The assessment by the Intergovernmental Platform on Biodiversity and Ecosystem Services, three years in the making and signed off by more than 150 governments, is expected to guide policymaking across multiple sectors.

WHY IT MATTERS: Construction, food, pharmaceuticals and infrastructure are among the sectors most exposed to biodiversity loss, research firm Zero Carbon Analytics said, though most companies face risks through their supply chains.

Written by 79 experts worldwide, the report pointed to “inadequate or perverse” incentives, weak institutional support and enforcement, and “significant” data gaps as key obstacles to progress.

It builds on a 2024 pledge by countries to protect 30 per cent of land and sea by 2030, followed last year by a plan to spend US$200 billion on the effort – still far short of the finance flowing into activities that damage nature.

‘Blind spot’

Despite the need for “transformative change,” US$7.3 trillion in public and private funds was going to nature-harming activities, the authors said, citing 2023 data.

“This Report draws on thousands of sources, bringing together years of research and practice into a single integrated framework that shows both the risks of nature loss to business, and the opportunities for business to help reverse this,” said Matt Jones (UK), one of three co-chairs of the assessment.

“Businesses and other key actors can either lead the way towards a more sustainable global economy or ultimately risk extinction … both of species in nature, but potentially also their own.”

The report said companies can act now by setting ambitious targets and embedding them in corporate strategy; strengthening auditing, monitoring and performance assessments; and innovating in products, processes and services.

Fewer than one per cent of public companies disclose biodiversity impacts, it added.

Construction, food, pharmaceuticals and infrastructure are among the sectors most exposed to biodiversity loss, research firm Zero Carbon Analytics said, though most companies face risks through their supply chains.

Paul Polman, the former boss of consumer goods company Unilever, said business strategy was about managing risk and building resilience, yet nature “has barely featured in that equation”.

“The IPBES assessment shows that this blind spot is now becoming one of the defining economic risks of our time.”

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It used terms such as “commitment” and “pledge,” and a slogan that “anything less is not an option,” to describe its plan on calls with investors about a sustainable bond issue and in marketing materials, including for its beef.

Nearly four years later, Jason Weller, global chief sustainability officer at the company in which the Batista family is the largest investor, told Reuters in a rare interview that its emissions goal was merely an “aspiration.”

“It was never a promise that JBS was going to make this happen,” Weller said about the net-zero emissions pledge.

He also said JBS cannot control how farms operate, although they are encouraging voluntary change. The company had pledged in 2021 to end illegal Amazon deforestation by its cattle suppliers by 2025.

In a written statement to Reuters after the interview, JBS said: “Our climate ambitions have not changed. Any assertion otherwise is completely untrue.”

Reuters found that investors have achieved little in holding JBS to its pledges in the last five years, with no shareholder proposals being put forward about the environment, few voting against the Batistas on any issue and hardly any questions about sustainability on earnings calls.

Profits are soaring on strong meat demand, helping drive JBS’ Sao Paulo-listed stock last month to a record high.

Deforestation by cattle farmers is pushing the Amazon closer to a tipping point at which the world’s largest rainforest will gradually stop locking away climate-warming carbon dioxide.

Brazilian cattle ranchers are responsible for 80 per cent of current Amazon deforestation, according to researchers.

The difficulty of reducing the environmental damage related to JBS and other agriculture companies could undermine President Luiz Inacio Lula da Silva as he prepares to host global climate talks in November.

Oil majors Shell and BP are also among global companies to have softened their climate pledges.

“There are far too few investors using their shareholder influence to engage with this issue,” said Vemund Olsen, a senior analyst for sustainable investments at Norway-based Storebrand Asset Management, which sold its JBS stock in 2017.

“It’s an issue to which the entire industry needs to find common solutions, and which also requires improved regulation and enforcement of legislation in countries like Brazil.”

In October, Brazil’s environmental protection agency fined ranches and meatpackers, including JBS, for raising or buying cattle on illegally deforested Amazon land.

Supply chain challenge

Environmental activists have calculated that 97 per cent of JBS’ emissions stem from greenhouse gases released through deforestation, biodiversity loss and pollution.

In emissions accounting, these are called emissions from changes in land use. JBS has called these calculations flawed.

While JBS reports indirect emissions across its supply chain, it excludes emissions related to changes in land use.

“There is not an approved format today on how to calculate land-use-change emissions for which we have confidence,” Weller said. JBS instead focuses on emissions from its own operations, including slaughterhouses.

Other global companies, including packaged food company Mars and grain traders Archer Daniels Midland and Bunge, have begun disclosing change-of-land-use emissions.

