Corporate Action Continues as Amazon Fires Grow

The thousands of fires consuming the Amazon rainforest this year (as shown in the NASA photo above) have brought international attention and alarm. This year has seen an 89 percent increase in fire hotspots compared to the end of August 2018, a number of Amazon fires that hasn’t seen since in almost a decade.

In the face of lukewarm rhetoric from the Brazilian government concerning the fires, companies are taking action. Last week, days after Brazil’s government rejected funding from the United Nations G7 for fighting the fires, VF Corp — the company that owns brands including Timberland, Vans and the North Face —said it will pause purchasing supplies, including leather, from Brazil.

The company said in a statement they would resume purchases when “we have the confidence and assurance that the materials used in our products do not contribute to environmental harm in the country.”

The background on the Amazon fires

Cattle ranching is one of the main industries that is encroaching on the Amazon. Alberto Setzer, a senior scientist at Brazil’s space research center (INPE) told CNN 99 percent of the fires in the region have resulted from human action. Even in the dry season, the rainforest rarely catches fire naturally. Environmental organizations place the blame on cattle ranchers, loggers and miners.

Corporate action is vital as Brazil’s last two administrations have put economic development over ecological protection. The current administration, under President Jair Bolsonaro, has made its skepticism of climate change clear.

Bolsonaro campaigned on the Amazon’s economic potential. And since being elected in 2018, the president has taken specific action to clear the way for agriculture in the Amazon, including an executive order enabling the Agricultural Ministry to certify indigenous lands as protected territories, a change that indigenous groups claim would lead to “an increase in deforestation and violence against indigenous people.”

The president’s tune changed slightly after domestic and international pressure, including an EU threat to withdraw a trade deal. Bolsonaro placed a 60-day ban on intentional burning in the Amazon and deployed 44,000 troops to fight the fires.

“Forest fires happen all over the world, so this is no reason to impose international sanctions. Brazil will continue to be as it is now a country that is friendly with everyone and is responsible with protection its forest,” Bolsonaro said in a televised speech on August 23.

Despite the ban and military intervention, 2,000 new fires were burning in the Amazon only two days later.

Corporate action is putting pressure on Brazil

The rest of the world is imagining the earth’s lungs on fire; this is not just a national issue from the point of view of the global community.

While the world awaits the September 24 United Nations General Assembly meeting where Bolsonaro is expected to defend his policies in the Amazon, companies are voicing their disapproval.

Last week, Apple CEO Tim Cook promised his company would donate to preserve and restore the Amazon forest.

The next day, representatives from oil firm Equinor, fertilizer-maker Yara and aluminum producer Norsk Hydro met with Norway’s Climate and Environment Minister Ola Elvestuen on the topic of the Amazon.

Elvestuen told reporters, “[Companies] must be conscious about their supply chains and ensure that they do not help contribute to deforestation.”

Norsk Hydro told Reuters it is alert to its environmental footprint.

“Hydro has a bauxite mine in Para that respects environmental regulations. We use significant resources to replant and rehabilitate mining areas and we have a goal to conduct one-to-one reforestation of available areas,” a company spokesman told Reuters.

Investors are making their voices heard as well.

Norway’s biggest investors — Storebrand ASA and the pension fund KLP — have contacted companies to confirm that they do not contribute to environmental degradation.

“If there is evidence that we are invested in companies that contribute to develop new deforested land or deforest areas … we will withdraw from investments,” Jeanett Bergan, KLP’s head of responsible investments, told the Guardian.

What's next for the Brazilian government?

And back to VF Corp. Only five percent of the leather the company uses in its shoes and apparel comes from Brazil, according to the Guardian, but this sort of symbolic move has already affected Brazil’s economic image in the eyes of investors.

“The disaster has already been done to the environmental image,” Fabio Silveira, a director and partner at the São Paulo financial consulting outfit Macrosector, explained to the Guardian. “That means that the cost lenders put on Brazil’s environmental risk, previously regarded as close to zero, just went up.”

“Brazilian companies and the Brazilian government lose. Nobody can deny international banks put a cost on environmental risk,” Silveira added.

For a country climbing out of a recession and fighting a 13 percent unemployment rate, these repercussions add up. At this point, no one can ignore the fact that a laissez-faire policy with regard to the environment and global climate does not pay off.

Perhaps this mounting economic pressure on Brazil will open Bolsonaro to cooperation when he attends the U.N. meeting in September. Environmental scientists warn the Amazon is nearing its tipping point as fires continue to consume the forest. Global partnership is essential to avoid reaching that point.

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Image credit: NOAA