UAW says GM outlines EV investment plans, will raise wages for US workers

Ben Klayman
Sat, November 4, 2023 


United Auto Workers President Shawn Fain greets UAW autoworkers to mark the beginning of contract negotiations in Sterling Heights

By Ben Klayman

DETROIT (Reuters) -The United Auto Workers union said its tentative contract deal with General Motors includes plans for investments around electric vehicles and will raise wages for thousands of U.S. hourly workers at units with lower wage tiers than at vehicle assembly operations.

The UAW released more details of its tentative 4-1/2 year deal with GM

"We won this round," UAW President Shawn Fain said in a video address on Saturday. "This contract will change thousands of lives overnight."

Now that preliminary approvals for all three contracts are done, UAW leaders will spend the next two weeks working to win "yes" votes from rank-and-file union members at the Detroit Three.

The main economic provisions of the agreement follow the pattern set at Ford and Chrysler parent Stellantis, providing 25% base wage increases for full-time workers, which could total as much as 33% including newly negotiated cost-of-living allowances.

Temporary workers will have a faster path to full-time status and could see wages rise by about 50% immediately. Temporary workers who convert to full-time status could more than double their hourly pay over the life of the agreement, the UAW said.

The GM agreement will move more than 7,000 UAW workers in GM component plants, service parts warehouses and what GM calls "subsystems" operations up to the higher wage levels paid to assembly plant workers.

The new contract would largely unwind a strategy the automaker has used for years to hold down labor costs, UAW officials have said.

"This contract has wage increases and economic gains like nothing we've ever seen before," UAW Vice President Mike Booth said. "The gains in this contract are worth more than four times the last contract."

Under the deal, starting base wage for full-time members will increase over the life of the contract by about 70% to $30.60 an hour, and by about 33% to $42.95 an hour for top wage earners, Fain said.

The progression by workers to the top wage will be cut to three years from eight years, he said.

Fain also said workers at GM's Ultium EV battery operations also be covered under the master agreement. Some former GM workers at the company's old Lordstown, Ohio, assembly plant also can apply for jobs at Ultium at current wages, and new hires will make at least 75% of the maximum wage rate, he said.

In addition to the pay increases, the UAW said GM has agreed to invest $4 billion at its Orion, Michigan, plant for future EVs, and $2 billion at the plant in Spring Hill, Tennessee, for two GM EV models and a future partner EV. The union also said a future electric full-size SUV would be built at Factory Zero in Detroit.

Fain also called on workers across the U.S. to organize.

"Auto workers at Toyota, Honda, Volkswagen, Hyundai and Tesla, they deserve record contracts too," he said, referring to future planned organizing efforts.

(Reporting by Joe White and Ben Klayman in Detroit and Rishabh Jaiswal in BengaluruEditing by Matthew Lewis)

New vehicles from Detroit's automakers are planned in contracts that ended UAW strikes


Sat, November 4, 2023 

DETROIT (AP) — Stellantis plans to build a new midsize pickup truck, along with battery-run versions of six Jeep, Ram and Dodge vehicles.

Ford envisions at least three new electric vehicles that will preserve jobs at several factories.

General Motors plans to build at least six new electric vehicles, including a full-size SUV.

Those and other closely held production plans by Detroit's automakers have emerged in details of the tentative contract agreements that ended the six-week strikes by the United Auto Workers union.

Under the new agreements, the three companies will significantly boost pay and benefits and improve job security. But the agreements also provide a blueprint for which cars and trucks they intend to build in the coming years and where they will do so. Many of the plans will continue the manufacture of vehicles that the automakers already build. But the production of some new vehicles over the next few years is being planned, too.

About 146,000 union members will vote on the contracts in the next two weeks. Workers at 10 Ford facilities who have already voted have overwhelmingly favored the agreements, which will be in effect through April 2028.

The UAW's success in gaining commitments from the companies to build new electric vehicles at several factories represented a particular achievement. The expansion of EV production will preserve jobs and could create new ones, depending on how fast the nation transitions from gas engines to batteries.

The automakers have all embraced the transition to electric vehicles as a large-scale and long-term commitment. The companies have set goals of having EVs represent roughly half their U.S. sales by 2030. Adopting the same goal, the Biden administration's 2022 Inflation Reduction Act increased federal tax credits to buyers of new and used EVs.

What's not yet known is whether consumer demand for EVs in the coming years will justify the automakers' plans to accelerate their production. In the meantime, the companies are moving ahead with their ambitious EV production plans.

In Belvidere, Illinois, according to the union, Stellantis will construct an EV battery factory that would create 1,300 jobs. And at its Toledo Assembly Complex, Stellantis plans to build a battery-electric version of the rugged Jeep Wrangler SUV and another with an unknown new powertrain.

In addition, the union said, the company plans to build battery electric versions of the Jeep Wagoneer and Grand Wagoneer large SUVs at a plant in Warren, Michigan. The Ram REV battery-electric truck is expected to be built starting next year at the plant in Sterling Heights, Michigan.

And at the Detroit Assembly Complex, Stellantis plans to build the next generation of the Dodge Durango and Jeep Grand Cherokee SUV. Both are to have fully electric versions.

Ford, according to contract highlights released by the UAW, has agreed to $8.1 billion in new investments at its factories during the contract, including for at least three new electric vehicles. A new electric truck will be built in an EV plant inside Ford's Rouge complex in its hometown of Dearborn, Michigan.

At the Kentucky Truck Plant in Louisville, Ford will add gas-electric hybrid versions of the Expedition and Lincoln Navigator giant SUVs. Another assembly plant in Louisville that now makes Ford Escape and Lincoln Corsair small SUVs will get an unspecified new electric vehicle.

The Ohio Assembly Plant near Cleveland will build a new EV van in addition to the medium-duty trucks and van chassis it now produces. And an unspecified new vehicle will be built at a factory in Flat Rock, Michigan, that has been building the Mustang muscle car, pending Ford's approval to move forward with it.

As for GM it plans to keep several factories busy building new electric vehicles, according to the union. In addition to producing the Cadillac Lyriq electric SUV, GM’s Spring Hill Assembly Plant in Tennessee will manufacture one new EV and one for a future partner, which is likely to be Honda.

An electric full-size SUV will be built at GM's Factory Zero in Detroit, a designated electric vehicle center. And unspecified future electric vehicles will be assembled at a factory in Orion Township, Michigan. The company has already announced that the plant will build electric versions of the Chevrolet Silverado and GMC Sierra full-size pickup trucks.

And GM will build future electric vehicles at both its Fairfax Assembly Plant in Kansas City, Kansas, and its Grand River Assembly Plant in Lansing, Michigan.

Stellantis and Ford declined to comment on future vehicle plans. GM said it would provide more details on its production plans “moving forward.”

At most of the Detroit automakers' assembly plants, the current vehicles they make will continue through their product life cycles.

And not all the companies’ production plans under the contract, of course, involve electric vehicles. The union says Stellantis has agreed to $19 billion worth of investments by the end of the contract, including plans to build its new midsize pickup in Belvidere, Illinois, where it had been moving toward closing a factory. The production of the truck, which will compete with the hot-selling Toyota Tacoma, would produce about 1,200 jobs.

___

Veiga reported from Los Angeles.

Tom Krisher And Alex Veiga, The Associated Press

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More homebuyers back out of deals as mortgage rates hit 23-year high



Gabriella Cruz-Martinez
·Personal finance writer
Sat, November 4, 2023 

Homebuyers are backing out of deals at the highest rate in nearly a year, a new study found. The culprit: higher mortgage rates.

