednesday by Reporter Brasil, an independent research group focused on environmental and labor issues.

In its report, Reporter Brasil reviewed several cases in which beef from illegally cleared ranches was shuffled between farms to hide its true origin, then shipped to slaughterhouses owned by companies that supply McDonald’s. Unions in Europe are piggybacking on the report to demand that McDonald’s start annually disclosing detailed risks of human rights and environmental abuses in its supply chain, citing a French vigilance law that environmental groups hope will be a model to other countries.

McDonald’s declined to comment before the report was published. The company’s website says more than 99% of the beef it sourced by the end of 2020 “supported deforestation-free supply chains.” The fast food giant has struggled to curb its enormous carbon footprint.

Brazil’s beef supply chain, among the most complex in the world, is the key culprit in the deforestation of the Amazon, which reached a 15-year high in 2021. On one end of the chain are 2.5 million ranchers, many in far-flung corners of Brazil without government protections, monitoring or enforcement. On the other are corporate buyers in 80 countries. JBS SA, Marfrig Global Foods SA and Minerva SA – Brazil’s biggest beef exporters – say they set the highest standards for weeding out bad actors from their supply chain, but a Bloomberg Green investigation in January showed how a cow’s journey from birth to fattening farm is left almost entirely unmonitored.

In the report released Wednesday, Reporter Brasil alleges that JBS slaughterhouses in the Brazilian cities of Juina and Juara bought cattle in 2018 and 2019 from a rancher who transferred animals from a property embargoed by the environmental regulator to another with a clean title before making the sale. JBS has supplied McDonald’s with hamburger meat, but never from those specific plants. At least five other ranchers selling to JBS’s Confresa unit, Marfrig’s Varzea Grande and Tucuma plants, and Minerva’s Mirassol D’Oeste facility between 2017 and 2020 used “similar animal transfer strategies,” Reporter Brasil alleged. Reporter Brasil, which scours public records to piece together supply chains, also said that in 2019 it tracked shipments to JBS’s Campo Grande unit back to a farm where workers were allegedly mistreated, without access to clean drinking water.

JBS said that the ranches mentioned in the report were either never registered as direct suppliers or were in compliance with labor and environmental laws at the time of purchase.

Minerva said that the alleged illegal farm mentioned in the report has been blocked from its direct suppliers’ list since 2015. Marfrig said nothing about the farms triggered any of its monitoring systems and acknowledged that getting information on indirect suppliers – or the suppliers to its suppliers – is still a major challenge.

In all cases, it’s impossible to know whether beef from any of the problematic animals actually showed up in McDonald’s restaurants. That’s because animals aren’t tracked individually in Brazil from origin to slaughter, and transport documents that could shed some light on the herd’s movement are restricted by the government.

French unions led by the General Confederation of Workers, known as the CGT, planned to file an official warning against McDonald’s under the so-called Duty of Vigilance law, according to a letter sent to the company Wednesday. The letter focuses on labor violations mentioned in the Reporter Brasil report, including at orange and soybean producers in Brazil that allegedly feed the McDonald’s supply chain, while also mentioning environmental concerns.

The 2017 French vigilance law requires companies with more than 10,000 employees globally to monitor their full supply chains and create plans to avoid environmental, human-rights and corruption risks. While there are no hard and fast penalties for violating the law, it does put bad corporate practices into the spotlight at a time when investors are increasingly discounting stocks and bonds with unsustainable business models. Environmental groups are pushing to expand the law, both in scope and to other countries, and have also targeted supermarket chain Casino Guichard-Perrachon SA and oil producer TotalEnergies SE using the legislation.

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