“We do not have the ability to mandate or force a change on farms, nor do we have the ability to mandate and change how our customers use our products,” Weller said.

Because of these limits, he said JBS had “zero operational, contractual or legal control of its supply chain.”

The executive, however, added that “despite not having any mandate, we’re acting on our supply chain, investing, and driving real change.”

Little pressure

Morningstar Sustainalytics, an independent sustainability ratings agency, places JBS in the 95th percentile among the companies it analyzes, with a “severe-risk” rating attached to its environmental performance.

Reuters found in interviews with investors and reviews of company filings that the fast-growing company faced little pressure even as evidence mounted that it was on track to miss sustainability targets.

The company’s 20 largest investors declined requests to discuss the company even as demands from European companies to stop deforestation mounted.

Morningstar data showed that 17 funds labeled as “sustainable” hold JBS stock. All declined to discuss their engagement with the company or their investment rationale, or did not respond to requests for comment.

Weller said JBS is committed to improving transparency and engagement with investors on sustainability.

The ability of private investors to influence the company is already limited as the Batistas hold almost half of the company’s stock. Another 21 per cent is owned by Brazilian development bank BNDES, which has sided with management in votes.

Non-public advice to investors last year from proxy advisor Glass Lewis showed JBS scored low on climate risk mitigation and board accountability, while proxy advisor ISS also raised concerns over management and “egregious governance practices in the context of corruption.”

During the broad anti-corruption investigation known as Operation Car Wash, which began in 2014 and included companies across Latin America, a court banned brothers Wesley and Joesley Batista from holding management positions.

It came after they admitted bribing approximately 2,000 Brazilian regulators, government officials and politicians, including a former president, over a span of 10 years.

Last April, the Batista brothers rejoined JBS’s board following a shareholder vote.

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Set by a group of 11 firms in the Good Food Finance Network, including Nuveen Natural Capital and Mexican development lender FIRA, the new goals cover objectives such as stopping deforestation and expanding the use of agroforestry.

“This new generation of high ambition targets can enable a cleaner greener food and agriculture sector,” said Eric Usher, Head of the U.N. Environment Programme Finance Initiative, which helped convene the group and approved the targets as ambitious.

Ahead of the COP27 global climate talks in Egypt in November, investors are increasingly focusing on links between a healthy food system and efforts to fight global warming and preserve biodiversity.

“The wider finance sector must use COP27 to supersize its ambition and grow a more sustainable food and agriculture sector,” Usher said.

Among the group’s targets, which cover a collective $113 billion in assets, Rabobank said it would aim to lock away 150 million tonnes of carbon emissions per year across its agricultural holdings by 2030.

FIRA, one of the largest sources of financing to the rural sector in Mexico, said it aimed to increase the amount of money it invests in adapting to climate change to $3.6 billion by 2030.

The Global Environment Facility, a multilateral funder of biodiversity protection, said among its targets it would aim to restore 420,000 hectares of degraded land, and improve land management practices across more than 20 million hectares.

Nuveen, which manages around 3 million acres of land, said it aimed to expand its policy on zero deforestation across its portfolio by the end of 2023, and would complete a natural capital inventory of all its properties.

“Identifying what a state-of-the-art, credible target to finance sustainable food and agriculture looks like is a vital part of addressing the urgent climate and food crises,” said Wiebe Draijer, co-chair of the Good Food Finance Network and former CEO from Rabobank.

“Today’s new generation of high ambition targets provide a significant step forward in meeting that challenge.”

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For some time companies including Canopy Growth, Aurora Cannabis and Tilray Inc. have been signing export deals with European governments, buying local companies, even opening production facilities in the region.

This year, they have also stepped up pitching their businesses to European funds at conferences and road shows, betting their size and first-mover advantage will help replace fickle retail investors with more stable institutions.

Canada was one of the first countries to approve medical marijuana in 2001, and legal recreational sales will begin in October.

Until now, though, Canadian firms have had little success in drawing institutional investors because of high valuations and lingering concerns about the future and legitimacy of the industry — particularly in the United States.

Executives say institutions are moving cautiously and acknowledge it will take time before their efforts translate into substantial investments, but cite some early results.

For example, while Tilray’s Nasdaq initial public offering in July primarily went to North American investors, 12 per cent of the $153 million offer was taken up by funds from London, Frankfurt, Sydney and Hong Kong.

Brendan Kennedy, CEO of Tilray and executive chairman of private-equity firm Privateer Holdings, which remains Tilray’s majority owner, said he met with more than 200 institutions, many in Europe, ahead of the listing.