Roughly 53,000 US home purchase agreements fell through in September, according to Redfin, equal to 16.3% of homes that went under contract that month. That’s the highest percentage of canceled contracts since October 2022 when mortgage rates surpassed 7% for the first time in two decades. The share is also up from 15.2% a month earlier and 15.8% a year earlier.

Pandemic boomtowns where home prices skyrocketed due to the influx of remote workers were hit the hardest with buyers with cold feet, Redfin noted, with some areas in Florida seeing contract cancellation rates over 20%.

The reaction from buyers comes as mortgage rates remained at 23-year highs between August and September, convincing rate-sensitive folks to call it quits on their home purchase plans. Even more cancellations may be on the horizon, as rates hover near 8%.

Read more: Mortgage rates at over 20-year high: Is 2023 a good time to buy a house?

"Buyers are extra cautious right now. They want to make sure they’re getting a good deal given how much mortgage payments have gone up, and when they don’t feel like they’re getting a good deal, they’re backing out," said Heather Kruayai, a Redfin premier agent in Jacksonville, Fla., in a statement.

Potential homebuyers visit open house. (Credit: Getty Creative) (The Good Brigade via Getty Images)

Florida saw the highest cancellation rates

The Sun Belt region – which saw home prices jump by double digits during the pandemic – lost some of its heat as rates surged higher.

Among the 50 most populous metros analyzed by Redfin, Atlanta saw the most pending sales fall out of contract in September. Some 24.4% of contracts were canceled in the area that month, up from 23.6% in August – but slightly down from 27.1% a year earlier.

Metros in Florida rounded up the top five cities with the highest shares of cancellations, with Jacksonville seeing 24% of contracts fall through in September, followed by Orlando (23.6%), Tampa (22.7%), and Fort Lauderdale (22%).

The reason for the pullback by certain buyers isn’t a surprise, given how quickly house prices have outpaced salary growth. Add in this year’s high mortgage rates and payments become unaffordable for many.

For instance, those looking to purchase in Fort Lauderdale had to earn 22.2% more than they did a year ago to afford a median-priced home of $420,000 in August, a separate survey by Redfin found. That’s an average income of $114,549 – nearly $40,000 above the national US median income of $75,000.

"Affordability is a big issue," Jeffrey Ruben, president of WSFS Mortgage, told Yahoo Finance. "The interest rate environment is definitely creating constraints in our industry. It’s become a depressed kind of housing market."

'Buyers are frustrated'

Higher mortgage rates weren’t the only reason derailing home purchases.

"Transactions are also falling apart due to skyrocketing insurance premiums and disagreements between buyers and sellers over necessary repairs," Kruayai said in a statement. "Overall, buyers hold a lot of the cards right now, and sellers are having to give out more concessions to close a deal."

In Florida, so many insurers have pulled out of the state due to rising costs that it has gotten harder for homebuyers to secure a homeowner’s policy at a reasonable price. Homeowner’s insurance is a must-have to secure a mortgage, leaving buyers scrambling to find an insurer in the first place and at a cost that won’t leave them ineligible for a mortgage.

Builders, too, have seen cancellation rates spike as rates inched higher. According to LGI Homes latest earnings call, their cancellation rate during the third quarter was 27.9%, compared to 21.3% in the same period last year.

If there’s one silver lining for price-struck folks, it’s that homebuilders have taken notice of the shift in buyer sentiment and are offering more concessions to close deals.

Read more: Types of mortgage loans: Which is best for you?

Some 32% of builders said they cut prices in October, according to the National Association of Home Builders (NAHB), compared with 25% in August. That’s the highest rate since December 2022, when 35% of builders issued price reductions. The average price cut was 6%.

At the same time, 62% of builders said they offered sales incentives of all types in October, up from 59% the month prior and tied with the previous high for this cycle set in December 2022.

"The cost of a home through higher rates is becoming more expensive, and those on the hunt have no choice but to seek other financing such as adjustable-rate mortgages (ARMs) or new construction where there may be opportunities to get a lower rate," Ruben said. "Buyers today are growing frustrated."

Lack of affordable housing in Los Angeles' Venice Beach neighborhood inspires activism and art


Fri, November 3, 2023

LOS ANGELES (AP) — As more and more of her friends and neighbors found themselves priced out of rental units in Venice Beach, Judy Branfman began photographing the dozens of houses, bungalows and apartments being sold, renovated and then relisted at double or triple the cost.

Branfman started with only the vague idea that she should be documenting the growing problem of evictions and housing unaffordability in her beloved west Los Angeles neighborhood. The writer and activist lamented that Venice, where tourists flock to the famous boardwalk and Muscle Beach, has been slowly shedding its historically bohemian vibe and becoming another enclave for the wealthy.

Word spread about her photo project and earlier this year Branfman started hosting community meetings where residents could share their experiences with evictions that forced them to move out of the area and, in some cases, into homelessness. Some people recited poems. Others expressed themselves through paintings. And the more academically-minded among them began compiling housing and eviction statistics.

Branfman's initial notion to just shoot a few photos has culminated in an unlikely but ambitious art-meets-data exhibit titled “Where Has All The (affordable) Housing Gone?” It's on display through Saturday at Venice's venerable Beyond Baroque gallery, a hub for cultural events and activism dating back to the late 1960s.

“The idea was to illustrate the problem, to show what we've lost. You know, make it visual so people would walk in and be a little shocked, and want to do something about it,” Branfman said at the gallery this week.

Venice became a center of the Los Angeles homelessness crisis during the coronavirus pandemic, when camps sprouted up in residential neighborhoods and along the sands. The nation’s second-largest city also has 46,000 residents who are homeless among the overall population of 4 million people, according to the most recent survey.

The area was a flashpoint because of its visibility as a city landmark — the boardwalk attracts an estimated 10 million visitors per year. A certain edginess always coexisted with a live-and-let-live ethos in the artsy beach community, but the widening of the wealth gap has become increasingly apparent as tech firms moved in and sleek modern homes went up.

As building owners seek to bring in more deep-pocketed renters, longtime residents find themselves dealing with rent increases that overwhelm their finances. Some 80% of low-income Los Angeles renters pay over half their income toward housing costs, according to data released this week by the nonprofit Angeleno Project.

While Los Angeles is on track to meet certain goals for new housing set out by recent ballot measures, “supply is severely behind demand,” the report found.

“Some 3,500 housing units are at high or very high risk of losing their affordability terms, threatening to push more families into homelessness,” said the report. “A significant dip in affordable housing that started in 2022 post-COVID-19 continues to trend downward.”

Upon entering Branfman's exhibit, visitors are confronted by her photos on an enormous and detailed map depicting, block by block, many of the nearly 1,500 rent-controlled units she says have disappeared from the housing market in Venice over two decades. In many instances, the buildings were sold to large corporations that are increasingly buying up properties and jacking up rents.

The map, and much of the exhibit, pins some of the blame for the problem on the Ellis Act, a 1985 California law that gave landlords broad authority to evict tenants in rent-controlled buildings for redevelopment, and then later list the same units at market rates. Branfman said she was “Ellis Acted” when she was evicted from a Venice apartment in 2003.

“Too many tenants are afraid to fight back. And most don't know what their rights are under the law,” she said. And even when tenants do file complaints against landlords, she said, the city very rarely prosecutes the claims.

On the wall opposite the map is a free-verse poem made up of quotes about why many renters are were afraid to take

 on landlords, such as: “I don't want any trouble" and "My neighbors aren't documented and they're afraid if they say anything they'll be targeted."

