BNDES - Brazilian Development Bank

Environmental guidelines for cattle-raising

To promote regularization and increase socio-environmental compliance in cattle-raising production, the BNDES has established a set of guidelines that must be followed by companies applying for financing and stakes in companies.

The guidelines encompass the entire country. The challenge is to meet the growing demand for beef and establish a production model that guarantees the preservation of natural resources, as well as respect for workers and communities. Instituting environmental safeguards is one way to stimulate modernization and foster a gain in competitiveness in sustainable bases.

Meatpacking companies and slaughterhouses need to prove, for example, that their suppliers have not been charged with trespassing on indigenous lands, with discrimination, child labor or slavery. Neither can they set up in areas that IBAMA has embargoed. In addition, financing applicants must commit to maintaining an updated list of suppliers as well as verifying they are abiding by the rules so as to monitor environmental compliance throughout the supply chain.

These new guidelines, established in October 2009, strengthen other efforts within the BNDES' social and environmental policy. Thus, this reinforces the Bank’s concern to finance the country's development in accordance with the basic principles, such as respecting the environment and human dignity.

Following are the rules for:

Direct operations, non-automatic indirect and company shares

Requirements concerning suppliers

During the analysis phase of a request for financial support, applying companies and all their branches, must provide proof that a list of direct suppliers is kept, with information such as a corporate name, individual taxpayers number (CPF) or a corporate taxpayer’s number (CNPJ), a geo-referenced property, registration number in the National Rural Registration System and an environmental license number.

The company should also prove that it offers a system with cattle purchasing procedures, including only direct suppliers who have proven they meet the following conditions once the applicant has carried out an assessment:

  • Suppliers are not registered in the Employers Registration for being caught exploiting workers in conditions similar to slavery, which is instituted by the Ministry of Labor and Employment;
  • Suppliers or their managers have not been charged with breaking the law against discrimination of race or gender, child and slave labor;
  • Suppliers should not been included on IBAMA’s list of embargoed areas;
  • According to information released by official authorities, direct suppliers or their managers have not been convicted for: trespassing on indigenous land under federal jurisdiction (Article 20 of Act Nº. 4,947/66); criminal conviction involving land disputes; any acts that comprise violence or fraud to obtain a title to or ownership of public or private land (land grabbing); criminal offenses related to deforestation (Act Nº. 9,605/98);
  • Suppliers should present environmental licensing for rural property or proof of exemption by the competent environmental agency;
    If suppliers do not have a license, the company requesting support from the BNDES may accept a letter of application for environmental licensing for the property provided that it was submitted by July 2010, and July 2011 will be deemed the deadline to obtain the license.
    As of August 2010, supplier registration will include only those that already have an environmental permit for its activities or a permit application filed at the competent environmental agency. After July 2011, such registration should contain only direct suppliers with a previously-issued environmental permit.
  • Suppliers should submit a document proving land-title compliance or application for such regularization at the competent body, provided that it was submitted by July 2010. As of August 2010, registration of applicants’ direct suppliers should only include those that already have land-title regularization or have duly applied for it at the competent bodies.

Applicants for financial support should declare that the system to purchase cattle meets the BNDES' requirements. False declarations may result in the immediate termination of the contract, in addition to applicable legal penalties.

Environmental commitment

Still in the analysis phase, companies applying for financial support from the BNDES should meet the following requirements in all their branches:

  • Developing an implementation plan that complies with the BNDES’ acceptable criteria, with goals and a timeframe to obtain environmental certifications, implementing environmental management systems and improving indicators of liquid effluents and solid residues;
  • Preparing suppliers’ environmental development plan that includes training and technical assistance to increase productivity rates and meeting the land-title regularization and environmental compliance within the deadlines previously mentioned.
  • Beneficiaries will also have special obligations, and non-compliance could result in the debt being called early. In contracts that formalize the operations for financial support, beneficiaries will be required to:
    •    Join the tracking system for the beef cattle production sector, which tracks cattle from birth to slaughter, to verify the environmental compliance of the supply chain;
    •    When purchasing animals included in the tracking system, verify compliance of the farms involved, according to information from official bodies, as well as complying with the criteria set forth for direct suppliers;
    •    As of January 2016, slaughter only the animals that have been continuously tracked from birth;
    •    Comply with the schedule and the goals set forth in the environmental implementation plan;
    •    Update the list of registered suppliers, excluding those that do not comply with the requirements already mentioned, and make the list available and provide it to the BNDES when requested;
    •    During the term of the contract, submit semi-annual reports put together by independent auditors, in accordance with the BNDES’ acceptable criteria, and verify that all requirements mentioned above have been met.

Automatic Indirect Operations

The BNDES also adopts guidelines and environmental criteria in automatic indirect operations, that is, those conducted through an accredited financial agent and worth up to R$ 10 million.

During analysis of operations, applying companies should deliver a declaration to the financial agent stating that they keep records of direct suppliers with the same information required in direct operations, non-automatic indirect operations and stakes in companies. Companies should also declare that they maintain a system with procedures to purchase cattle from direct suppliers that includes only those that meet the social and environmental conditions already mentioned, such as never having been convicted of practicing child labor and slavery, and having submitted an environmental permit.

A special obligation in the contract for financial support requires beneficiaries to update and maintain registration of direct suppliers available to the financial agent and to the BNDES. Non-compliance may result in the contract being terminated early. The BNDES may request the list of suppliers at any moment up to the full repayment of the loan.

Resources will not be released if financial agents do not receive the updated list of the company’s direct suppliers. In the case of the BNDES card, such a list must be submitted upon the request for documents to issue the card, when renewing the credit limit, and when the accredited financial institution is updating registration.

False declarations may result in the immediate termination of the contract, in addition to applicable legal penalties.