The Silence of the Loans

Methane is responsible for roughly 0.5°C of current global warming. Over 80 times more potent than CO₂ over 20 years, methane is the fastest lever we have to slow near-term heating. Agriculture, including livestock and rice, generates around 40% of methane emissions, more than fossil fuels.

However, banks are failing to act on rising methane emissions in the agriculture sector.

Planet Tracker examines 25 banks that provide and facilitate finance to 15 of the largest meat, dairy and rice companies. These banks provide lending and underwriting worth USD 159 billion to these 15 companies.   The companies generate an estimated 1.3 million tonnes of methane emissions per year, highly concentrated in a small number of multinational meat and dairy processors, including Tyson Foods and JBS.

Key findings

Analysis of their policies and targets shows that:

• All 25 banks have targets for reducing GHG emissions from high-emitting sectors but only two banks have targets specifically for Agriculture, Forestry, and Other Land Uses (AFOLU) sectors: Barclays (UK dairy and livestock only) and Rabobank (10 agriculture sectors).
• None of the 25 banks have policies or targets explicitly for agricultural methane. Rabobank is the only bank to name methane, but its commitment is to “significantly reduce” by 2050 rather than a specific medium-term (e.g. 2030) methane reduction target.
• Only one bank (Deutsche Bank) has a stated policy of withdrawing funding from companies “not willing or able to transition away from carbon-intensive activities” and only then as a last resort.
• Only JPMorgan, Barclays and Citi have GHG targets that also cover arranging bond financing (“facilitated debt”); the other 22 banks have targets for bank loans only (“financed emissions”). Yet bonds account for 96% of total debt of the 15 companies analysed.
• Bonds (rather than loans) account for 96% of the companies’ debt. However, most banks’ emissions targets apply only to lending, excluding the far greater climate impact of their role in arranging bond financing.  

Banks should use their leverage to reduce these emissions by restricting or withdrawing finance from companies that fail to act.

Planet Tracker recommends that:

• Banks adopt robust and credible policies for methane emissions from the food and agriculture sector.
• These policies should cover both financed and facilitated debt, and include a commitment to exiting companies that are not willing or able to transition away from methane-intensive activities.
• Standard setters require banks’ disclosure of facilitated methane emissions.