Swiss Re profits in Brazil from insurance on illegally deforested lands

Benefitting from a public subsidy offered by the Brazilian government, the company has insured farms covering an area equivalent to 16 percent of Switzerland’s territory in that country. But public data shows that some contracts supported farms conducting illegal activities and contributing to deforestation, the main source of greenhouse gas emissions in Brazil. Environmental crimes, armed violence, and the use of slave labor are other accusations faced by farmers who have recently purchased insurance from Swiss Re.

Last September and October, the largest rivers in the Amazon Forest were affected by drought much more than usual, resulting in the death of animals and threatening the survival of the local population. Meanwhile, in the far south of Brazil, a flood caused by a cyclone killed 50 people whose homes were swept away by the force of the water. And in the center of the country, cities such as São Paulo and Rio de Janeiro hit extreme temperatures close to 40ºC – highly unusual for that time of year.

Scientists considered these extreme weather phenomena as consequences of climate change, and predicted that they will become increasingly common in the country. The agricultural sector is the main agent for climate change in Brazil, not only due to emissions arising from arable farming or cattle-raising but also because of the deforestation required for the expansion of farm land.

As one of the biggest agricultural commodities producers in the world, Brazil has a public subsidy for rural insurance. The Rural Insurance Premium Subsidy Program (PSR is the acronym in Brazil) allows farmers to share the policy cost with the government, thus reducing their contribution to the contract. Swiss Re is one of the 17 companies authorized to participate in the program. Apart from doing business as a reinsurer, the Brazilian branch of the global corporation also offers corporate insurance to various economic sectors, including agribusiness.

Between 2016 and 2022, Swiss Re signed at least 19 insurance policies for protecting crops or cattle-raising at farms where public authorities had found illegal deforestation and, as a result, had imposed an environmental prohibition on the respective regions. Brazilian legislation prohibits the planting of crops in areas subject to such a restriction, with the goal of ensuring the regeneration of native vegetation. Granting insurance for planting crops or raising animals in restricted areas is, effectively, supporting illegal activities.

“Agribusiness contributes significantly more to climate change when it operates on deforested land. As it becomes riskier to plant in some areas, there is a greater demand for agricultural insurance, which in Brazil is subsidized by the government. In other words, farmers profit from deforestation and then socialize the losses – everyone pays for them,” criticizes Paulo Barreto, a researcher at the Amazon Institute of People and the Environment (Imazon).

In 2021, gross emissions from deforestation in Brazil exceeded the total emissions of a country like Japan, according to calculations by the Observatório do Clima – a coalition of Brazilian civil society organizations created to discuss and research climate change.

Extreme weather events are the main risk factor for subsidized insurance, and this is a market that has been growing exponentially. Between 2015 and 2021, the number of subsidized policies jumped from 39,800 to 212,900 per year. During its first decade of operation (2005-2015), almost half of the claims for insurance payments were caused by events such as drought (30 percent) or excessive rainfall (8 percent).

According to the Brazilian Ministry of Agriculture and Livestock, adverse weather events have been observed with greater severity and frequency during the last three harvest seasons, especially in the south of the country. “There was a direct impact on many crops, especially soya and maize, which were affected by prolonged periods of drought”, the ministry reveals in a statement. As a result, adds the organization, there is much greater interest among producers in taking out insurance to protect their property.

“If the farmers affected hadn’t had insurance, they would most likely not have paid off their financing, which is largely public in Brazil. In other words, it would also have been a problem for the government. With insurance available, there was support for the agricultural sector,” concludes the president of the Rural Insurance commission of the National Federation of General Insurance (FenSeg), Joaquim Neto.

Repórter Brasil also identified farmers who had their crops grown inside indigenous land insured by Swiss Re. Another customer of the company was a coffee farmer caught during a federal government inspection using slave labour in the grain harvest.

This investigation was based on data obtained from contracts receiving public subsidies, where the Brazilian government pays part of the premium, providing a substantial discount on the final cost of insurance to farmers. The contract information is available to the public, including the geographical coordinates of the insured properties.

Asked for a comment on these business practices, Swiss Re only stated very generally that “we remain fully committed to its sustainability ambitions and targets. We seek to identify, manage, and address sustainability risks throughout our business. We use available information when evaluating a potential transaction, to ensure it adheres to ESG criteria. We continue to update our own processes and analyses to reflect evolving ESG criteria and address new variables as they emerge, and also to align with best governance practices.”

The Brazilian Ministry of Agriculture and Livestock was also presented with all the issues investigated, but said only that it “has no official knowledge of the reported cases.” The ministry added that by 2024 it expects to have implemented a system for monitoring subsidized policies, which is currently being tested.

