Market Pressures and the Amazon – First Steps towards a Brazilian Green New Deal?

Socio-environmental governance is not an area of exclusive government action. Corporations, investors, civil and consumer organizations are reinventing themselves as political players in an increasing number of self-regulatory arrangements. Private environmental governance covers a wide-range of schemes such as Corporate Social Responsibility (CSR), Environmental, Social and Governance (ESG) criteria; Voluntary Sustainability Standards (VSSs) and certifications. Private initiatives have been praised for their potential to contribute to the goals of the Paris Agreement. Nonetheless, the current situation in Brazil shows that the private sector has a role to play not only in making its own environmental commitments, but in demanding that governments respond.  

In the past few weeks, a series of open statements by private actors made headlines. Major European asset management firms threatened to divest from beef producers, grains traders and government bonds in Brazil if they do not see progress in resolving the surging destruction of the Amazon rainforest. If carried out, such actions would have significant impacts, since the firms hold over $4.6 trillion in assets, and they are mounting pressure on lawmakers and investees. In starting a public policy dialogue with the Brazilian government, the financial institutions, led by Storebrand Asset Management, had a first meeting with Brazilian Congressmen on the sustainable management of the Amazon rainforest. Norway’s largest pension fund (Oslo's Kommunal Landspensjonskasse – KLP) also announced that it would review the adequacy of the environmental policies of Archer Daniels Midland (ADM), Cargill, and Bunge – some of the biggest grain trading firms operating in Brazil.

Investors’ threats are having a ripple effect. A European campaign to boycott Brazilian products – Boykottiert Bolsonaro – is nominally targeting large supermarket chains – Aldi Nord, Edeka, and Lidl. Moreover, CEOs of dozens of large Brazilian and foreign companies and four sectorial entities sent a letter to Brazilian Vice President Hamilton Mourão, who is also the President of the National Council for the Legal Amazon. In its first-ever collective manifestation under Jair Bolsonaro's government, business leaders in agribusiness, industry and finance called for effective public socio-environmental action, particularly in the fight against illegal deforestation, the inclusion of local communities and the enhancement of biodiversity. Finally, the three largest private banks in Brazil met Mourão to launch a joint initiative in defence of the Amazon. The meeting resulted in a letter of intent for financial institutions to support public authorities in stimulating the bioeconomy in the region. The private sector is concerned about the negative perception of Brazil's image abroad. This is no wonder given the consecutive disasters of contemporary Brazilian politics, but it is bewildering when we remember that not that long ago, Brazil was a global player in the international environmental agenda.

Environmental management in Brazil – From international innovative excellence to criminal misleading

For two decades Brazil has played a growing role in the international agenda. The fostering of South-South cooperation and major investments in research and social oriented policies were key priorities for decades and across multiple administrations. However, few features were more important to the emergence of Brazil’s multilateral role than its position regarding the Amazon rainforest conservancy strategy implemented in the beginning of the century.

The Brazilian performance in Amazon conservancy was marked by a coherent evolution and deepening of several programs and the build-up of national knowledge and advancements in international conservation. For instance, the PPG-7 (Pilot Program to Conserve the Brazilian Rainforests) 1) took the first steps towards a stronger globalization of the Amazon by using international investments to implement national conservancy policies/agencies; and 2) strengthened the role of traditional communities and civil society organizations, for example in the context of the internationalization of forest products (e.g. açaí – Euterpe oleracea).

Major national initiatives were created in response to this international joint action with the aim of 1) promoting the empowerment of innovative civil society and government conservancy projects (such as the 2008 Amazon Fund); 2) improving the governance of the complex framework of preserved areas existing in the Amazon (such as the Amazon Region Protected Areas Program – ARPA); and 3) creating a major inter-federative action framework to combat the deforestation (such as the Action Plan for the Prevention and Control of Deforestation in the Legal Amazon – PPCDAm). As a consequence of this sophisticated and bold agenda, the country was able to reduce the deforestation rates of the Amazon by over 84%, between 2004 and 2012. In addition to leading international conservation efforts, Brazil played a leading role in carbon policy development and in innovation and climate change discussions. Brazil supported and influenced important international initiatives such as the Paris Agreement, Kyoto Protocol and also the REDD+ overall framework.

Nevertheless, the annual rate of deforestation has been growing at a constant rate since 2012 (the only year in which deforestation dipped below 5,000km2 since measurements began in 1988), according to official figures (PRODES). The setbacks increased further after the election of President Jair Bolsonaro and the commencement of his mandate in 2018, which saw deforestation skyrocketing and forest peoples and environmentalists facing new threats.

In order to better understand the situation, we propose a clash of narratives approach that exposes the incoherencies of the administration (specially based in the anti-environmental and military perceptions).

