Friends of the Earth Discuss Who Funds the Most Environmentally Damaging Sectors

Elysabeth: I bring on my two guests today, Kelly McNamara, who is the Senior Policy Advisory and Research Person at Friends of the Earth, and Monique Mikhail, who’s the Senior Program Manager at Friends of the Earth. Thank you both for being with me today.

Let’s get into the data. I’ll let you share it, although if you listen to this podcast on a regular basis folks, you know that I quote this stat all the time. But please tell me, what were the results of this study?

Monique Mikhail: Absolutely. So, zooming back out a little bit to the first part, we actually found that there are 58 US banks that are providing financing to these 56 meat, dairy, and feed corporations. That collectively is a staggering $134 billion in financing between 2016 and 2023 that they provided to fund the expansion of these corporations. This financing led to over 63 million metric tons of carbon dioxide equivalent emissions in 2022 alone.

So to make that crunchier for people, it’s equivalent to the emissions from approximately 14 million cars driven for a year. That’s the same number of cars registered in the state of California. So this really highlights a significant environmental impact of the bank financing of this sector.

Bank of America, Citigroup, and J.P. Morgan Chase then emerged as the key players in financing those 58 banks. They were collectively responsible for over half of the U.S. bank financing of the meat, dairy, and feed corporations, which is why we ended up dubbing them the big three and focusing our efforts on engaging those specific banks.

Most importantly, I think the real central fact of the report, which even we were quite shocked by ourselves, was that the lending from these big three banks to the meat, dairy, feed and food processing and agro commodity corporations that we reviewed in the report represents a tiny fraction, just a quarter of 1% of the big three loans outstanding, but actually roughly 11% of the reported financed emissions. So a quarter of a percent of their portfolio and 11% of their emissions. So it’s a massively outside impact than their emissions compared to their actual portfolio. The emissions footprint from financing these companies is a 44x greater impact than the proportion of the bank’s lending portfolio, which is pretty staggering.

We also then looked at who were the biggest climate culprits that they were funding. The meat giants, food processing corporations, and agro commodity traders that supply animal feed are the highest emitters among this set from the big three. Specifically, Cargill, ADM, Bunge, and Nestle accounted for the bulk of financed emissions. Nestle, Cargill, and ADM accounted for the dominant shares of facilitated emissions.

Really interestingly, Bank of America should take note that their underwriting of JBS alone accounted for 87% of their facilitated methane emissions. So, just the financing going to JBS has a massive impact. So to us, the conclusions just really jumped out as very clear that the big three curtailing support for meat, dairy, and feed corporations would affect only a tiny fraction of their portfolio but result in significant reductions in their financed emissions and enable major progress towards their climate commitments. So it’s one of the most climate positive choices that the banks could actually make to curtail the finance for this sector.

Elysabeth: Let’s get back to the actual results here. This quarter point is producing 11% of the carbon footprint as reported by these top three. That’s Citigroup, J.P. Morgan Chase, and Bank of America. So my question to Kelly and chime in Monique as well if you would like, is why? Why would they put themselves at this kind of risk? These are publicly traded companies.

Kelly McNamara: Yeah, that’s a great question and frankly, we have that question ourselves. I think part of the answer is that there’s a lack of awareness of just how much these emissions are contributing to the banks’ footprints. Citi themselves has said that it’s too complex to calculate the agricultural emissions. Monique and I would say, “Well, we did it.” So that’s frankly our response to that.

There hasn’t been attention on the sector and I know this is coming up. We had COP28. It’s rising to the surface, etc. But for so many years, it’s been creeping up the agenda and just hasn’t been on the banks’ radars. So they haven’t had to address it. I think that their investment in the sector has just been a business-as-usual, diversified portfolio, opportunistic, routine investing.

So, I think a big piece of this is education and calling it out. This is why this report, this is why the campaigning, this is why this is so helpful to be on your podcast and reach your listeners. So to help them just raise awareness to call account for exactly the reasons you point out. These are publicly traded companies, the banks I’m referring to. They have an obligation to shareholders. They have an obligation to their shareholders to diversify their portfolios that are going to be at risk because of climate change being driven in a small part by industrial livestock, so that’s my high level answer.

Elysabeth Alfano is the CEO of VegTech™ Invest, the advisor to the VegTech™ Plant-based Innovation & Climate ETF, EATV. She is also the founder of Plant Powered Consulting and the Host of the Plantbased Business Hour.