- $369.2 billion USD has been provided to big agribusiness corporations operating in the Global South, driving deforestation and production of greenhouse gas emissions.
- No bank yet recognizes or seeks to reduce the climate harm resulting from the production and application of fossil-fuel-based nitrogen fertilizers by industrial agriculture corporations
New research by ActionAid has revealed that the world’s leading financial institutions have provided twice as much financing to industrial agriculture corporations operating in the Global South than Global North governments have provided as climate finance to help countries on the front lines of the climate crisis.
‘How the Finance Flows: the banks fueling the climate crisis‘ reveals that in the seven years since the Paris Agreement was signed, the world’s leading financial institutions have provided US$369.2 billion in bank financing in the form of loans and underwriting to big industrial agribusiness corporations operating in the Global South. This averages out at about US$53 billion per year, although the annual figures fluctuate. In comparison, the real value of financial support for all climate action provided from countries in the Global North to the Global South has been estimated to be around US$21 to US$24.5 billion in 2020.
A breakdown of the major banks funding industrial agriculture shows that they are based in the United States, Europe, China, and Japan. HSBC is the largest agribusiness bank, providing US$17.2 billion in financing between 2016 and 2022. It is followed in the rankings by JPMorgan Chase (US$14.2 billion), Bank of America (US$14 billion), Citigroup (US$13.9 billion), and Mitsubishi UFJ (US$13.2 billion).
The report shines a spotlight on the role of industrialized agriculture as the second largest contributor to the climate crisis after the burning of fossil fuels. The industrial agriculture approach to farming aggressively markets agrochemicals that lead to large amounts of greenhouse gas (GHG) emissions, drive deforestation, and undermine billions of smallholder farmers and their agroecological farming systems, which could otherwise feed the world while cooling the planet.
“While the climate harm wreaked by fossil fuels is well known, industrial agriculture’s massive contribution to planet-heating emissions has flown under the radar. Banks that finance industrial agriculture in the Global South are accelerating the climate crisis while also harming the smallholder farming communities who are losing their lands and livelihoods to expanding agribusiness giants.
Climate-vulnerable communities in Africa, Asia, and Latin America are suffering the impacts of decisions made in distant banking boardrooms. With this report, banks can no longer pretend that the issue is out of sight, out of mind.”
Teresa Anderson, Global Lead on Climate Justice for ActionAid International.
With statistics showing that the industrialized food system is failing to provide sufficient food for the world and causing harm to the climate, the report calls for a shift to agroecology which can guarantee meeting local food security needs, reduce deforestation, limit land grabs, and support the livelihoods and economies of Global South communities.
“The time for serious climate action is now. The world cannot continue to pay lip service to the need for funding sustainable alternatives such as agroecology which has already proved its potency in providing food security for communities hit hardest by the effects of climate change in Africa, Asia, and Latin America.”
Arthur Larok, Secretary General of ActionAid International.
Exposing the role of industrial agriculture and its reliance on fossil fuels to produce agrochemicals that lead to large amounts of greenhouse gas emissions and expand factory farming, the report recommends that governments and banks stop projects and corporate financing of deforestation and other harmful industrial agriculture activities, and support for a feminist and just transition towards agroecology.
ENDS
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Notes to Editors
Article 2.1C of the Paris Agreement states the need to “make financial flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development”.
According to Oxfam’s 2023 “Shadow Climate Finance” report, the real value of climate finance provided in 2020 was between US$21 billion and US$24.5 billion.
ActionAid’s research was in partnership with independent research organization Profundo.
For a summary table of the key results and funding of fossil fuels and industrial agriculture in the Global South, see below:
About ActionAid
ActionAid is a global federation working with more than 15 million people living in more than 40 of the world’s poorest countries. We want to see a just, fair, and sustainable world in which everybody enjoys the right to a life of dignity and freedom from poverty and oppression. We work to achieve social justice and gender equality and to eradicate poverty.