Last year, the Swiss multinational ranked fourth among the insurers with the highest number of policies contracted within the Brazilian PSR. The total area insured by the company in these contracts – 659,000 hectares – is equivalent to 16 percent of Switzerland’s territory, almost the size of its biggest canton Grisons. 

In its own words, Swiss Re aims to “make the world more resilient.” Operating in 25 countries, the company reported a net income of USD 1.4 billion in the first six months of 2023, equivalent to the full-year result for 2021. To its investors and other stakeholders, the company emphasizes environmental commitments as one of its assets. According to its 2022 sustainability report, one of the key ambitions is to advance towards a greenhouse gas emissions neutrality framework – a goal the company plans to achieve by 2050.

However, by insuring the Manto Verde farm, Swiss Re could have contributed to the end of the world’s most biologically rich savanna – the Brazilian Cerrado, a region that has over 10,000 species of plants, of which 40 percent are exclusive, and which stretches across nearly 200 million hectares of Brazil. This is one of the most threatened biomes in the country, and the loss of its native vegetation also significantly contributes to climate change.

The 17 insurance policies that Swiss Re provided for The 17 insurance policies that Swiss Re provided for soybean crops at Manto Verde Farm between 2016 and 2022 have geographic coordinates that precisely coincide with a 2400-hectare embargoed area inside the property. The environmental prohibition was imposed because their owners, the Kumasaka brothers, deforested the Cerrado without authorization and planted crops in the area without permission.

Nevertheless, in 2018, 2020, and 2022, federal government inspections identified violations at Manto Verde Farm, including crops being grown in these areas. The inspections resulted in fines totalling approximately $3 million USD. ling approximately $3 million USD.

According to the Kumasaka family’s lawyer, Edson Vieira Araujo, the prohibition on Manto Verde Farm “resulted from an institutional dispute between environmental agencies” and stated that the farm is “in the process of legalization.” In May of this year, a court decision suspended the legal measure while the farm sought environmental licensing for its activities. However, the prohibition was still in effect when contracts with Swiss Re were signed.

Swiss Re pretends to comply with the embargoed areas

In 2020, in another case in the Cerrado region, Swiss Re made a transaction with the farmer Edvair José Manzan to insure a 547-hectare soybean plantation at São Francisco Farm in the municipality of Peixe, Tocantins state. Since November 2018, an environmental prohibition had been placed on the property, where authorities identified the illegal deforestation of 92 hectares. Manzan claimed to Repórter Brasil that the crops were not grown in a embargoed area: “Only a part of the property was embargoed by the government. The rest of the farm operates completely within the law.”

In another case, this one related to the Amazon rainforest, cattle-rancher Jefferson Luiz Bazanella signed a contract with Swiss Re to insure 27 animals at Queda Livre Farm in Novo Progresso, Pará. However, part of this farm had been embargoed six years earlier when an inspection identified illegal deforestation on the site. Bazanella didn’t answer our e-mails asking for comment.

Cattle-ranching is the main driver of deforestation in the Amazon biome – a green area representing one-third of the world’s tropical forests, and whose preservation is considered indispensable for achieving the goals of the 2015 Paris Agreement. In its last sustainability report, Swiss Re pledges support for “the reforestation of Brazil’s Atlantic Forest”, but there is no mention in the document of their business activities in the Cerrado or the Amazon. The company also states that it does “not provide business support to activities that contribute to the conversion or degradation of ecologically sensitive areas, and respects specifically protected areas including World Heritage Sites.” Both the Cerrado and the Amazon forest include fragments of land that are on Unesco’s WHS list.

Under the previous Brazilian president, Jair Bolsonaro, the Amazon deforestation returned to 2008 levels, as his government lifted many environmental rules and laws. Recent data from the National Institute for Space Research (Inpe), a Brazilian federal agency monitoring deforestation, reveals that, under Lula’s administration, deforestation alerts in the Amazon fell by 33.6 percent in the first six months of 2023. But the deforestation of the Cerrado biome remains high: in the first six months of 2023, deforestation in the Cerrado increased by 21 percent.

Both Bazanella and soybean farmer Manzan invoked the insurance and received payments from Swiss Re. A death of an animal in Bazanella’s herd led to a transferral of approximately $2,000 USD, while soybean farmer Manzan received compensation of around $27,000 USD due to a drought.

Seven years ago, an area of 56,000 hectares (a little smaller than Singapore) in the state of Mato Grosso do Sul was officially identified by the Brazilian government as part of the traditional territory of the Guarani and Kaiowá peoples. According to the anthropological report that led to the decision, the indigenous groups who lived there had been subjected to successive forced removals throughout the 20th century, while their lands were occupied by farmers. The report also identified dozens of rural producers who, in 2016, remained within the disputed area, named Dourados-Amambaipeguá I Indigenous Land. To this day, through legal action contesting this identification, they avoided being removed from the location.

