CLIMATE MISALIGNMENT - Development Bank Investments in Industrial Livestock and Paris Agreement Commitments (Stop Financing Factory Farming Campaign)

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Executive Summary

During the last several years, including at the November 2021 Finance in Common Summit, the world's public development banks committed to shifting their investment strategies and activities to align with and support the objectives of the Paris Agreement.¹ Despite this commitment, multilateral development banks (MDBs) continue to invest in the global expansion of industrial livestock production, or “factory farming", notwithstanding the United Nations Environment Program's and other climate experts' assessments that absolute reductions in GHG emissions from livestock production are necessary to limit global warming to 1.5°C or "well below” 2°C, as the Paris Agreement requires.²

According to research by World Animal Protection, leading MDBs including the European Bank for Reconstruction and Development (EBRD), European Investment Bank (EIB), IDB Invest (Inter-American Development Bank), and the International Finance Corporation (IFC, World Bank Group) invested $4.6B in the sector between 2010 and 2021.³ EBRD and IFC were the largest investors in private sector industrial operations, deploying $2.6B to help extend the global reach of some of the world's largest meat and dairy producers, including Smithfield and Danone.⁴

Despite the incompatibility of factory farming's global expansion with keeping global warming to Paris-aligned levels, some MDBs have dramatically ramped up their investment in industrial animal agriculture, including feed production. For example, between 2018 and 2021, IDB Invest invested ~$500M in operations across Latin America and the Caribbean after investing just ~$15M in the sector between 2011 and 2017.⁵ Since 2021, MDB investments in factory farming have continued across Africa, Asia, Eastern Europe, and Central and Latin America and included support for regional and global agribusiness giants including PRONACA (Ecuador/IDB Invest and IFC), Louis Dreyfus Company (Brazil, IFC) and CMI Alimentos (Central America/IDB Invest).⁶ Each is briefly profiled in this report.

Shrinking Industrial Livestock Production is Necessary to Meet Paris Climate Targets

The science is clear. To keep Paris-aligned GHG reduction targets within reach, global production and consumption of industrially produced meat and dairy must decline. Recent estimates of the sector's contributions to global GHG emissions range from 11.2% to 19.6%; estimates are far higher when emissions related to foregone carbon absorption resulting from using land for grazing and animal feed.⁷ The sector also accounts for one third of anthropogenic methane (CH4) emissions.⁸ Because CH4 has 81.2 times the global warming potential (GWP) of CO2 over a 20-year timeframe, reductions from industrial livestock production are particularly critical for meeting the goal of reducing global GHG emissions by 45% by 2030 to limit global warming to 1.5°C.⁹

A 2020 Science study warns that even if fossil fuel emissions were immediately halted, livestock emissions could make it impossible to limit warming to 1.5°C and difficult to limit it to "well below" 2°C.¹⁰ While industrial meat and dairy production and consumption must decrease in higher-income countries, several studies, including a 2022 report by the Inter-American Development Bank (IDB), have shown that production and consumption can and must also diminish in regions including China and Latin America, where banks are currently supporting the expansion of factory farming.¹¹

Livestock production can play a role in meeting the nutritional and economic needs of the populations whom development banks serve. However, the decades-long industrialization and globalization of the sector has driven the overconsumption of animal-based foods in higher-income countries while exacerbating food insecurity among populations in lower and middle-income countries (LMICs) who should be the beneficiaries of development banks' support.¹²