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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.
The new research, titled How the Finance Flows: the banks fuelling 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 industrialised 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,” says Teresa Anderson, Global Lead on Climate Justice for ActionAid International.
“Climate-vulnerable communities 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,” she adds.
With statistics showing that the industrialised 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,” says 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.
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