Upstairs there are paintings and mixed-media figurines that the artist Sumaya Evans calls “dignity dolls.” Evans, who was homeless in Venice for years before recently finding housing, said creating art gave her a sense of self-worth when she was living on the streets.

“You get used to being ignored as a homeless woman. People are blind to you when you're outside,” she said. “And so being a part of of a project like this, being a part of a community, is just so healing.”

Branfman and other housing activists are hopeful that change could come with measure that's qualified for the 2024 ballot. The initiative that will go before voters would expand local control by overturning a 28-year-old law that prohibits rent control on single-family homes, condos and rental units that were built after 1995.

After the exhibit closes Saturday, Branfman hopes to find a home for some of the installations at a library or university. Most of it will live virtually on its own Instagram page.

“The rest of it will be on display in my apartment,” she laughs.

Christopher Weber, The Associated Press

'Sandwich generation' is in a jam and struggling with caregiving costs, survey shows


Dylan Croll
Sat, November 4, 2023 

Meeting basic living expenses is tough enough when you go it alone. But what about when you have someone else to look after?

According to New York Life’s new Wealth Watch Survey, nearly half of the "sandwich generation" – folks with children and elderly family members to look after – report being unable to meet basic living expenses, like food or medical care, in the last year due to caregiving costs.

Of those surveyed, 90% say they’ve made a "lifestyle change or financial decision" due to the cost of caregiving.

The study, which surveyed 1,003 sandwich generation adults between Aug. 31 and Sept. 10, shows how unprepared they are for the expenses of caregiving. It also reveals how they’re adapting.

"People should care because you can be individually financially healthy, have your bills under control, have adequate emergency savings," said Suzanne Schmitt, head of financial wellness at New York Life. "But you're one caregiving event away from having your own finances challenged."

Read more: How much money should I have in an emergency savings account?

Is the so-called sandwich generation under financial siege? (Photo: Getty Creative) (BlessedSelections via Getty Images)

The study also reports a demographic shift in those who make up the Sandwich Generation. Millennials, 27-42 years old, are increasingly becoming caregivers. In 2023, the study reported, 66% of self-reported caregivers were millennials while 23% were Gen Xers. Meanwhile, in 2020, merely 39% of caregivers were millennials and 40% were Gen Xers, between the ages of 43 – 58.

Men are also playing a more active role in caregiving, according to the study. For instance, in 2023, 45% of self-reported caregivers were women while 55% were men. That’s in stark contrast to 2020, when 64% of self-reported caregivers were women and 36% were men.

"Males as a result likely of the pandemic are more willing to admit to providing care and are more apt to be pulled into the act of household caregiving for children and also older loved ones," said Schmitt.

Though more men are becoming caregivers, women still bear a notable financial and emotional load from caregiving. The study found that 72% of men "said they would be able to afford providing the same level of care for their loved ones for at least another year before adjusting their financial plan" while only 54% of women said the same. And the report finds that 50% of women say that caregiving negatively impacts their mental health compared to 39% of men.

Women also continue to spend more hours per week caregiving than men, according to the study.

"Women historically have underreported caregiving, because it's often just seen by many women as something they simply do," Schmitt said. "Picking up prescriptions, managing medications, doing grocery shopping, doing cooking."

Family caregivers are struggling to make ends meet.

 (Photo: Getty Creative) (Drazen Zigic via Getty Images)

Meanwhile, the sandwich generation as a whole is struggling to make ends meet as they care for children and the elderly. The study finds that 40% say they "made a financial decision they regret due to mental strain from caregiving." More than 50% say they’ve "made a sacrifice" when it comes to financial security due to caregiving needs. Of those that have made a financial change due to caregiving responsibilities, 34% reported cutting back on expenses, 26% reported contributing less to their emergency savings, and 26% reported taking on more debt.

Read more: Personal loan vs. credit cards: What to use for an emergency?

On the other hand, the sandwich generations’ financial struggles have also made them more far-sighted. For instance, over 3 in 4 agree that "the experience of caring for their aging relative led them to purchase or explore purchasing financial protection products," according to the survey. New York Life also reports that 34% of study respondents plan to pay for future caregiving costs by paying more out of their own budget, 28% say they plan to do so by working overtime in their jobs, 27% say they will do so by spending the retirement savings of those they will be caring for.

The sandwich generation is also saving money for their children to take care of them. According to the study, 42% say they've put aside $43,136.67 on average.

"As a silver lining in all of this we believe that younger people are starting to have those thoughts and internal dialogue and conversations with spouses and partners earlier in life," Schmitt said. "Where they simply have more time to save more runway to consider products and solutions, and ultimately be proactive in putting a plan in place before they find themselves in this care."

Dylan Croll is a Yahoo Finance reporter.

NOTHING MORE CORRUPT
Ukraine minister says he wants to turn his country into a weapons production hub for the West
THAN GUNRUNNING

Sat, November 4, 2023



KYIV, Ukraine (AP) — Ukraine’s newly appointed head of defense industry says he is working tirelessly to ramp up local arms production and wants to turn the country into a weapons production hub for the West.

Oleksandr Kamysyhin, the minister for strategic industries of Ukraine, said that Russia’s invasion of his country and the Israel-Hamas war raging in the Middle East have highlighted the need for countries to spend on their defense systems.

“We’re really focusing on making Ukraine the arsenal of the free world,” Kamyshin told The Associated Press in an interview late Friday.

Kamyshyn said approximately 500 companies in Ukraine’s defense industry are contributing to the country’s efforts to increase weapons production in order to counter Russia’s attempts to seize more territory. Among those are 70 state-owned factories, over 200 primarily private factories producing unmanned systems, and more than 200 private sector companies involved in the production of various types of weaponry and ammunition.

“We are focused on producing all types of weapons and ammunition, and we show that we can test it on the battlefield and make it better during the war,” Kamyshin said. “That’s something we can contribute to the free world, because as you see, defense industry is becoming more and more important globally.”

Oleksandr Kamyshin was appointed to the post around eight months ago, and is now in charge of 300,000 people employed in Ukraine’s defense industry.

He previously worked as the chief of the national railway Ukrzaliznytsia, which under his rule, became famous for keeping trains running on time despite the war, crucial to evacuating hundreds of thousands of Ukrainians to safety in the early days of Russia’s invasion.

Now he recalls that time as his “past life” and says he is completely focused on make the defense industry a successful enterprise like Ukrzaliznytsia.

He acknowledges that he has had to start scaling the local manufacture of weapons from scratch. Ukraine barely had a local defense industry to speak of before 2022, he said, with the military mainly relying on what it already had and what it received as military aid from allies before the war began with Russia's invasion in February 2021.

Now, Ukraine is delivering locally produced munition to the battlefield and can increasingly strike inside Russia, he said.

He declined to disclose specific figures but said Ukraine is manufacturing mortar and artillery ammunition, drones, armored vehicles, missiles and various other items. The industry, he says, has grown by dozens or even hundreds of times compared to the previous year in some segments.

Artillery ammunition production has increased by 20 times in the last 10 months, and armored vehicle production has grown by five times during the same period, he said.

Most crucially, Kamyshin says that the increased local production of weapons has enhanced Ukraine’s capabilities to launch attacks on Russian territory.

“As you know, Moscow never sleeps. Now, Sochi never sleeps. Now, Krasnodar never sleeps. And there would be more Russian cities that never sleep,” said Kamyshin, referring to regular drone strikes occurring on Russian territory.

Since the onset of the war, the Western allies were careful with providing Ukraine with weapons that could reach Russia, fearing the strikes of Western-supplied weapons on Russian territory would lead to a wider war.