Virgílio Mettifogo, one of these producers, is also one of the five farmers accused of murdering the Kaiowá community member Clodiodi Aquileu Rodrigues de Souza. The crime occurred in 2016, a month after the government’s decision acknowledging the indigenous people’s rights to the area. According to investigations, Mettifogo and four other farmers organized an attack on the indigenous area, with the support of about 40 pickup trucks, three backhoes, and over 100 people – many of them armed. In addition to Souza’s death, the attack, known as the “Caarapó Massacre”, left six other community members hospitalized, including a child. They were hit by bullets in the heart, head, abdomen, stomach and arm.

Mettifogo is among the clients of Swiss Re in Brazil. Between 2020 and 2021, when he was already a defendant in the homicide case – a still-pending trial – the company signed three insurance policies with him to financially protect his crops in the region against climate events such as drought or frost. The geographical coordinates of one of these contracts overlap the indigenous land. Other contracts signed with Mettifogo are for his Edurama Farm, which is adjacent to Dourados-Amambaipeguá I and contiguous to another farm registered in his name inside the indigenous territory.

Repórter Brasil identified at least four other farmers who had their crops insured by Swiss Re within Dourados-Amambaipeguá I.

According to Marco Antônio Delfino de Almeida from the Federal Prosecutor’s Office in Dourados, Mato Grosso do Sul, there is no legal impediment to granting insurance on this indigenous land, as the process of final homologation of the area has not yet been completed. After the identification of an indigenous land in anthropological reports, there is still a long legal path to be followed, subject to all kinds of potential interventions by landowners.

“Insuring plantations in conflict-ridden areas is not consistent with international legislative and corporate standards, especially for institutions that commit to complying with Convention 169 and to following environmental, social and corporate governance (ESG) principles” observes Almeida. Mettifogo was contacted by Repórter Brasil and answered through his lawyer, who stated that his client had “nothing to say” about the case. Swiss Re itself states in its ESG Risk Framework that they “ do not support business activities that negatively impact local communities and the rights of specific groups of people, such as the right of free, prior and informed consent for indigenous peoples.”

The Caarapó massacre was one of 24 attacks on indigenous communities in Mato Grosso do Sul identified by the Federal Prosecutor’s Office between 2000 and 2016. The nature of violence has characteristics that lead human rights experts to classify these acts as crimes against humanity. With 120,000 individuals, Mato Grosso do Sul, where the area is located, is the state with the third-largest indigenous population in Brazil. Many of them live in precarious conditions, distributed in small areas demarcated by the government in the early 20th century.

asks Matias Rempel, regional coordinator of Indigenist Missionary Council (Cimi), an indigenous rights advocacy organization. “It is absurd and immoral that banks and insurers are financing and covering these plantations,” he concludes.

Inside the Dourados-Amambaipegua territory

Simão Kaiowa is one of the survivors of the attacks attributed to Virgílio Mettifogo. He lives near Souza’s grave – buried where he was killed – and says that even today he carries a bullet lodged in his chest from the shots fired that day. Simão travelled with Repórter Brasil on some of the roads that cross the region, and showed farms located inside Dourados Amambaipeguá I. One of them is Santo Onofre Farm, registered in the name of Jorge Luiz Rolim. In the Guarani language, however, the place where Rolim grows his crops is “Javoraikue” – a word that means “house of Javorai”, in reference to a community prayer leader whose name was used to baptise the locality.

Between 2016 and 2022, Rolim signed six insurance policies with Swiss Re for the planting of soybeans and corn in the area. The last one, which covered the 2022/2023 crop, was valid until the end of May this year. “And here was Laguna Joha,” Simão adds, referring to another reference point for his people, now occupied by the Camacho family’s farms. One of them is Copacabana, owned by João Camacho, who signed three contracts with Swiss Re between 2019 and 2022.

Two other cases of Swiss Re contracts with coordinates overlapping the indigenous land concerns the policies signed with Gilmar Frenhan between 2020 and 2022 at Santa Tereza Farm. The property belongs to another landowner, but Gilmar has had authorization to grow soybeans there since 2020. And the three contracts signed by the company with Lucilo Carlos Ciceri between 2017 and 2021 for insurance on Diamante Farm. Ciceri passed away in 2022, but the farm continues to produce. Simão is surprised when he discovers that the plantations in the area are covered by insurance:

he protests. The farmers either didn’t answer our requests for comments or couldn’t be found by Repórter Brazil’s team.

In 2020, an inspection by Brazilian authorities at Bom Jardim Farm in Minas Gerais state, where Fuad Felipe grows coffee, found that the producer was keeping 39 farmworkers in conditions analogous to slavery during the coffee harvest. Inspectors also confirmed the use of child labour on the property. Among the rescued workers were three 14-year-old adolescents.

