Twenty banks and the same number of investors are collectively financing a methane footprint that is nearly equivalent to Saudi Arabia’s CO2 emissions, according to research by Planet Tracker.
A new report by the NGO and Changing Markets Foundation charges that lenders and institutions led by BlackRock, Capital Group and JP Morgan are lagging their own countries on methane emissions “significantly” and have underdeveloped policies in this area.
Their financing of the two largest meat and dairy companies alone – JBS and Marfrig – is enabling emissions equivalent to 0.5 gigatonnes of CO2.
The top 15 companies in the sector (whose financing the report focuses on) emit 1.5 times as much methane as either the European Union or United States. On a global warming potential basis, their overall greenhouse gas footprints are larger than those of oil majors such as BP or ExxonMobil.
Although short-lived, methane is a particularly powerful climate pollutant with 80 times the warming potential of CO2 over a 20-year period. Scientists attribute about half of all global warming since the pre-industrial age to methane emissions from agriculture, energy and waste.
More than 150 countries signed the Global Methane Pledge and additional “pathways” announced at last year's COP27 climate summit in Egypt. Launched by the EU and US at COP26 in Glasgow in 2021, the pledge commits signatories to take collective action to reduce global methane emissions by at least 30% from 2020 levels by 2030.
The initiative’s supporters said reducing methane emissions is the single most effective strategy to keep the goal of limiting warming to 1.5 degrees Celsius within reach. Additional benefits include better public health and agricultural productivity.
But financial institutions are falling short, the NGOs argue. Headed by JP Morgan, Morgan Stanley and BNP Paribas, banks have committed US$400bn to the top 15 meat and dairy producers in the past decade. Investors led by BlackRock, Capital and Vanguard hold US$115bn of the companies’ equity and a disclosed US$3bn of bonds, though the NGOs suggest this is an underestimate and their high-methane bond holdings could be as high as US$50bn.
Planet Tracker and Changing Markets Foundation want financial institutions to start requiring companies they fund to limit methane emissions, particularly from agriculture (and including Scope 3 emissions along their value chains), and to publicly disclose up-to-date, verified emissions data by product line and geography.
Moreover, they should set investment policies linked to science-based methane reduction targets, also with public disclosures to ensure accountability. These must extend to agriculture – livestock in particular – and should be aligned to the recommendations of the United Nations’ Global Methane Assessment, the NGOs said.