Kamyshin acknowledged that defense technology, particularly in the field of innovative warfare, is a game-changer and the fastest-growing sector in Ukraine’s defense industry.

As many allies have significantly depleted their stocks in order to support Ukraine, the country has recently hosted an international defense industry conference seeking other forms of cooperation, including the joint production of weapons. Kamyshin said that over 60 companies signed an agreement to become a part of the Alliance of Defense Industries of Ukraine after the forum. He revealed they are mostly companies from the U.S., the U.K., France, Germany, Poland, the Czech Republic and Turkey.

The minister has ambitious plans for the future of Ukraine’s defense industry and believes that one day, his country will be able to export various types of weapons and munition, just as it exports its grain across the world.

“That’s something we can contribute to the free world because, as you see, the defense industry is becoming more and more important globally,” he said, adding that it could help to revitalize Ukraine’s economy, drained by war.

Despite the claims of steady growth, Kamyshin admits that it will never be possible for Ukraine to cover its needs without supply from its foreign partners.

“No matter how much you grow, it would never be enough because we got the greatest war of generations,” he said, referring to Russia's invasion.

“That’s why we will always be dependent on foreign supply as well."

___

Follow AP’s coverage of the war in Ukraine at https://apnews.com/hub/russia-ukraine

Hanna Arhirova And Nebi Qana, The Associated Press

LA REVUE GAUCHE - Left Comment: Search results for PERMANENT ARMS ECONOMY 

Bankers Seek Legal Cover After Backing $1.5 Trillion of ESG Debt

Greg Ritchie and Alastair Marsh
Sun, November 5, 2023 





(Bloomberg) -- Bankers servicing one of the world’s biggest ESG debt markets are now actively seeking legal protections to guard against the potential greenwashing allegations that may be ahead.

In the handful of years they’ve existed, sustainability-linked loans have mushroomed into a $1.5 trillion market. SLLs let borrowers and lenders say that a loan is tied to some environmental or social metric. But the documentation to back those claims generally isn’t available to the public, nor is the market regulated. Lawyers advising SLL bankers say the reputational risks associated with mislabeling such products are now too big to ignore.

Greg Brown, a London-based partner in Allen & Overy’s banking practice, says he’s seen a surge in clients asking for new legal clauses in SLL documentation. Such add-ons are designed to let lenders strip the “sustainability” claim from a loan. So-called declassification provisions mean bankers can just book what had been an SLL as a normal loan, should they subsequently realize the product doesn’t actually merit an environmental, social or governance label.

Rachel Richardson, head of ESG at London-based law firm Macfarlanes, says her firm’s clients are now asking for “more and more” declassification clauses.

“I would describe it as protection for lenders for greenwashing risk,” she said in an interview.

The newness of such clauses means it’s not yet clear how often clients will end up triggering them. But their introduction is an important signal.

Jamie Macpherson, senior counsel at Macfarlanes, pointed to a letter by the UK’s Financial Conduct Authority in June addressed to heads of sustainable finance. The FCA, which noted that it does “not directly regulate this part of the market,” said then that concerns around the “integrity” of some SLLs had been “corroborated by market intelligence.” As a result, “accusations of greenwashing” may follow, the FCA said.

For SLL bankers, that means “publicizing anything that you can’t back up with good robust processes is a danger from a regulatory perspective,” Macpherson said.

Read More: Learn More About ESG-Linked Loans

The SLL market is far from transparent, and not all deals can be seen in public filings. Based on data compiled by BloombergNEF, sustainability-linked loans arranged in the first three quarters of 2023 amounted to only 40% of the level seen at the same time last year, or roughly $136 billion.

Next year, meanwhile, a large number of SLL borrowers will need to get existing loans rolled over. An estimated $187 billion worth of SLLs will come due in 2024, according to data compiled by Bloomberg. More than 90% of that will be in the form of revolving credit facilities.

The most active SLL lenders are Bank of America Corp. and JPMorgan Chase & Co., according to league data compiled by Bloomberg. Representatives from both banks declined to comment.

“The real downside risk for lenders is, if you take your SLL book and you publicize to the world — or to your regulator — that you are now financing X-trillion-dollars of sustainable finance, what happens if someone then takes a ruler to that and actually delves down into what that means?” Brown said in an interview.

Lenders may not be as supportive of the sustainability-linked loan market in 2024 as they were during its peak during the 2021 to 2022 period, according to at least three senior bankers who have worked on SLLs and who asked not to be named discussing non-public information.

Aside from an overall retreat from debt markets due to higher interest rates, one banker pointed to an additional level of souring toward the SLL market that’s being driven by the arrival of regulatory scrutiny. Voluntary standard setters in the industry also are trying to catch up, which means there’ll probably be stricter guidelines in future, the banker said.

Allen & Overy’s Brown said banks were increasingly seeking additional legal protections for SLLs at the end of last year. By this year, such clauses were “starting to appear almost as standard in a lot of deals,” he said.

Regulatory scrutiny “feeds into lenders taking a closer look at their ESG-related products,” he said. “Anything that has an ESG label, we need to be a bit more careful.”

After a timid start in 2017, the SLL market took off as banks increasingly attached sustainability claims to loans, often without having to provide public documentation to back the label.

Between 2018 and 2021, the SLL market soared more than 960% to $516 billion of annual deals, according to data provided by BloombergNEF. Green bonds, the biggest ESG debt market, grew 250% in the same period to just over $640 billion worth of annual deals. As of last year, there was no ESG debt market bigger than SLLs, except for green bonds.

The SLL bankers Bloomberg spoke with raised concerns that some of the deals crossing their desks had questionable sustainability credentials. Some of the deals were rejected, but some were accepted for commercial reasons, they said.

They cited examples in which borrowers set themselves softer emissions reduction targets than their current net zero trajectory implied. And borrowers would allow themselves several years to meet such goals.

Examples given by the bankers include rejecting SLL pitches with health and safety targets, as these were often little more than a promise to uphold the absolute minimum requirements needed to avoid work-related injuries. In another example, a coal company seeking an SLL wanted the environmental targets to cover just 5% of its emissions. The loan was rejected by western banks, but ultimately taken on by lenders in the company’s local market who were joined by Chinese banks.

Another banker spoke of deals in which key performance indicators were set to sustainability targets that never represented a realistic ESG risk in the first place.

The UK’s FCA has itself documented examples of potential greenwashing. In its June letter to sustainable finance heads, it noted that of the 250 SLL transactions done by one market participant in 2022, “only 30% were deemed ‘fit for purpose.’”

The FCA said it also “noted a general sentiment among banks that the ‘relationship’ may matter more than the borrower’s sustainability credentials.”

Grace Osborne, an analyst at Bloomberg Intelligence, describes the SLL market as “opaque,” which “makes measuring impact a substantial challenge.”

As a result, growing concern that such products are being used “as marketing tools for banks and a means to achieve sustainable-finance targets may create regulatory and reputation risk,” she said.

In the smaller but more transparent sustainability-linked bond market, the International Capital Market Association has set guidelines to protect investors from greenwashing that specifically require issuers to set key performance indicators that are relevant to their industry.

This year, the Loan Market Association published updated voluntary principles for SLLs. Borrowers and their banks are supposed to make sure that key performance indicators are actually “relevant, core and material.” KPIs also should be “measurable or quantifiable,” and possible to compare with a benchmark, the LMA said. And borrowers “are encouraged” to publicly report the extent to which they’re meeting targets. Crucially, external verification is required, according to the LMA’s updated principles, which only apply to deals struck after March 9 of this year.

