According to new research by ActionAid, the world’s top financial institutions have given industrial agriculture companies operating in the Global South twice as much funding as governments in the Global North have given as climate finance to assist countries on the front lines of the climate crisis.
In the seven years since the Paris Agreement was signed, the world’s top financial institutions have given US$369.2 billion in bank financing in the form of loans and underwriting to large industrial agribusiness corporations operating in the Global South, according to a new study titled How the Finance Flows: The Banks Fueling the Climate Crisis.
The annual amounts vary, but on average it comes to roughly US$53 billion. In contrast, it has been calculated that the real value of all financial support for climate action given by the Global North to the Global South will be between US$21 and US$24.5 billion in 2020.
The biggest banks that finance industrial agriculture are headquartered in the US, Europe, China, and Japan, according to a breakdown of their locations.
The largest agribusiness bank is HSBC, which will finance $17.2 billion in agribusiness projects between 2016 and 2022. JPMorgan Chase ($14.2 billion), Bank of America ($14 billion), Citigroup ($13.9 billion), and Mitsubishi UFJ ($13.2 billion) are the companies that come in after it in the rankings.
The paper draws attention to the fact that industrialized agriculture, after the use of fossil fuels, is the second biggest cause of the climate problem.
The industrial agriculture method of farming aggressively promotes agrochemicals that cause significant greenhouse gas (GHG) emissions, promote deforestation, and threaten the livelihoods of billions of smallholder farmers who otherwise would be able to feed the world while cooling the planet.
“While the damage that fossil fuels cause to the climate is well known, modern agriculture’s significant contribution to emissions that warm the world has gone unnoticed. According to Teresa Anderson, Global Lead on Climate Justice for ActionAid International, banks that finance industrial agriculture in the Global South worsen the situation for smallholder farming communities who are losing their lands and means of subsistence to burgeoning agribusiness giants.
Communities in Africa, Asia, and Latin America that are vulnerable to climate change are being negatively impacted by decisions made in far-off banking boardrooms. With the release of this research, banks will no longer be able to claim that the problem is unimportant.
The report calls for a switch to agroecology because statistics show that the industrialized food system is unable to feed the world adequately and is damaging the climate. Agroecology can guarantee meeting local food security needs, reduce deforestation, limit land grabs, and support the livelihoods and economies of communities in the Global South.
According to Arthur Larok, secretary general of ActionAid International, “the world cannot continue to pay lip service to the need for funding sustainable alternatives such as agroecology, which has already proven its potency in providing food security for communities hit hardest by the effects of climate change in Africa, Asia, and Latin America.”
The report calls for governments and banks to stop projects and corporate financing of deforestation and other harmful industrial agriculture activities as well as support for a feminist and just transition towards agroecology after exposing the role of industrial agriculture and its reliance on fossil fuels to produce agrochemicals that increase factory farming.