(Bloomberg) – A $200 million loan for Marfrig Global Foods SA has fallen apart amid growing concerns that Brazil’s second-largest beef producer is driving deforestation in the Amazon.

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The private sector arm of the Inter-American Development Bank shelved a plan to run the syndicated loan after a series of setbacks. First, a vote on funding was pushed back from December to May, according to two people familiar with the matter. The bank could not agree with the company on environmental goals or the financial terms of the loan, one of the people said. Now, according to the IDB website, the loan is dormant and will no longer be put up for vote.

Activist groups, including Friends of the Earth, began pressuring the bank last year to halt the loan, claiming that the IDB line of credit violated the bank’s sustainability guidelines. For more than a decade, Marfrig and its biggest competitors like JBS SA have been committed to ridding their supply chains of animals born or raised on deforested land.

Both companies say they set the highest standards for their suppliers, but a Bloomberg investigation released last month revealed how they use a greenwashed version of an animal’s origin and operate in a legal system so riddled with loopholes that prosecutors, environmentalists and even ranchers themselves consider it a farce. Deforestation in the Amazon is now at a 15-year high, with more than 70% of illegally cleared land being converted to rangeland for animals to graze.

Read more: How Big Beef is fueling the destruction of the Amazon

The loan, of which $43 million would have come from IDB Invest and $157 million would have been syndicated, was announced in April 2021 to fund Marfrig’s Plano Verde+, or Green+ plan, which aims to increase the sustainability of its beef supply chain .

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Marfrig confirmed in an email that the loan was no longer being considered and did not comment further. The IDB said via email that after thorough due diligence of Verde+, it “reached a mutual understanding that the conditions are not ideal to proceed with the loan”.

“We hope that IDB Invest’s decision to halt the Marfrig loan will send a signal to other banks,” said Kari Hamerschlag, deputy director of food and agriculture at Friends of the Earth US are driving the climate crisis with deforestation, biodiversity loss and methane emissions in Brazil and worldwide.”

Marfrig’s 2031 bond traded 0.12 cents lower at 88.18 cents on the dollar on Wednesday, a yield of 5.65%. Since the beginning of the year, the notes have fallen by 7.4 cents.

(Adds details on Brazilian legal loopholes in fourth paragraph, borrowings in last paragraph.)

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