“SLLs have seen meteoric growth since their inception in 2017 and, as such, market practice is in a constant state of evolution,” the LMA said in May. “Much like the SLL product itself, it is intended that these model provisions shall evolve in line with the market.”

In its June letter, the FCA said the SLL market “provides a useful transition finance tool” if done right. The regulator added that it now hopes “to encourage industry-led action that will help the market for SLLs scale with integrity.”

--With assistance from Jacqueline Poh.

Most Read from Bloomberg Businessweek

Australian prime minister to protest blogger's detention conditions while meeting China's leader

Sun, November 5, 2023 



CANBERRA, Australia (AP) — Prime Minister Anthony Albanese said Saturday he would protest a lack of transparency in China’s treatment of a detained Australian democracy blogger when meeting with President Xi Jinping in Beijing during a trade-focused state visit.

The detention of Yang Hengjun without conviction for almost five years will be one of the topics raised with Xi when they meet in the Great Hall of the People on Monday.

Yang is being held in a Beijing detention center awaiting the verdict of a 2021 closed-door trial on espionage charges. The 58-year-old’s family fears he is dying.

“I’ll be saying that Dr. Yang’s case needs to be resolved and I’ll be speaking about his human rights, the nature of the detention and the failure to have transparent processes,” Albanese told reporters in the northern Australian city of Darwin hours before he flew to Shanghai.

The Chinese Foreign Ministry this week defended Yang’s prosecution, saying his case had been handled in strict accordance with the law.

Chinese state broadcaster CCTV announced that Albanese arrived in the Chinese financial hub Saturday afternoon along with his delegation, becoming the first Australian prime minister to visit China since 2016. The visit signals an improvement in strained relations between the two nations since Australia’s center-left government was elected last year.

"It’s very good to be here,” he told Australian reporters on the tarmac. “I look forward to the visit.”

He was greeted by China’s ambassador to Australia, Xiao Qian, and Australia’s ambassador to China, Graham Fletcher. Albanese was handed a bouquet of flowers by a young girl.

Albanese has been raising the plights of Yang and another detained Australian, journalist Cheng Lei, with Chinese leaders since he first met Xi on the sidelines of a Group of 20 summit in Indonesia a year ago.

Cheng was freed and deported last month after three years in a Beijing detention for breaking a government-imposed embargo by a few minutes. Her release was interpreted as a Chinese concession ahead of Albanese’s visit.

Albanese is to meet on Tuesday with Chinese Premier Li Qiang, whose message of congratulations soon after the prime minister’s election victory on May 21 last year raised the prospects of a reset in bilateral relations.

Beijing has previously refused top-level ministerial contacts between the two countries.

From the outset of his prime ministership, Albanese had demanded that China immediately lift what he described as “unjustified” official and unofficial trade barriers costing Australian exporters 20 billion Australian dollars ($13 billion) a year.

Those barriers have since been substantially reduced and now cost around AU$2 billion ($1.3 billion).

Albanese on Saturday credited his government’s different approach toward China for what he describes as “stabilizing” the relationship, after nine years of conservative rule in Australia.

“My approach towards this relationship has been patient, deliberate and measured, making sure that both of our interests are put forward because that is the way that good diplomacy works,” Albanese said.

“The fact that it is the first visit in seven years to our major trading partner is a very positive step, and I look forward to constructive discussions and dialogue with the president and the premier during my visit to Shanghai and Beijing,” he added.

China is concerned by the level of restrictions placed on Chinese investment in Australia due to growing security concerns.

Around 400 Australian executives who do business with China are expected to attend a lunch with Albanese in Shanghai on Sunday. Many urge Australia to ease restrictions on Chinese investment.

“Chinese investment shouldn’t be a dirty word,” David Olsson, president of the Australia China Business Council, told The Australian Financial Review newspaper.

Albanese will visit Shanghai to attend the opening of the China International Import Expo trade fair where more than 200 Australian companies will be represented.

During the three-day visit, Albanese will focus on reinvigorating the China-Australia free trade agreement, resolving the remaining Chinese trade bans and finding agreement on how to settle future trade disputes, his office said.

Trade Minister Don Farrell, Foreign Minister Penny Wong and an Australian business delegation are traveling with him.

China is Australia’s largest export market, particularly for iron ore, natural gas and critical minerals such as lithium.

Albanese has signaled that Australia won’t back China’s bid to join the free trade agreement known as the 12-nation Comprehensive and Progressive Agreement for Trans-Pacific Partnership.

Rod Mcguirk, The Associated Press

Cameco stock hits 52-week high; CEO says U2's Bono shows nuclear 'social shift'



Jeff Lagerquist
Tue, October 31, 2023 at 12:06 p.m. MDT·3 min read


Cameco CEO Tim Gitzel says U2 rocker Bono's recent shift from an ANTI nuclear energy activist, to a supporter, is bullish for the uranium industry. (Michele Tantussi / reuters)

Shares of Cameco (CCO.TO)(CCJ) hit a 52-week high on Tuesday as the Canadian uranium miner raised its 2023 revenue guidance amid rising prices for nuclear fuel.

Saskatoon-based Cameco now expects to earn between $2.43 billion and $2.58 billion this year, a $500 million increase from its prior guidance.

The company on Tuesday reported third-quarter profit of $148 million, compared with a $20 million loss in the same period last year. Revenue for the three months ended Sept. 30 topped $575 million, up from $389 million in the third quarter of 2022.

Toronto-listed Cameco shares rose nearly 10 per cent in Tuesday's trading session, climbing as high as $57.62. The stock was up 8.12 per cent to $56.61 as at 12:38 p.m. ET.
Cameco Corporation (CCO.TO)

A combination of rising concerns about energy security, growing urgency to address climate change, and expectations for surging global electricity demand have improved the outlook for uranium in recent years. At the same time, years of underinvestment following Japan's Fukushima nuclear accident have impacted global supply.

The International Energy Agency says global nuclear capacity must double by mid-century from 2020 levels to help meet the world's various net-zero commitments.

"There are a number of notable differences in the market's evolution and prospectivity compared to past cycles," Cameco CEO Tim Gitzel told analysts on a post-earnings conference call Tuesday morning.

"Cameco's valuation should therefore reflect a scarcity premium. No other publicly-traded uranium company offers similar exposure to that durable full-cycle demand growth across the fuel cycle that's occurring in the nuclear industry."

According to a Bloomberg report, several hedge fund managers are ratcheting up their exposure to uranium stocks.

Gitzel says nuclear power is now an "undeniable part of the social conversation," noting a recent meeting with Prime Minister Justin Trudeau and Ukrainian President Volodymyr Zelenskyy, as well as an apparent change of heart by U2 frontman Bono.

"Longtime nuclear protesters, like Bono of U2, just last month admitted that although he has campaigned against nuclear energy for a long time, his view has flipped to support nuclear amid the climate crisis," Gitzel said on the call. "We're seeing a social shift happening like never before."

The company said on Tuesday that it continues to expect its $7.9 billion deal in partnership with Brookfield Renewable Partners (BEP-UN.TO)(BEP) to acquire nuclear power plant equipment maker Westinghouse Electric to close by year's end.

Gitzel also addressed operational challenges that forced Cameco to lower its 2023 production guidance last month. The company's Cigar Lake and Key Lake operations were impacted by equipment reliability issues, as well as labour, and supply chain issues.

"I'm happy to say it's going a lot better," Gitzel said, describing the problems as "short term."

Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.