Less than two months after the inspection, Felipe signed a contract with Swiss Re to insure a coffee plantation on another of his properties. Subsequently, in 2021 and 2022, the coffee grower again obtained insurance policies from Swiss Re, this time for soybean cultivation on the same Bom Jardim Farm where the workers were rescued.

Swiss Re is subjected to the UK’s Modern Slavery Act 2015, which applies to any company with annual UK revenue exceeding £36 million. It requires such companies to take measures to identify, prevent, and mitigate modern slavery in their operations and business networks, as well as to publish an annual statement reporting on these measures.

In its annual statement for the year 2020 – the same year as the rescue at Bom Jardim Farm – Swiss Re stated that violations of human rights, forced labour and slavery are criteria outlined in its sustainability policies, and that these crimes can lead to the exclusion of business partners in insurance transactions. However, neither in this statement nor in any of its subsequent statements, did the insurer mention specific risks and actions related to slave labour in Brazil.

According to federal government inspectors responsible for the raid on Bom Jardim Farm, the victims worked without employment contracts, did not have access to clean drinking water, and had inadequate provision of personal protective equipment. The rescue took place during the height of the Covid-19 pandemic, and Brazilian authorities emphasized the absence of measures to prevent infection in the working environment.

Another issue identified was the lack of sanitary facilities in the working areas, where men and women of various ages harvested coffee. “The people were subjected to the embarrassment of having to relieve themselves while in the vegetation, with acute discomfort and no privacy”, notes the inspection report, to which Repórter Brasil had access.

Under Brazilian law, such degrading work is one of the legal criteria that define ”modern slavery,” and this was the administrative measure with that Fuad Felipe was charged with. Since 1995, federal government inspections have rescued more than 60,000 people from slavery-like working conditions in the country, with the vast majority of cases (90 percent) involving rural workforce. Felipe didn’t answer Repórter Brazil’s requests for comment.

The Ministry of Agriculture and Livestock (Mapa) audits only 1 percent of the total number of subsidized agricultural insurance policies to scrutinize the information contained in the documents. These properties are also inspected on-site, but this did not prevent the signing of contracts in areas associated with negative social and environmental impact.

“In Brazil, there are tools available today to avoid this overlap (of insurance in prohibited areas),” notes Paulo Barreto of Imazon. He points to the possible use of satellite images in combination with public data on the boundaries of farms and protected areas within them. “It would already be possible to analyze 100 percent of the contracts; there’s no need for sampling,” he adds.

The Brazilian Ministry of Agriculture and Livestock confirms that the monitoring system that is now being tested – and expected to be available by 2024 – will cross-check many databases against social and environmental information. This will include satellite images, the Brazilian “dirty list” of slavery, as well as information on farms subject to environmental prohibitions and overlapping with indigenous land.

According to a regulation published in June 2022 by the Superintendence of Private Insurance – the federal agency of this sector in Brazil – the responsibility for verifying whether the business complies with expected socio-environmental parameters lies with the insurance company.

In its sustainability report from 2022, Swiss Re states that it activates its ESG Risk team to deal with potentially problematic cases. This group can suspend a particular business. Globally, just 21 out of the 250 cases brought before the team in 2022 resulted in contract terminations. Approximately 17 percent of the total analyses conducted by this risk group in 2022 were based on human rights or environmental issues. Unfortunately, the document does not specify where or when these cases occurred.

concludes Merel van der Mark, the coordinator of the Forests & Finance Coalition, an international platform that analyzes the financing received by agribusiness companies that could potentially cause socio-environmental damage. Repórter Brazil is member of that platform.

Public Eye's Investigation Award has been granted to Repórter Brasil

André Campos and Naira Hofmeister, the two lead authors of this text, have been working for Repórter Brasil for years. The investigative journalism organisation itself is well known for its research into violations of human rights and environmental standards based around global supply chains. While Campos is the coordinator for media projects, Hofmeister leads the team of reporters. Additionally, Gil Alessi, France Júnior, Ruy Sposati, Carolina Motoki and Bruna Bronowski also collaborated on the article. This investigative journalism project in Brazil was financed by the Public Eye Investigation Awards, which was awarded for the third time in 2023. A second research project, revealing the problematic mining of sapphires for Swiss jewellery in Madagascar, also received grant funding 2023 and was published in January 2024.

^Imprint

Reportage: André Campos, Naira Hofmeister, Gil Alessi, France Júnior, Ruy Sposati, Carolina Motoki, Bruna Bronoski
Photos: Ruy Sposati, Lilo Clareto, Fernando Martinho, João Laet
Drone videos: Ruy Sposati, Fernando Martinho
English redaction: alphadoc
Infographics and web implementation: Fabian Lang