Clash of narratives – The Amazon under territorial and discursive disputes

First, it is important to stress the strong anti-environmental position of the government, the open dismantlement of conservancy policies, and an overall weakening of the Brazilian environmental protagonism conducted by Ricardo Salles, the current Minister of Environment. Examples of this trend include severe cuts in the Ministry’s budget, the dissolution of civil society participation in major programs’ councils and committees, 95% cuts on the Climate Change Department, and the overt anti-environmental policies rhetoric of the executive power. This has instilled a sense of impunity among land grabbers and other criminal organizations, which made 2019 the worst year for wildfires in the Amazon since monitoring began (INPE) in 1988. In 2019, wildfires were up by around 80% on the previous year. This has led to an international political crisis, resulting in the freezing of future instalments to the Amazon Fund and the non-approval of new projects, among other things.

Second, the government’s anti-environmental rhetoric has been reinforced by a nationalist narrative, coupled with the appointment of military officials at strategic positions in the government. As mentioned, Vice President Mourão, also a general, was appointed President of the National Council for the Legal Amazon. The Council was launched as a response – some call it a window-dressing measure – to the negative perception of Brazilian socio-environmental agenda abroad. Since then, parts of the Amazon conservancy policies have been militarized, exemplified under the Green Brazil Operations 1 and 2. These operations, which targeted internal and external opponents, have deepened a non-participatory approach towards the conservancy of the forest, weakened the role of the environmental monitoring agency (IBAMA), and increased the resort to sovereignty claims.

The situation for Amazon conservancy strategies and programs is fraught with challenges but the federal government is also struggling to define the narrative. On the one hand, business groups are demanding changes in the government's attitude as they fear the potential economic harms and market loss. On the other hand, the government's survival depends on the support of anti-globalists and parts of the rural sector, which elected Bolsonaro because of his campaign promise to roll back the monitoring of deforestation. This situation has been aggravated by the Covid-19 pandemic, which has eroded presidential popularity, intensified inequality and hit the Amazon region the hardest. In spite of this and the recent divestment threats, civil society has been rather reluctant to pressure the government and propose new ways for the development of the Amazon. A Brazilian Green New Deal strategy has to put the forest at a centre stage. As said, conservancy has been crucial to Brazil’s growing international standing. This is not going to change in the future. Considering this dilemma, two major questions arise: 1) How effective is the market in pressuring the Brazilian government to take action?; and 2) What role must civil society play?

Market pressures and the emergence of an Amazon New Green Deal

The importance of protecting the environment for the welfare of current and future generations should be enough reason for sound green politics, but money talks … It is our hope that the Brazilian government will return to the right path of socio-environmental leadership. Private sector engagement in addressing contemporary challenges such as climate change is welcome, but divestment would exacerbate unemployment, inequality, and development challenges in Brazil. More radical and much needed economic and social reforms are required. A Brazilian Green New Deal for the Amazon that entails a broad participatory path could avoid these potential negative effects.

The participation of social movements and civil society must match that of investors and business initiatives, while the state must act as an arbiter of this dialogue. Manifold Brazilian initiatives already bring various and sometimes antagonistic stakeholders together to decide on new development paradigms for the Amazon rainforest, such as the Brazilian Coalition on Climate, Forests and Agriculture. However, the current administration openly opposes social participation in public committees and councils. Without the involvement of social movements, the debate on a New Green Deal will not reach a broader social consensus and probably fail to take different interests into account.

Pressure from big market players is building the momentum for the launch of this much needed debate. The Amazon is a key territory on the edge of different projects (climate change action, indigenous populations’ rights, biodiversity protection and agribusiness expansion), it embodies different understandings of human society development. A path that does not consider an open dialogue towards an agreement on how humanity handles the Amazon in an innovative and inclusive way is doomed to lead nowhere.

What should a Brazilian Green New Deal look like?

In light of the circumstances outlined above, we propose three guidelines for a dialogue led by the federal government to promote a just, inclusive, sustainable, new development paradigm for the Amazon:

1.    A comprehensive dialogue is needed, including diverse stakeholders and agencies – academia, NGOS, traditional communities, business – that are concerned with and committed to the construction of a new understanding and practice of sustainable development for the Amazon. This should build on already successful projects that combine scientific, local and business knowledges to foster innovations in biotechnology value chains, community-based tourism and non-wood forestry products, for example.

2.    It is vital that indigenous peoples are included in this dialogue. These diverse ethnic groups have developed a deep understanding of the functioning of the forest and should accordingly be involved in major decision-making processes. As noted above, different narratives (e.g. climate change, agribusiness, and national sovereignty) are influencing the on-going discussion on the Amazon. These narratives are promoted by groups based outside the forest and do not reflect the interests and concerns of local initiatives and communities. A middle ground between global concerns and local realities has to be found.

3.    Brazil must have a leading role in global proposals for a Green New Deal. With most of the Amazon (approx. 60%) located within its territory, and given its historical leadership in environmental discussions, Brazil is well-equipped to lead a joint effort to secure a sustainable future for the Amazon, not least of all through the development and adoption of a Brazilian Green New Deal.

This blog post in Portuguese: Pressões de mercado e a Amazônia – Primeiros Passos para um Novo Acordo Verde Brasileiro?