UCP general meeting kicks off in Calgary with high turnout, questions of unity

CBC
Sat, November 4, 2023 

Delegates lineup to register at the United Conservative Party annual general meeting in Calgary, Friday, Nov. 3, 2023. (Jeff McIntosh/The Canadian Press - image credit)

A strikingly large crowd streamed into Calgary's BMO Centre on Friday afternoon for the first day of the United Conservative Party's annual general meeting, expected to be a crucial weekend to gauge party unity in light of the involvement of the social conservative group Take Back Alberta.

Friday was a chance for attendees to get oriented, and to vote on less dramatic governance resolutions — such as whether leadership reviews should take place two years instead of three after an election, and whether paper membership cards could be issued to party members. Both of those did not pass.

But most of the fireworks will come on Saturday, with controversial policy resolutions to be voted on and board elections to be held.

Political watchers are paying close attention to see how this weekend's meeting, the second under Alberta Premier Danielle Smith, will be received by the crowd of at least 3,728, a figure the party says is the largest in Alberta's history. The UCP's founding convention in 2018 drew around 2,500 members.

Crews ready the venue of the United Conservative Party annual general meeting in Calgary, Friday, Nov. 3, 2023.

Crews ready the venue of the United Conservative Party annual general meeting in Calgary. Alberta's United Conservatives are holding their second annual general meeting under Premier Danielle Smith on Friday and Saturday. (Jeff McIntosh/The Canadian Press)

Many attending for the first time

As the doors opened to the event centre, members filed into the meeting hall along stanchions divided by black curtains. Many in this line said they were attending a political AGM for the first time, and many said it was the efforts of the social conservative group Take Back Alberta that had drawn them there.

Some still expressed grudges over how pandemic-era policies were handled by government, while others said they were here to weigh in on policies tied to the economy.

"I guess we tend to be Take Back Alberta people, but we'll see. I hope the people who work in there really do unify," said first-time attendee Verlin Rau.

First-time annual general meeting attendee Verlin Rau said he has been impressed with Alberta Premier Danielle Smith so far, though he said he recognizes she has been under pressure. (Joel Dryden/CBC)

"I want to see what they're doing on things like policy and governance, and things like that," said Tom Howard, another attendee in line.

A short walk away, in Stampede Park's Big Four Roadhouse, tables clad with black cloth were littered with pamphlets and handouts from party board hopefuls.

"There's a lot of talk about party unity. How do we build unity? By building trust," read one printed on yellow paper.

These normally sleepy elections have drawn increased attention this year due to Take Back Alberta's goal of taking a majority of the board for the stated reason of guaranteeing grassroots representation in government.

David Parker, the group's leader, was visible on the meeting floor on Friday. The night prior to the event, he wrote on X, previously Twitter, that this weekend would begin "a new age in Alberta."

"After this AGM, the grassroots of the UCP will be in charge," he wrote. "Those who do not listen to the grassroots or attempt to thwart their involvement in the decision making process, will be removed from power."

Social issues clearly front-of-mind

On stage in the Big Four Roadhouse, sessions with provincial ministers were underway even as registrants in the BMO Hall waited in line.

The sessions, focused on crime, energy and the environment, kicked off with a talk from Energy and Minerals Minister Brian Jean and Environment and Protected Areas Minister Rebecca Schulz. Their efforts talking up Alberta's opposition to federal net-zero rules and to Prime Minister Justin Trudeau were warmly received by the party faithful.

"Smith is gonna kick some butt," Jean said, referring to the prime minister.

A registrar hands out vote cards to delegates at the United Conservative Party annual general meeting in Calgary, Friday, Nov. 3, 2023. (Jeff McIntosh/The Canadian Press)

But where the crowd really came alive was during the question-and-answer sessions with Jean and Schulz, and with Minister of Justice Mickey Amery and Minister of Public Safety and Emergency Services Mike Ellis. During one of those portions, an attendee referenced what they said were pressing issues of gender and sexuality in schools, something often referenced by Take Back Alberta leader Parker and others as "parental rights."

The crowd loudly applauded those sentiments. Requiring the written consent of parents whenever a student under 16 wants to change their name or pronouns at school is one of many controversial party positions reflected amongst the30 policy resolutions that will be voted on by party members on Saturday.

Other resolutions include prohibiting the implementation ofso-called '15-minute cities,' ending funding for supervised consumption sites and opposing net-zero power rules in Canada by 2035.

Party resolutions are brought forward by party members and are non-binding, but they do provide grassroots direction on what it thinks the government's policies should be.

Mixed views on unity

Talk to people ordering tacos from food trucks outside the Big Four Roadhouse, or party members lingering in the hallways, and opinions vary on how much unity there is currently in the party.

Many, including those affiliated with Take Back Alberta, say they think Smith is equipped to help keep people across the conservative spectrum together.

Delegate Scott Payne of Medicine Hat arrives at the United Conservative Party annual general meeting in Calgary on Nov. 3. (Jeff McIntosh/The Canadian Press)

Others aren't so thrilled with the influx of members from Take Back Alberta and its implications for party policy moving forward. Denise Hamilton, a director with the Calgary-Beddington constituency association, said she would welcome the members as friendly members of the UCP, but didn't want them to take over the party.

"We can't just go one way or the other. You tip the scales, and you're way off balance. So it worries me, worries me a lot," Hamilton said. "If they had just wanted to come and run for each board, and just like the rest of us, want to do the hard work — sure, please join us.

"But if you came in here, just to take us over, because you have your own agenda, and you don't want to fit in with the regular agenda, then I'm not with that."

Such dynamics are likely to continue on Saturday, when most of the action is scheduled to take place. Speeches from candidates running for seats on the party's board will begin early in the morning, and voting will take place until 2 p.m. Smith will also deliver her keynote address on Saturday afternoon at 1 p.m.

Danielle Smith signals support for 'parental rights' as party members pass controversial resolutions


CBC
Sat, November 4, 2023

Alberta Premier Danielle Smith speaks to party faithful at the United Conservative Party annual general meeting in Calgary on Saturday. (Jeff McIntosh/The Canadian Press - image credit)

In a speech to party members on Saturday, Alberta Premier Danielle Smith expressed her opposition to federal net-zero rules and called out her federal counterparts in Ottawa, but received the loudest approval of the day after signalling her support for "parental rights."

"Regardless of how often the extreme left undermines the role of parents, I want you to know that parental rights and choice in your child's education is and will continue to be a fundamental core principle of this party and this government," Smith said.

This weekend's annual general meeting in Calgary, one the United Conservative Party has referred to as the largest in Alberta's history, drew a large contingent of members affiliated with Take Back Alberta, a social conservative group.

David Parker, the leader of that group, has made the subject of "parental rights" among his chief areas of interests. Over the past number of months, some parents and socially conservative groups have been protesting LGBTQ-inclusive education policies in the classroom and in extracurricular settings under that term.

Attendees at this weekend's AGM passed a non-binding resolution that would require the written consent of parents whenever a student under 16 wants to change their name or pronouns at a school.

Party faithful cheer Alberta Premier Danielle Smith as she speaks at the United Conservative Party annual general meeting in Calgary on Saturday. (Jeff McIntosh/The Canadian Press)

The Saskatchewan government recently passed a similar bill. Critics and researchers say the term "parental rights" isn't accurate, because it doesn't include the concerns of LGBTQ parents or parents of LGBTQ children.

Smith herself has, in the past, spoken about how she didn't want to turn this issue into a political football, mentioning a non-binary family member. Speaking to reporters after her speech, she said she was still hopeful that it was possible to "keep the temperature down."

"Whether you're a straight couple or a gay couple or whether you're a trans individual, you want to know what's going on with your kids," she said.

