We examined IFC’s Agribusiness and Forestry financing approved from Fiscal Year (FY) 2017 through FY 2023, 182 projects in total. We divided this into two periods, each three and a half years, to highlight changes or trends over time. From these 182 projects, we identified 61 with components related to livestock operations, livestock product procurement and processing, and livestock feed production for review. We evaluated these 61 projects to see whether they supported industrial livestock operations and how they applied the IFC’s Performance Standards (PSs) as they relate to greenhouse gas emissions and biodiversity. Using disclosed Summaries of Investment Information (SII) and Environmental and Social Review Summaries (ESRS), we looked for information on the manner and size of operations to determine how much was in support of industrial livestock operations.
Findings
Rapid Growth of Industrial Livestock Finance: The most notable finding was the near tripling of finance from the first to the second period supporting industrial livestock operations, from $434 million to $1.19 billion. The direct support of industrial livestock (excluding livestock feed and products) more than tripled, from $202 million to $632 million.
Absence of Key Information: The large gap between what is identified as livestock vs. industrial livestock was notable. In the first period, we identified $863 million of livestock finance of which $434 million confirmed as industrial livestock; in the second period we identified $2.62 billion of which $1.19 billion was industrial. While none of the remaining projects could be definitely identified as non-industrial, there simply wasn’t sufficient detail to definitely classify them as industrial.
Growing GHG Emissions: Although both periods fall after the Paris (UNFCCC) climate agreement, given the long pipeline for approval of many loans, we hypothesized that projects with significant emissions might decrease in the second period. Instead, the opposite occurred. While we do not have precise totals, it is reasonable to estimate that financed emissions roughly doubled from the first period to the second.
Failure to Apply Performance Standard (PS) 6: IFC’s PS 6 addresses Biodiversity Conservation and Sustainable Management of Living Natural Resources. Guidance Note 7 adds: “Regarding living natural resources, [PS] 6 will apply for all projects involved in the primary production of such resources.” Yet PS 6 was triggered in only 36 of the 61 livestock projects. Thus, in 25 of 61 cases, IFC exercised no oversight of how or even whether clients identify, avoid, mitigate, and manage impacts on biodiversity and living natural resources. Such harms may go unaddressed.
Conclusions and Recommendations:
Industrial livestock operations are widely recognized to have serious environmental impacts. They also are counterproductive for food security due to the large proportion of crops that could be available to people instead of being used as animal feed.
Looking at IFC’s livestock portfolio, with typical finance in the tens of millions of dollars, it is clear that IFC funds are benefitting large corporations but doing little to address poverty. These industrial-scale operations are capital-intensive, relying on mechanized operations and monoculture plantations providing low-wage, if any, employment, and often displacing smallholder farmers. Each of our findings raises serious concerns that IFC needs to address.
Accordingly, we recommend that IFC:
●Recognize the GHG emissions of IFC-financed livestock operations as a critical barrier to achieving Paris alignment. Addressing this means reducing both the share of finance provided to livestock operations and the emissions or emissions-intensity from those operations financed.
●Refuse to fund projects that lack a time-bound plan for achieving supplier traceability with the goal of zero deforestation from land-use change.
●Disclose all ESIAs and update project summaries to reflect current conditions and information at least annually.
●Disclose the emissions of GHGs and other pollutants associated with all financed operations publicly in annual or more frequent monitoring reports.
●Disclose what animal welfare standards are applied, where, and how many animals are covered at each location.
●Consistently apply Performance Standard 6 in agriculture and livestock projects, and require sufficient mitigation action—including implementation of supplier codes of conduct—to adequately address all associated risks.
●Evaluate any investment in this sector not only by whether it promotes agricultural development that meets the Performance Standards, but also contributes to sustainability and poverty reduction.
By replacing support for industrial livestock with agro-ecological operations and Paris-aligned practices, IFC could contribute to food security, sustainability, and poverty reduction.
Read the report: How Much (and How) Does IFC Support Industrial Livestock? And Is It Changing?