Big Three U.S. Banks Face Billions in Climate-Related Financial Risks From Livestock Investments
Driven by climate-related disruptions, America’s largest banks face financial risks of up to $9.3 billion from their investment in livestock agriculture.
By lending money to some of the world's biggest meat and dairy companies, US banks aren't just hurting the planet, but also their bottom lines. Since 2023, 58 American banks have provided at least $134 billion in loans and underwriting to animal protein and feed producers, with 55% of this sum coming from just three institutions: Bank of America, Citigroup, and JPMorgan Chase. These banks are the largest US-based lenders for livestock farming, but the climate crisis they're exacerbating is putting their money at risk.
According to a new report by Dutch research group Profundo, nearly 90% of the outstanding financing provided by these ‘Big Three’ banks faces climate-related risks. The 31 companies that benefit from this capital could themselves lose up to $5.4 trillion. The report analyses financial data from 2016 to 2023 using climate scenario modelling to calculate risks considering deforestation, greenhouse gas emissions, and water scarcity.
Big Three face up to $9.3B in long-term losses
In the short term, these 31 corporations could face $116 billion in losses by 2030, translating into a risk for the Big Three banks ranging from $430 million to $1.1 billion. In the long term, the potential losses could rise to between $2.3 billion and $9.3 billion.
The banks face risks from higher feed costs, carbon taxes, and declining consumer demand. However, by ending financing when loans are redeemed, these risks could be reduced by up to 95%.
How banks can halt climate risks and emissions
Despite being part of the Net Zero Banking Alliance, Bank of America, Citigroup, and JPMorgan Chase have not yet set net-zero targets for agriculture. The financial institutions are advised to stop new financing for livestock expansion, enact full emissions disclosure, and prioritize significant methane emission cuts.
“Financial institutions must act swiftly to mitigate these risks by shifting capital toward more sustainable food systems,” said Kelly McNamara, senior research and policy analyst at Friends of the Earth US.