"I don't think it needs to be polarizing. I think that we have to make sure that we're respecting the rights of parents, but also making sure kids feel protected and supported."

While the premier didn't make any policy commitments, it was a way for her to indicate to members that that she shared their concerns, said Lisa Young, a University of Calgary political science professor.

"I think that the reaction from the party members who were there really did signal how important this issue is to them," Young said.

"So it will be interesting to see how this plays out in the policy debate, and in the days to come if there's pressure on the government to act, as opposed to simply expressing sympathy."

Attendees at the UCP AGM also voted on a number of other policy resolutions. They approved resolutions banning race-based admissions in post-secondary institutions and a resolution that would prohibit the implementation of so-called "15-minute cities."

Delegates cast their votes at the United Conservative Party annual general meeting in Calgary on Nov. 4. (Jeff McIntosh/The Canadian Press)

They've also approved resolutions that would ban the use of electronic voting machines, end provincial funding of supervised consumption sites and refuse transgender women in women's correctional facilities. Members also voted to approve a resolution that would oppose net-zero power rules in Canada by 2035.

Party members voted on 30 policy resolutions in total. Policy resolutions are brought forward by party members, and are non-binding, but they do provide grassroots direction on what it thinks the government's policies should be.

Smith references AHS decentralization

Smith, in her speech at the BMO Centre, also received a big response from the crowd after saying her government would have more to say "in the coming weeks" on health reforms that would "decentralize decision-making and resources from AHS down to our front lines."

Young, the U of C political science professor, said there have been a number of people recruited into the party as members over the past year or two who were unhappy with the provincial government's response to the COVID-19 pandemic, specifically when it came to mandates.

"The policy stance that seems to be favoured by those groups is that there needs to be decentralization of Alberta Health Services," Young said.

Alberta Premier Danielle Smith promised to continue to reduce taxes, balance budgets, pay off debt and eventually build a high-speed rail link between Edmonton and Calgary as a part of her speech to almost 3,800 delegates at the United Conservative Party's annual meeting in Calgary on Saturday. (Jeff McIntosh/The Canadian Press)

During her speech, Smith also touched on familiar topics such as her opposition to federal net-zero rules, receiving loud applause from the crowd when she referred to federal Minister of Environment and Climate Change Steven Guilbeault as Prime Minister Justin Trudeau's "green czar."

"They are still hell-bent on imposing these destructive leftist policies on the people of Alberta. You know what I say to them. Not so long as I am premier. Not a chance," said Smith.

Smith did not mention the ongoing battle over the Canada Pension Plan during her remarks. Based on a report from the consultant LifeWorks, the province has claimed that if it pulled out of the CPP, it would be entitled to $334 billion, which would represent more than half of the fund's assets.

Rob Smith new party president

One of the other main areas of focus at this year's AGM has been the question of unity — in particular, how Smith might respond to Take Back Alberta and the members it drew to the event.

"I think a strong message is going to be sent to our government that the grassroots is very interested in protecting their rights," said Parker, the leader of the group, on Saturday afternoon.

David Parker, centre, founder of Take Back Alberta, looks on as delegates debate resolutions at the United Conservative Party annual general meeting in Calgary, on Nov. 4. (Jeff McIntosh/The Canadian Press)

Parker has said the group's goal is to take a majority of the seats on the UCP board so as to ensure the goals of his group's members are represented in government.

Before this weekend's event, Take Back Alberta already held half of the board seats, with Parker saying he wanted his group to control an "absolute majority" of the seats after the AGM.

Two Take Back Alberta-affiliated individuals, Sonia Egey-Samu and Vicki Kozmak-LeFrense, filled spots by acclamation on Saturday, with Egey-Samu the new vice-president of fundraising and Kozmak-LeFrense a northern director. Attendees at the AGM voted for Olds-Didsbury-Three Hills constituency association president Rob Smith to become the new party president. As a riding president, Smith challenged the leadership of former premier Jason Kenney.

United Conservative Party member Ron Pearpoint said he was concerned about unity within the party moving forward. (Joel Dryden/CBC)

Though Take Back Alberta drew plenty of supporters to this weekend's events, its large presence drew concern from some attendees, too.

In line for the lunch buffet on Saturday afternoon, Ron Pearpoint said he was concerned about how long conservative premiers have typically lasted in Alberta, including Smith's predecessor, Kenney.

"That bothers me more than anything else. We eat our own, right?" he said.

How an American meat broker is fueling Amazon deforestation

LONG READ 

Sat, November 4, 2023 



WASHINGTON (AP) — As incomes in China have grown in the last decade, so has China’s appetite for beef. No longer out of reach for China’s middle class, beef now sizzles in home woks and restaurant kitchens.

China has become the world’s biggest importer of beef, and Brazil is China’s biggest supplier, according to United Nations Comtrade data. More beef moves from Brazil to China than between any other two countries.

But the Brazilian cattle industry is a major driver of the destruction of the Amazon rainforest. Data analysis by The Associated Press and the Rainforest Investigations Network, a nonprofit reporting consortium, found that a little-known American company is among the key suppliers and distributors feeding China’s hunger for beef – and the Amazon deforestation that it fuels.

The world’s largest rainforest, the Amazon plays a critical role in the global climate by absorbing carbon emissions. A new study published this week in the journal of the National Academy of Sciences linked Amazon deforestation to warmer regional temperatures.

Salt Lake City-based Parker-Migliorini International, better known as PMI Foods, has been a major beneficiary of the beef trade between Brazil and China. PMI has shipped more than $1.7 billion in Brazilian beef over the last decade – more than 95% of it to China, according to data from Panjiva, a company that uses customs records to track international trade. Over the last decade, Chinese beef imports have surged sixfold, U.N. Comtrade data shows, and PMI has helped satisfy China’s growing demand.

As a middleman that has been one of the leading importers of Brazilian beef to China, PMI provides a window into how that growing international trade is driving deforestation.

___

This story was supported by the Pulitzer Center’s Rainforest Investigations Network.

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Holly Gibbs, a professor of geography and environmental studies at the University of Wisconsin-Madison who studies land use changes linked to the beef industry, says that PMI has contributed to the Amazon’s destruction, because it sources beef from companies that purchase cows raised on deforested land.

Last year, the Brazilian Amazon lost more than 4,000 square miles (10,360 square kilometers) of rainforest, the equivalent of nearly 3,000 soccer fields each day, according to a January report by Imazon, a Brazilian research group that uses satellite monitoring to track deforestation.

More than two-thirds of deforested land in the Brazilian Amazon has been converted to cattle pastures, according to Brazil’s Ministry of Environment and Climate Change.

PMI gets more of its Brazilian beef from Sao Paulo, Brazil-based meat processing giant JBS SA than from anywhere else. In a series of reports released between 2018 and 2023, Brazilian prosecutors have determined that JBS purchased massive numbers of cattle raised on illegally deforested land. Last December, prosecutors found that JBS had bought more than 85,000 cows from ranches that engaged in illegal deforestation in Pará, one of nine states in the Brazilian Amazon. Their latest report, released October 26, found that JBS had substantially lower but still significant rates of purchases from ranches involved in environmental violations across four Amazon states.

“There’s no doubt that PMI Foods is benefiting from the deforestation of the Amazon,” Gibbs said. “They’re also helping to drive that deforestation by continuing to pay into that system.”

In an email, a PMI spokesperson said that “in a world where famine, malnutrition and acute food insecurity are a global concern, PMI is focused on feeding millions of people all over the world,” including providing meals to refugees.