“Some of the investors who participated in the IPO, they would’ve been unimaginable eight years ago, of course, but a year ago as well,” Kennedy told Reuters.

One of those to take part, albeit with a symbolic stake, was global investment house Fidelity International, which bought around 0.15 per cent of Tilray shares across several funds.

Canopy’s latest financing deal, a $500 million convertible debt offering in June, was only pitched to institutions and drew about 60, mostly new investors, with a third coming from Europe, CEO Bruce Linton told Reuters.

A significant shift toward a more institutional and diverse investor base, however, has yet to happen.

A Reuters analysis of publicly available shareholder data shows Canopy has just four Europe-based active investors that use a common long-term investing strategy, in contrast to 102 for Goldcorp, a similarly valued Toronto-listed stock.

Still, investors, organizers and executives say this year’s events mark a step up both in turnout and a shift to institutions compared with recent years when European conferences would primarily draw retail investors.

Michael Barnes, professor of neurological rehabilitation at the University of Newcastle and chief medical officer at Scythian Biosciences, said plans to relax rules later this year in Britain, home to many of Europe’s top investors, could unlock institutional demand.

“I think we’re close to a tipping point.”

In February, Canadian financial services firm Canaccord Genuity hosted Britain’s first medical cannabis conference in London aimed solely at investors and attended by more than 100 fund managers, family office representatives and wealthy individuals. Three months later, another conference organized by advisory firm Prohibition Partners with Canaccord as one of the lead sponsors drew 450 participants, according to the organizer.

“A couple of months in cannabis is like two years in most industries,” said Tristan Gervais, who leads Canaccord Genuity’s cannabis investment banking and corporate broking in Britain and Europe.

Different kind of cash

On the face of it, Canadian cannabis firms do not need cash. In anticipation of a surge in sales after October and more medical marijuana approvals worldwide, the valuations of the five biggest Canadian companies have soared to about $43 billion, even though most have yet to turn a profit. Yet most shares are held by retail investors, which brings price volatility that complicates planning and expansion.

“It’s smart strategy to… bring in institutions who will be with us as we expand,” said Cam Battley, Aurora’s chief commercial officer.

Aurora last year bought Pedanios, which supplies marijuana to German pharmacies, and also operates in Denmark and Italy. Canopy has operations and partnerships in Germany, Spain and Denmark.

For now, North American investors remain the main source of institutional capital.

Despite a federal ban, the U.S. is also by far the biggest legal market, accounting for almost 90 per cent of the $9.5 billion in global sales in 2017, according to research firms Arcview Group and BDS Analytics.

But Europe, projected to become the world’s largest medical cannabis market by 2028, could become a key source of funding.

Over 20 European countries allow medical marijuana, providing incentives to invest in Canadian firms, which account for the majority of operating licenses in Europe and about 70 per cent of its imports, according to Prohibition Partners.

The group predicts annual sales in Europe will reach 116 billion euros (C$175.9 billion) by 2028, with growth of 40 per cent a year.

Prohibition Partners’ founder Stephen Murphy said the Cannabis Europa conference attracted alongside fund managers also executives from sectors such as pharmaceuticals, healthcare and insurance.

Constellation Brands, a U.S. producer and marketer of beer, wine and spirits, set a high bar when it raised its stake in Canopy by $4 billion in August.

Among European investors to take their first step this year is Felix Wintle, fund manager of the London-based 15-million-pound (C$25.56 million) VT Tyndall North American Fund.

Wintle said the fund had about three per cent of its portfolio invested in Canopy Growth and Tilray, though lofty valuations made it tough to justify buying more.

“It’s a fascinating time for the sector because … you’re coming off prohibition, basically,” he said. “You don’t often get opportunities like this.”

— Reporting for Reuters by Nichola Saminather in Toronto and Simon Jessop in London; additional reporting by Joshua Franklin in New York.

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McDonalds and JD Wetherspoon were among those to receive a March 15 letter from institutions including Aviva Investors asking them to set a timeline to stop the use of medically important antibiotics in their supply chains.

The other eight approached were Domino’s Pizza, Brinker International, Darden Restaurants , Mitchells + Butlers, Restaurant Brands International, Restaurant Group, The Wendy’s Company and Yum! Brands.

The move follows warnings from the World Health Organization that the world is moving towards a post-antibiotic era in which many infections would no longer be treatable because of the overuse of antibiotics.

Eighty per cent of antibiotics produced in the U.S. are given to livestock, the coalition said in a statement, adding that failure to confront their “irresponsible” use threatens both health and investor returns.

“These large food companies are key ingredients in the portfolios of most of our pensions and savings, thus it is a case of proper risk-management to ask them to work out how they will meet this challenge,” said Jeremy Coller, chief investment officer of Coller Capital.

