São Paulo and Brasilia, July 13, 2021 – A coalition of civil society organizations delivered today a warning letter to public and private financial institutions regarding a series of risks – social, environmental, legal, financial and reputational – related to their potential involvement in Ferrogrão, a proposed ‘greenfield’ railroad project aimed at promoting exports of mechanized soybeans and other large-scale agribusiness commodities in the heart of the Brazilian Amazon.
Considered a priority within the Brazilian government’s Investment Partnership Program (PPI), the Ferrogrão project (EF-170) would involve the opening of a 933 km long railway line that would traverse a volatile and sensitive frontier area of the central Amazon, with enormous potential risks for accelerating deforestation and land conflicts that especially threaten indigenous peoples and legally- protected areas.
The letter argues that the project design and licensing process of Ferrogrão have been undermined by “critical weaknesses and flaws” characterized by gross underestimation of socio-environmental risks and excessive optimism about the project’s economic viability. The letter cites studies showing the federal government did not consider alternatives to Ferrogrão that would involve reduced social, environmental and economic risks, and greater benefits to Brazilian society. The documents analyzes critical shortcomings of the proposed railway project in relation to nine key areas:
- Insufficient attention to international sustainability criteria;
- Underestimation of deforestation risks;
- Incentives for land conflicts, including land-grabbing (grilagem) on public lands
- Increasing pressure to reduce conservation units;
- Violations of indigenous peoples’ rights, including their right to free, prior and informed consent (FPIC);
- Contradictions regarding zero deforestation commitments made by agribusiness companies;
- Underestimation of construction costs and excessive optimism in projections of economic returns;
- Flawed evaluation of competition from other transportation routes;
- Lack of consideration of alternative investments.
The warning letter is an initiative of GT Infra, a Brazilian civil society coalition composed of over 40 environmental and human rights organizations, together with independent researchers and scientists from throughout the country. The coalition seeks to strengthen governance and the effectiveness of public policies related to energy and transportation infrastructure, especially in the Amazon region.
According to Sérgio Guimarães, Executive Secretary of GT Infra, potential investors need to carefully analyze the risks of the Ferrogrão project in light of Brazilian legislation and international standards on environmental protection and human rights, prior to making any decisions. “In addition to posing a threat to the forest, traditional populations and climate crisis mitigation commitments, the project has serious flaws in its analysis of economic feasibility. Such flaws represent major economic, legal reputational risks for financial institutions potentially interested in investing in the project”, Guimarães said.
According to the letter, such analysis of project risks will lead responsible investors to the logical conclusion that they should refrain from participation in this project. “A failure to conduct such due diligence would not only expose investors to noncompliance with their own policies of social and environmental responsibility (ESG), but also to risks of co-liability for socio-environmental damages associated with Ferrogrão, should the project proceed” arguese Guimarães.
The letter is co-signed by a series of Brazilian civil society organizations and networks, including the Brazilian Forum of NGOs and Social Movements – FBOMS, Brazilian Forum on Climate Change and Socio-Environmental Justice – FMCJS, Socioenvironmental Institute – ISA, Greenpeace, International Rivers, Tapajós Vivo Movement – MTV, Terra Azul, and Vitória Amazônica Foundation – FVA, among others.
Read the letter:
For more information, contact:
Executive Secretary – GT Infra
tel: +55 65 9201-0599
Featured photo: A railroad in Tocantins State, Brazil (Credits: PAC).