PMI said it is working to strengthen environmental practices of its beef operations. “While our absolute primary priority is feeding people, we remain committed to continuous improvement of sustainability across the beef value chain,” the spokesperson said.

PMI Foods is a $3 billion global enterprise that buys and sells more than 1.6 billion pounds (725.7 million kilograms) of beef, pork, chicken, seafood and eggs each year. In the last decade, PMI Foods shipped more than $616 million of Brazilian beef from JBS, almost twice as much as from any other supplier, shipping records show.

JBS, in turn, purchased a significant share of its cattle from ranches that were illegally deforested, Brazilian prosecutors have found. These properties accounted for 15% of JBS’s cattle supply in the Amazon state of Pará from 2019 to 2020, according to an audit by prosecutors audit last December. The company’s purchases from properties linked to environmental violations decreased to 6% of its supply across four Amazon states in the following year, prosecutors found in an audit published in October.

JBS has been investigated and fined by Brazilian authorities in connection with its purchases of cattle from illegal farms, but these are separate from the audits, which are focused on improving company practices.

JBS, the world’s largest meat processor, asserts that it has fixed the problems identified in previous audits by prosecutors. In a statement, JBS said it has a “zero-tolerance policy for illegal deforestation” in its supply chains, and is adopting block chain technology to include vetting of indirect suppliers by 2025.

Yet as recently as last fall, JBS admitted to a large-scale purchase of cattle raised on illegally deforested land. Following an investigation by Repórter Brasil, a contributor to the Rainforest Investigations Network, JBS acknowledged it had illegally bought nearly 9,000 cattle from a rancher whom Brazilian authorities have described as “one of the biggest deforesters in the country.” The rancher, Chaules Volban Pozzebon, is now serving a 70-year prison sentence for offenses including leading a criminal gang.

PMI also buys in large volume from Brazil’s second largest meat processor, Marfrig, which has been dogged as well by reports by environmental groups and news outlets alleging that it purchased cattle from ranches that were involved in illegal deforestation. In February 2022, the Inter-American Development Bank scrapped a $200 million loan to Marfrig amid criticism of the company’s environmental record. In September, the Swiss food multinational Nestlé dropped Marfrig as a beef supplier in Brazil following media reports last year that Marfrig had bought cattle raised on land that was seized from indigenous peoples.

Marfrig said in an email that the ranch cited in last year’s reports was on land that had not yet been designated protected indigenous territory. Marfrig did not face legal penalties in connection with the case. The company said it has a “rigorous livestock sourcing policy” that uses satellite monitoring to avoid suppliers linked to deforestation.

Asked about its leading suppliers, JBS and Marfrig, buying cattle raised on deforested or illegally seized lands, PMI said it requires its suppliers to follow local laws, and depends on government environmental agencies in Brazil and elsewhere to enforce them. “PMI relies on the assurances set forth in the sustainability policies of its suppliers,” a company spokesman said in an email.

For its part, Brazil's Environment Ministry said independent audits have shown that major meat processors are still buying significant quantities of cattle raised on deforested land through their indirect suppliers.

“The persistence of these cases shows that the companies' systems are flawed and there is not sufficient effort to avoid illegal purchases,” the ministry said in a statement.

The FBI Investigation

PMI Foods has come under scrutiny from U.S. authorities before for its shipments to China.

Between 2008 and 2011, Parker International, a predecessor of PMI and co-creator of PMI Foods, took in more than $289 million in revenue from illegal beef shipments to China, representing the majority of U.S.-sourced sales to the country, according to a spreadsheet produced by a whistleblower for FBI investigators.

“They were willing to break laws,” whistleblower Brandon Barrick said in an interview in 2022, referring to the time that he worked at PMI. “They were willing to do whatever it took to make a buck for themselves.”

In spring of 2014, Parker International pleaded guilty to a misdemeanor charge of making a false statement to U.S. authorities about the destination of its beef exports and paid a $1 million fine.

In an email, PMI said it had put the “entire episode behind us” nine years ago, and emphasized that Parker International pleaded guilty only to making a false statement. “PMI was never charged with a crime for its export operations,” said company attorney Mark Gaylord.

Rise of beef in China

In the last decade, Chinese imports of beef from Brazil have increased from $1.3 billion in 2013 to more than $8 billion in 2022, according to U.N. Comtrade data.

PMI has been a major player in feeding that growing market. As of 2017, the company was the second largest importer of Brazilian beef to China, according to a 2020 report by Trase, a research group that studies commodity supply chains.

As Brazil became China’s biggest supplier, cattle production ramped up. China imposes relatively few environmental demands on its beef importers, meaning suppliers who need land for cattle may be tempted to engage in deforestation, said Gibbs, the University of Wisconsin geography professor.

“As China’s demand for beef goes up, so does the stress on the rainforest,” Gibbs said.

Daniel Azeredo, a Brazilian federal prosecutor who has led crackdowns on illegal deforestation in the beef industry, said companies must ensure that products from the Amazon region do not come from illegally deforested land.

“Everyone who participates in the trade of products that come from the Amazon has to be able to transparently determine the products' origin,” Azeredo said.

In response to inquiries about whether it had raised concerns about deforestation with JBS or other suppliers, PMI Foods said it “has discussions with our partners, vendors and suppliers including JBS, about always improving best practices towards the environment and sustainability.”

Middlemen avoid scrutiny

As a middleman rather than a company that raises animals or processes meat, PMI’s role in deforestation has been little examined.

PMI’s reliance on JBS is not unusual among food companies. While a handful of European retailers have dropped JBS beef products in recent years due to deforestation concerns, major American brands such as Kroger and Albertsons, the parent company of Safeway, still purchase its beef.

Albertsons confirmed that it sources beef from JBS, but said it is only a small quantity. Kroger did not respond to inquiries but its online store includes JBS beef products.

JBS, Marfrig and other top beef producers have signed pledges to work against illegal deforestation. But unlike most leading meat processors and commodity traders, PMI has not signed on to agreements to fight deforestation, such as the New York Declaration on Forests, in which endorsers commit to goals including eliminating deforestation by 2030.

Two months after initial inquiries about its environmental policies for this story, PMI said it was joining industry efforts to combat deforestation.

“We are now proud to partner with One Tree Planted, Green Business Bureau and the U.S. Roundtable for Sustainable Beef,” the company said last November. Since then it has planted 10,000 trees in the Amazon, the company said, part of a longer-term plan to plant a million trees.

The company has not yet signed a pledge against rainforest destruction, but last month said it was considering making one. “We are open to pledges and currently working on these matters,” the company said.

Gibbs, the University of Wisconsin professor, said that because PMI and other middlemen have such strong purchasing power, they “need to come to the table” to help stop deforestation.

So far meat brokers have been “completely ignored,” she said, allowing beef to reach consumers’ tables without meeting environmental standards strong enough to protect the Amazon.

Azeredo, the Brazilian prosecutor, emphasized that not just meat processors, but all companies in the beef and leather industries share the obligation to avoid suppliers that violate environmental laws.

“The entire industry that buys those animals, that sells leather or meat, must make sure that they don't allow products from areas of illegal deforestation,” Azeredo said.

___

AP journalists Camille Fassett in Seattle and Fabiano Maisonnave in Brasilia, Brazil, contributed to this report.

___

This story was first published on Nov. 3, 2023. It was updated on Nov. 4, 2023, to make clear that Parker International, a predecessor of PMI and co-creator of the PMI Foods brand, pleaded guilty to a misdemeanor charge of making a false statement to U.S. authorities.

Sasha Chavkin, The Associated Press