Dairy cows collect at a farm throughout a extreme drought in Visalia, California on July 5, 2022. Spencer Platt / Getty Pictures
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A brand new examine has discovered that 58 banks in america are “sabotaging” their very own net-zero commitments by offering financing to meat, dairy and animal feed companies.
Analysis for the report, Bull within the Local weather Store: Industrial livestock financing sabotages main U.S. banks’ local weather commitments, was performed by U.S. environmental nonprofit Buddies of the Earth and Profundo, a analysis group based mostly within the Netherlands.
From 2016 to 2023, $134 billion in loans and underwriting was supplied to meat, dairy, meals processing, animal feed and agri-commodity companies by 58 U.S. banks, in accordance with the report. Greater than 50 p.c of the financing the researchers investigated got here from three main lenders: Financial institution of America, JPMorgan Chase and Citigroup, a press launch from Buddies of the Earth mentioned.
“Since 2021, banks throughout the globe have pledged to slash financed and facilitated emissions. As signatories to the Internet Zero Banking Alliance, U.S. banks — together with Financial institution of America, Citigroup, and JPMorgan Chase — dedicated to ‘transition the operational and attributable greenhouse gasoline (GHG) emissions from their lending and funding portfolios to align with pathways to internet zero by 2050 or sooner,’” the report mentioned. “To satisfy these commitments, main U.S. banks have prioritized lowering GHG emissions from fossil gas associated financing and but, 12 months over 12 months, they’ve continued to finance the sector. These banks additionally proceed to finance high-emitting industrial livestock manufacturing.”
Of the overall greenhouse gasoline emissions related to the banks’ financing, 11 p.c was from lending to meat, dairy and animal feed companies, although the businesses make up solely a small portion of the banks’ portfolios — 0.25 p.c. This implies the financing represents a disproportionate barrier to banks attaining their local weather targets.
“Banks have dedicated to pathways to internet zero, however they’re ignoring an enormous ‘cow-shaped gap’ of their plans,” mentioned Monique Mikhail, the examine’s lead creator and director of the Agriculture & Local weather Finance program at Buddies of the Earth, within the press launch. “Huge Meat & Dairy exerts a vastly disproportionate influence on the banks’ whole emissions, placing their very own said local weather commitments in danger.”
The report’s suggestions for the banks included stopping all new financing that helps the expansion of commercial livestock manufacturing and requiring that meat, dairy and feed companies disclose verified 1.5-degrees Celsius targets and motion plans for third-parties which are in settlement with the Intergovernmental Panel on Local weather Change or a comparable science-based pathway.
“Our analysis finds that by eliminating their financing of high-emitting companies concerned in meat, dairy, and feed manufacturing — a comparatively small change in how they allocate their capital — these large banks can have an effect on a pointy emissions discount,” mentioned co-author of the examine Ward Warmerdam, Profundo’s senior monetary researcher, within the press launch. “In accordance with our analysis, defunding industrial livestock manufacturing is likely one of the most climate-positive decisions these banks might make.”
The examine discovered that the 56 largest meat, dairy and feed manufacturing companies examined within the examine generated extra carbon-equivalent emissions yearly than Japan — the eighth largest emitter on this planet.
Banks within the U.S. financed and facilitated the equal of 69.6 million tons of carbon dioxide emissions in 2022 by way of their lending and underwriting of companies concerned in meat, dairy, meals processing, animal feed and agri-commodities. That’s roughly equal to 14 million automobiles being on the highway for a 12 months — the identical as all of the registered automobiles in California.
The lending and underwriting of Financial institution of America, JPMorgan Chase and Citigroup alone have resulted in 26.9 million tons of carbon emissions.
“Methane influence is worse for warming than CO2: As much as 70% of the 58 U.S. banks’ whole meat and dairy associated financed and facilitated emissions are methane (utilizing GWP20), which has 80X the warming potential of carbon dioxide. This implies lowering methane may have an outsized influence on portfolio emissions,” Buddies of the Earth mentioned.
The researchers discovered that precise emissions from the firms could also be as a lot as 4 occasions increased than the reported numbers.
“Meat, dairy and feed companies omit or understate their emissions by tens of millions of tons a 12 months, masking their influence on U.S. banks’ Scope 3 totals,” the press launch mentioned. “Greater than half of the firms assessed within the examine don’t report emissions in any respect, and solely 22% disclose Scope 3 (worth chain) emissions. Scope 3 emissions account for as much as 90% of agribusiness companies’ whole carbon footprint.”
Nestlé, Cargill and Bunge made up many of the financed emissions, whereas underwriting of worldwide meals large JBS by Financial institution of America accounted for almost all — 87 p.c — of meat and dairy companies’ facilitated methane emissions.
“We weren’t anticipating to see the banks sabotaging their very own local weather commitments to this stage,” Mikhail mentioned, as The Guardian reported.
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