“The world is changing, regulation on antibiotic use is set to tighten and consumer preferences are shifting away from factory farmed food. As stewards of these food companies and responsible investors, we want to protect both human health and shareholder value.”

Drug-resistant infections could cost the world about C$129 trillion in lost output by 2050, the coalition statement said, citing recent academic research.

Among other investors to sign the letter were Boston Common Asset Management, Impax Asset Management and EdenTree Investment Management.

Domino’s spokeswoman Nina Arnott said the company’s suppliers only used antibiotics when necessary to treat disease, under veterinary supervision, and that they are not used to prevent disease or boost livestock growth.

“We are also encouraging our suppliers to reduce the use of antibiotics for therapeutic purposes, and trials are under way to assess the feasibility of achieving this goal,” she said.

In a written response dated March 24, JD Wetherspoon said that growth-promoting substances, including antibiotics, were already banned across all of its livestock supply chains.

Mitchells + Butlers said the use of antibiotics in livestock production is an important issue and the company is reviewing the matter across all species as part of its sourcing policy.

The Restaurant Group, meanwhile, said that it ensured responsible animal welfare standards throughout its supply chain and it is a strict requirement of suppliers’ contracts that antibiotics are used only for the treatment of disease.

McDonalds said it had received the letter and would respond to the coalition. Yum!, Wendy’s, Darden and Brinker did not immediately respond to requests for comment.

A representative for Restaurant Brands, whose chains include Tim Hortons and Burger King, was not immediately available for comment.

— Reporting for Reuters by Simon Jessop and Martinne Geller in London and Lisa Baertlein in Los Angeles.

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After rebuffing the takeover offer announced earlier Friday, Syngenta said the bid fundamentally undervalued the firm and that its suitor underestimated the risk of competition regulations challenging a deal.

The offer, which values the firm at 449 Swiss francs a share (about C$583), a 36 per cent premium to Thursday’s closing price, would create a company with combined sales of more than US$31 billion.

Despite the rejection, shares in Syngenta closed up 19.3 per cent at 396.90 Swiss francs.

The value of the cash-and-shares bid would need to rise before top investors would sign up, however.

“The price level is close to what we would consider a good valuation level but the mix incites us to apply a discount, mainly due to execution risk,” a top-20 investor in Syngenta said.

“A full cash offer at 450 francs or a 50-50 stock and cash offer at 500 francs would suit us at first sight. Of course we will deepen our analysis in the coming days to get a clearer view.”

The two biggest investors in Syngenta are asset managers BlackRock and Capital Research Global Investors, both with a combined stake across their various funds of around five per cent, Thomson Reuters data showed.

At a fund level, the biggest investor is U.S. hedge fund Harbor Capital Advisors, through its Harbor International Fund, which holds around a 2.7 per cent stake in the company, Thomson Reuters data showed.

Emailed requests for comment from fund managers at the two firms were not immediately answered.

Cedric Lecamp, senior investment manager at Pictet Asset Management, the 17th-biggest investor in Syngenta, said in emailed comments he also thought the price would need to rise.

“We think a deal gets done above 500 (francs). Good for our Pictet Agriculture fund shareholders near-term but being agricultural equity-focused investors, we would be losing a best-in-class investment opportunity in the longer term,” he said.

The Pictet Agriculture fund, up nearly 10 per cent year-to-date, holds nearly four per cent of its assets in Syngenta stock, making it the fund’s sixth-biggest investment, Thomson Reuters data showed.

Despite having some “unique” assets, the current management of Syngenta had “over-promised and under-delivered” and so a deal would be welcome, as long as the price got closer to 500 Swiss francs, a third top-20 investor said.

“On a two-to-three year view, we see a standalone valuation of around 450 (francs), so in effect they’re offering fair value for the company two years out. It fails to reflect any strategic premium or any synergies,” from cost cutting or the benefits of a lower tax bill should Monsanto move its headquarters to Switzerland, the investor said.

An overlap in the shareholder register of both companies of around 30 per cent should help a deal to be struck, and regulatory issues should be surmountable, although there would need to be a “sizeable” break fee, he added.

The wildcard could be a competing offer, he said, citing Dupont, Dow Chemical or a coalition of Bayer, BASF or possible Asian competitors, but either way, the offer on the table would need to rise.

“If we get an extra 50 Swiss francs a share, or something in that ballpark, we’d be happy to help support the board in completing such a process,” he added.

— Simon Jessop is Reuters’ chief European funds correspondent in London. Additional reporting for Reuters by Sinead Cruise.

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