International Lenders Continue Pouring Money Into Meat and Dairy, Despite Climate Promises

The world’s biggest development banks have agreed that they will funnel their financial support to businesses that promise to reduce greenhouse gas emissions. 

But a new analysis published Wednesday by animal and environmental advocacy groups says those banks have given billions to big livestock and grain companies expanding greenhouse gas-intensive agricultural systems.   

The report, researched and written for the Stop Financing Factory Farming campaign, finds that the world’s top development banks—those that support private-sector projects in developing countries—invested $4.6 billion between 2010 and 2021 in agriculture, with much of it flowing to big corporations, including Smithfield, Danone and grain giant Louis Dreyfus.

The banks include IDB Invest, an arm of the Inter-American Development Bank,  and the International Finance Corporation (IFC), the private finance arm of the World Bank, which together gave $2.6 billion to large meat and dairy producers, the report said. 

Among the many recent grants was one for $200 million to Netherlands-based Louis Dreyfus for the production of soy and corn from the Cerrado, a richly biodiverse region of Brazil where roughly half the forests have been chopped down for agriculture. Much of the grain flows to Europe to feed livestock in large industrial operations there, the groups say.

“It’s certainly wrong to finance overconsumption of meat in Europe,” said Kari Hamerschlag, co-author of the report and deputy director of the food and agriculture program at Friends of the Earth. “That’s not how development money should be channeled.”

Beginning in 2021 at a gathering of public development institutions called the Finance in Common Summit, the world’s big multilateral development banks, including the World Bank, agreed to adhere to “alignment methodologies” that lay out how their financial support will help meet the goals of the 2015 Paris climate accord.

But these methodologies, the new report says, don’t rule out investing in industrial livestock and the grain operations that sustain them, despite their climate impacts.  The report also finds that the banks don’t require their clients to report emissions from the entirety of their operations or their supply chains, including the most emissions-intensive parts or those connected to deforestation. Nor do they ask them to commit to absolute emissions reductions targets.

“They claim to be aligning their investments with the Paris Agreement and they continue to invest in these sectors without requiring strict climate mitigation measures,” Hamerschlag said.

Under these methodologies banks allow investments to be considered “Paris-aligned,” including those in cattle and dairy operations that are especially emissions-intensive because of the methane from cow belches. They also allow pig and poultry operations to be considered “Paris-aligned,” even though their manure disposal systems emit methane, and the grain used to feed the animals is often linked to deforestation in South America.

“We really see the [banks] failing, at least on the private sector side, to support the kind of change needed in the global agricultural system to support both people and planet,” said Ladd Connell, environment director at the Bank Information Center, a watchdog group that tracks international finance institutions. “Instead, they are supporting mostly business as usual, among major Agro-industries, with minimal attention to impacts on local communities.”

Connell’s group, he explained, worked to stop IDB Invest from supporting Marfrig, one of the biggest beef producers in Brazil, which has been accused of buying from ranchers that cut Amazonian rainforest to graze cattle.

The development banks point to the challenge they face. With a growing global population and rising demand for protein, especially in developing countries, they’re compelled to support jobs and food production.

“IFC is a development institution dedicated to the goals of ending extreme poverty and increasing shared prosperity in emerging and developing markets,” a spokesman for the bank wrote in a statement. “To achieve our Paris Agreement alignment commitment, IFC expects its investee companies to lower [greenhouse gas] intensity and adopt climate resilient practices. Our investments in the livestock sector seek to replace inefficient production processes with more efficient practices, a key step in reducing the [greenhouse gas] emissions intensity while supporting people’s livelihoods, nutritional needs, and economic development.”

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But the new report insists that achieving the goal of the Paris climate accord—of keeping global warming to within 1.5 degree Celsius above pre-industrial levels—can’t be achieved unless emissions are reduced from livestock production, which globally emits between 10 and  20 percent of all greenhouse gas emissions.

The authors point to a 2020 study, published in Science, saying that livestock emissions, on their current upward trajectory, could make it impossible to keep global warming to the 1.5 degrees Celsius goal, even if fossil fuel emissions were immediately stopped. The Intergovernmental Panel on Climate Change and the United Nations Food and Agriculture Organization have both said that consumption of meat and dairy should be reduced, especially in higher-income countries. The IDB’s own research suggests consumption of meat and dairy, even in less-rich countries, including China and those of Latin America, should also be reduced in order to meet those goals.

Hamerschlag noted that a global summit is slated to begin in Paris on Thursday at which global leaders will discuss how to fix the international financial system to address climate change in developing countries.

“My guess is that food and ag will hardly get mentioned,” she said. “They’ll focus on the energy transition and reducing fossil fuels, which is important. But we still haven’t gotten the world’s leaders and even some folks in civil society to recognize that if we don’t reduce greenhouse gas emissions associated with agriculture, particularly livestock, we can’t meet the goals of 1.5 degrees.”

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                    Georgina Gustin                 </a>


                <h4 class="profile-subtitle">Reporter, Washington, D.C.</h4>

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Georgina Gustin covers agriculture for Inside Climate News, and has reported on the intersections of farming, food systems and the environment for much of her journalism career.  Her work has won numerous awards, including the John B. Oakes Award for Distinguished Environmental Journalism and the Glenn Cunningham Agricultural Journalist of the Year, which she shared with Inside Climate News colleagues. She has worked as a reporter for The Day in New London, Conn., the St. Louis Post-Dispatch and CQ Roll Call, and her stories have appeared in The New York Times, Washington Post and National Geographic’s The Plate, among others. She is a graduate of the Columbia University Graduate School of Journalism and the University of Colorado at Boulder.
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