Blackstone investments driving Amazon deforestation and other climate concerns

September 22, 2019

In August, an article in The Intercept highlighted investments by private equity firm The Blackstone Group in a Brazilian infrastructure company that has spurred deforestation in the Amazon rainforest. In recent weeks, global attention has focused on the record number of wildfires in the Amazon this year and their broader impact on atmospheric carbon and global warming.

The Amazon, where a record number of fires have been raging, is the world’s largest rainforest. It absorbs a significant amount of carbon dioxide, a major contributor to the climate crisis. The fires are mostly a man-made event, set to clear land for agriculture.[i]

The article in The Intercept highlighted Blackstone’s investment in Hidrovias do Brasil. In the spring of 2019, the government of Jair Bolsonaro announced that Hidrovias would partner in the privatization and development of the B.R.-163 roadway through the Amazon. Hidrovias paid for a feasibility study on a 10-year concession of B.R.-163 which would include paving of the unpaved sections of the road.[ii] Developing the roadway itself causes deforestation and helps make possible the broader transformation of the Amazon from jungle to farmland. Hidrovias do Brasil runs a shipping terminal at Miritituba in the Pará state of Brazil to export grain and soybeans.[iii]

The leading edge of the invasion of the jungle is being cut by grileiros, or “land-grabbers,” who operate outside the law with chainsaws. The grileiros then sell the newly cleared land to agribusiness concerns, whose harvest is driven on the highway to the terminal, before being exported.[iv]

The International Finance Corporation, an affiliate of the World Bank that backed the project, noted that, “the construction of the Miritituba port, close to still-intact areas of the Amazon forest, is likely to lower transport costs for farmers and thereby accelerate conversion of natural habitats into agricultural areas, particularly for soy production.”[v] Lax regulation by Bolsonaro’s government has encouraged deforestation.

Blackstone connections to Hidrovias do Brasil

Blackstone has investments in Hidrovias do Brasil both directly and through Pátria Investimentos, a Brazilian private equity firm in which it owns a significant minority stake.

Blackstone is directly invested in Hidrovias do Brasil through its Tactical Opportunities funds.[vi] A spokesperson for Blackstone told The Intercept that Blackstone owns 9.3 percent of Hidrovias.[vii]

In addition, Blackstone owns a 40% stake in Pátria Investimentos, a Brazilian private equity firm that is the majority owner of Hidrovias do Brasil.[viii] In addition to Blackstone’s 9% stake, Pátria Investimentos owns another 55.8% of Hidrovias do Brasil, according to The Intercept.[ix]In 2010, when Blackstone announced its investment in Pátria, Blackstone CEO Stephen Schwarzman said, “Partnering with Pátria will enable Blackstone’s limited partners and advisory clients to benefit from the fast expanding business opportunities in the country” (i.e. Brazil).[x] Prakash Melwani, Chief Investment Officer of Blackstone’s private equity group, and Martin Alderson Smith, a Senior Managing Director at Blackstone, serve on Pátria’s board.[xi] Viral Patel, another Blackstone Senior Managing Director, is involved in Blackstone’s investment in Hidrovias.[xii]

Pátria Investimentos emphasizes its relationship with Blackstone, featuring the company’s logo on its website and notes it is “in partnership with” Blackstone.[xiii]

Other Blackstone investments raise climate concerns

Beyond its investment Hidrovias do Brasil, The Blackstone Group has made a number of other investments that raise climate concerns, including coal-fired power plants, several investments in fossil fuel extraction and transmission, and a number of investments in carbon-intensive cement production.

Blackstone’s Lightstone Generation owns the James M Gavin coal-fired power plant in Ohio

Coal and gas-fired power plants

Lightstone Generation – Owns 2,665 MW coal-fired Gen. James M. Gavin Plant in Ohio, three gas-fired power plants.[xiv]

Sithe Global – Owns one and is building another coal-fired power plant in the Philippines.[xv]

Oil and gas pipelines and infrastructure

Cheniere Energy Sabine Pass LNG export terminal[xvi]

Rover Pipeline[xvii]

Tallgrass Energy[xviii]

Oil and gas exploration and production

Tar/ Oil Sands – Osum Oil Sands Corp[xix]

Fracking – Western Eagle Ford Assets[xx], Jetta Permian[xxi], Osprey Energy/Falcon Minerals[xxii], Guidon Energy[xxiii], Eagleclaw Midstream[xxiv], Huntley & Huntley[xxv], Alta Energy[xxvi]

Offshore – LLOG Exploration[xxvii], Kosmos Energy[xxviii]

Cement production

Summit Materials – Blackstone created Summit Materials in 2009 and used it to acquire more than 35 companies to establish a major U.S.-based supplier of aggregates, concrete and asphalt. Blackstone took Summit public in 2015.[xxix]

Blackstone resistance to carbon footprinting

Despite its growing investments in fossil fuels, carbon intensive industries, and investments like Hidrovias do Brasil that spur deforestation, Blackstone has been resistant to measuring the carbon footprint of its portfolio. Blackstone’s Chief Sustainability Officer in a 2017 report called measuring a company’s carbon footprint “madness,” noting “Somehow, carbon has become the maypole for the sustainability community and the “E” in ESG, including attempts to make public disclosure of carbon footprint a mandate associated with corporate transparency.”[xxx]

[i]“We’re thinking about the Amazon fires all wrong. These maps show why.” Washington Post, Sept 5, 2019.

[ii]Hidrovias do Brasil 2018 Earnings Release, Apr 13, 2019.

[iii]“A Top Financier of Trump and McConnell Is a Driving Force Behind Amazon Deforestation,” The Intercept, Aug 27, 2019.

[iv]“A Top Financier of Trump and McConnell Is a Driving Force Behind Amazon Deforestation,” The Intercept, Aug 27, 2019.

[v]“A Top Financier of Trump and McConnell Is a Driving Force Behind Amazon Deforestation,” The Intercept, Aug 27, 2019.

[vi]https://www.patria.com/media/clipping/com-novos-socios-hidrovias-do-brasil-recebe-investimento-de-us-300-milhoes, accessed Sept 7, 2019.

[viii]Patria Finance SEC Form ADV, Apr 27, 2019.

[ix]“A Top Financier of Trump and McConnell Is a Driving Force Behind Amazon Deforestation,” The Intercept, Aug 27, 2019.

[vii]“A Top Financier of Trump and McConnell Is a Driving Force Behind Amazon Deforestation,” The Intercept, Aug 27, 2019.

[x]“Blackstone and Patria Announce Partnership in Brazil,” Media release, Sept 29, 2010.

[xi]https://www.blackstone.com/the-firm/our-people/person?person=1000073, https://www.blackstone.com/the-firm/our-people/person?person=1000001, accessed Sept 7, 2019.

[xii]https://www.blackstone.com/the-firm/our-people/person?person=1000255, accessed Sept 7, 2019.