Bankrolling Deforestation

by Amy Lupica, ODP Staff Writer

Even as big banks divest from industries like fossil fuels, mining, and logging in regions across the globe, they’re continuing to invest in one of the biggest drivers of global climate change: food and farming corporations. Unsustainable and privatized agriculture and food production is responsible for approximately 26% of global greenhouse gas emissions, and yet, awareness of the damage these practices cause remain too low

Experts say that unless banks divest from these harmful food production practices, including deforestation and mass livestock-production, the world could use more than half its carbon budget by 2030.

 

Why This Matters: By 2050, the global population is expected to reach 10 billion and rising demand for food is motivating banks and investment firms to pour billions into unsustainable production practices, especially deforestation resulting from agriculture. Deforestation by this industry poses one of the largest threats to the world’s carbon budget.

Between 2001 and 2015, an area twice the size of Germany was cleared for agricultural production, destroying crucial carbon sinks across the globe and releasing millions of tons of carbon into our atmosphere. But a significant amount of the crops produced on that land don’t end up on our dinner tables. Land cleared by deforestation is primarily used to raise cattle and grow grains to feed that cattle and over 30% of cleared land is dedicated to the production of palm oil, soy, rubber, and wood fiber.

Despite studies showing that reducing, and even eliminating, deforestation is the fastest way to reduce the food production industry’s carbon footprint, that hasn’t stopped capital from flowing to these companies.

 

Bad Investments: Banks lag behind every industry in divestiture from unsustainable food production, even behind some foodservice companies like McDonald’s and PepsiCo. A report from Global Canopy, an environmental think tank, found that “financial institutions are behind companies in setting commitments and policies on deforestation. Of the 150 financial institutions assessed, nearly two-thirds had no financing policy for any of the four key forest-risk commodities.”

Four major American banks, all of which have made promises to divest from fossil fuels to some degree, have not done the same for damaging food production. JP Morgan Chase has funneled $450 million into Brazilian meat production tied to deforestation and wildfires in the Amazon rainforest. Other international banks and investment firms, such as BlackRock, have either invested in harmful agribusiness or marketed “sustainable” investment funds containing agribusinesses involved in the destruction of tropical forests.

Blind Spot: Globally, all eyes are on the fossil fuel sector. Nearly every country has made some kind of pledge to reduce its dependence on fossil fuels, and even the largest fossil fuel companies have made some investments in green energy. But experts worry that unsustainable food production has fallen off the radar of activism and threatens to blindside the world with emissions they didn’t see coming. “Animal protein and even dairy is likely, and already has started to become the new oil and gas,” said Bruno Sarda, the former North America president of CDP, “this is the biggest source of emissions that doesn’t have a target on its back.”

 

A Planet-Based Focus: Last year the World Wildlife Fund put out its Living Planet Report which exposed that the most important direct driver of species loss is land-use change, in particular, the conversation of pristine native habitats into agricultural systems. This is why what people eat makes such a difference in stopping the degradation of nature and action on climate change overall

A follow-up report from WWF shows that a global shift toward healthier, more sustainable diets will combat climate change, improve human health and food security, reduce biodiversity loss, save lives, decrease the risks of future pandemics, and unlock economic benefits. Investment dollars should flow to projects that focus on sustainable agricultural systems that also protect biodiversity. 

 

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