As the world grapples with the escalating climate crisis, the spotlight is now on big banks in the United States. These financial institutions are under mounting pressure from various stakeholders, including shareholders, policymakers, and civil society, to decrease the greenhouse gas (GHG) emissions associated with their loans and financial services. Many major banks have committed to scaling back their investments in high-emitting sectors to help achieve net-zero targets. However, despite these pledges, they remain deeply entrenched in industries that are significant contributors to the climate crisis, jeopardizing global climate goals.
Investing in industries that are detrimental to the climate not only poses risks to the banks themselves but also to their investors, as acknowledged by asset managers. In a letter addressed to CEOs in 2020, Larry Fink, the chairman and CEO of BlackRock, the world’s largest asset manager, highlighted investors’ growing apprehensions about the impacts of climate change on their investments. This includes the physical consequences of climate change, such as rising costs, supply chain disruptions, and shifts in demand dynamics, as well as the repercussions of climate policies that alter the economics of activities that harm the climate.
Despite the commitments made by banks to mitigate the climate impacts of their investments, the agriculture sector, especially industrial livestock production, remains a significant emitter of greenhouse gases where banks have yet to make substantial changes in their financing practices. By reducing their financial support for industrial livestock operations, banks could make significant strides towards meeting their emissions reduction targets.
Industrial livestock production is a major global emitter, responsible for as much as 19.6 percent of global emissions. To limit global temperature rise to 1.5 degrees Celsius or below, global emissions must be capped. However, current trends indicate that by 2030, livestock production could consume half of the global emissions budget and up to 80 percent by 2050. The emissions from industrial livestock operations stem from various sources, including methane emissions from animals, feed production, processing, manure management, and deforestation.
Apart from contributing to climate change, industrial livestock production also leads to severe consequences such as animal cruelty, environmental degradation (loss of biodiversity and pollution), public health risks, and social issues like labor rights violations. The industry’s expansion often involves deforestation, with cattle ranching and feed production accounting for a substantial portion of global tropical deforestation. This deforestation releases carbon stored in trees and soil, further exacerbating climate change.
Moreover, industrial livestock operations are associated with habitat destruction, biodiversity loss, animal rights abuses, water scarcity, pollution, and health impacts. The intensive use of water in livestock production, coupled with the discharge of animal waste and chemicals from factory farms, pollutes nearby communities’ air and water sources. Pesticides and fertilizers used in feed production also contaminate soil, air, water, and food, leading to a range of adverse health effects.
Furthermore, industrial livestock facilities are breeding grounds for infectious diseases, contributing to the spread of diseases among animals, wildlife, and humans. The overuse of antibiotics in industrial livestock operations has fueled the rise of antibiotic-resistant bacteria, posing challenges in treating human diseases. Additionally, workers in industrial livestock and slaughterhouses often face hazardous working conditions, lack legal protections, and are vulnerable to injuries and illnesses.
The financing provided by banks to meat, dairy, and animal feed companies directly fuels their emissions and perpetuates the negative environmental and social impacts associated with industrial livestock production. The report “Bull in the Climate Shop” sheds light on the significant damage caused by U.S. banks’ investments in meat, dairy, and feed corporations. While these corporations emit a substantial amount of CO2-equivalent emissions annually, major U.S. banks, particularly Bank of America, Citigroup, and JPMorgan Chase, play a pivotal role by providing substantial financial support to these corporations.
Despite representing a small fraction of their portfolios, livestock production accounts for a significant portion of emissions generated by these banks’ investments. Compared to other sectors like auto manufacturing, financing in livestock production results in higher emissions intensity. Addressing the emissions impact of industrial livestock operations is crucial for banks to honor their commitments to reducing climate emissions. The current scenario calls for urgent action from banks to reassess their financing practices and steer away from supporting industries that contribute significantly to the climate crisis.
