A report by the nonprofit Friends of the Earth and the research firm Profundo suggests that U.S. banks are too indebted to industrial agricultural interests to follow through on their promised climate commitments. In particular, this “cow-shaped hole” in big banks’ sustainability promises comes from major institutions’ financial interest in the industrial livestock sector. Through an investigation and analysis of the “Big Three” major U.S. banks — Bank of America, Citigroup, and J.P. Morgan Chase — this report highlights how these banks are primary financiers and underwriters to corporations like ADM, Tyson, Cargill, and Nestlé. What’s more, only a major divestment from these emission-producing corporations — and the industrial livestock industry altogether — would allow U.S. banks to credibly keep their climate commitments.

The report states bluntly that climate risks are also financial risks, and that the ongoing climate crisis could reduce global GDP by 11-14% by 2050. Thus, policymakers and shareholders have increasingly pressured banks to help reduce climate emissions. This can be done, in theory, by banks slashing their financing to high-emission, greenhouse gas (GHG) producing industries such as the fossil fuel, automotive, and industrial agriculture sectors. As J.P. Morgan Chase explains: “climate change targets cannot be achieved without action on food sustainability… yet it continues to be neglected.” Thus, in 2021, Bank of America, Citigroup, J.P. Morgan Chase, and other signatories of the “Net Zero Banking Alliance” promised to convert their lending and investment portfolios to “align with pathways to net zero” by 2050. 

However, in addition to continuing to underwrite the fossil fuel and auto industries, big banks have shown little interest in divesting from industrial animal agriculture. Animal agriculture is a high-emitting industry that produces between 11.2-19.6% of global GHG emissions. The farmed animal industry may comprise 50% of the total 1.5 degree global emissions “budget” by 2030 and 80% by 2050. The industrial animal ag industry also contributes to deforestation, biodiversity loss, the pollution of land and waterways, and freshwater depletion. 

The report highlights that the “Big Three” banks are the three of the largest U.S.-based lenders to global meat, dairy, and feed corporations. From 2016 to 2023, U.S. banks channeled $134 billion worth of loans and underwriting services to industrial livestock corporations. Of these billions, 97% of this financing came from major creditors, and of this 97%, over 58% of funds came from the “Big Three” banks. Bank of America financed $26.5 billion while Citigroup and J.P. Morgan Chase each financed $23.8 billion. The top recipients of these funds were ADM, Nestlé, Tyson, Cargill, and Danone. 

The industrial livestock industry survives and thrives via support from U.S. banks. In contrast, divesting from industrial livestock would not substantially harm the banks that finance the sector. Indeed, divesting would actually be a net benefit for these banks; for the “Big Three” banks in particular, industrial animal agriculture clients represent a mere .25% of their total outstanding loans while representing 11% of their total financed emissions. In other words, the emissions footprint of the “Big Three’s” industrial animal ag clients is 44 times greater than the proportion of the banks’ lending portfolios. For J.P. Morgan Chase, for example, financed livestock emissions are nearly four times that of financed auto emissions and almost nine times that of oil and gas.

What’s more, big banks may not even be aware of their outsized contribution to climate change via industrial livestock financing, because the industry consistently underreports and obscures its GHG emissions data. This report suggests that some companies intentionally obscure particular aspects of emission production, specifically Scope 3 emissions (where the bulk of methane emissions occur), so much so that real emissions may be four times greater than what the companies self-reported.

To resolve this issue, the report makes three recommendations. First, U.S. banks must immediately halt all new financing that enables the expansion of the industrial livestock industry. This would include refusing to renew existing loans. Second, banks should require existing industrial livestock clients to disclose third-party verified 1.5 degree targets and action plans, including full disclosure of Scope 3 GHG emissions. Third, banks should require existing clients to actively address the social and environmental harms caused by industrial livestock by taking steps to, for instance, enact pro-labor and animal welfare policies.

To meet their climate commitments, U.S. banks — particularly the “Big Three” — must take immediate action to divest from industrial animal agriculture. Refusing to lend and underwrite for meat, dairy, and feed corporations would not meaningfully harm their banks’ portfolios. However, it would significantly reduce their financed emissions and allow these banks to take meaningful steps towards mitigating climate change.