Study on investment trends in the animal agriculture sector shows worrying results: activists demand better practices
by Alessandro Ramazzotti
In 2023, the 16 biggest multilateral development banks spent almost $3.3 billion on factory farming projects. After the World Bank Group, the next biggest investors were the Inter-American Development Bank Group (US$ 475 million) and the European Bank for Reconstruction and Development (US$ 134 million). Most investment went to private sector actors with 33 projects or 53.2% of the total projects.
The food sector is key to guaranteeing our planet’s future. It not only sustains human life but is also one of the sectors with the largest emissions of greenhouse gases. Reducing these emissions is essential for mitigating climate change and ensuring a sustainable future.
International financial institutions (IFIs) are heavily investing in all parts of the food systems’ value chains, including the livestock sector. Some of these investments are positively supporting better practices, while others are financing destructive extractivist systems that often end up having adverse impacts on people, animals, and the environment at the local and global levels.
How to analyze these public investments in the global food system, and especially in the livestock sector? That is a complex question and one we asked ourselves about a year ago.
As part of our work on Climate Justice with the Stop Financing Factory Farming Coalition, we started working on analyzing data from the Early Warning System (EWS) to provide reliable and timely information about the international investment trends in animal agriculture systems and the governments, companies and investors involved. We aim to stop multilateral development banks’ investments in the expansion of industrial animal farms and the complex supply chains behind them. However, understanding how to do that in practice was challenging.
We designed a methodology that consisted of categorizing development projects financed by the 16 institutions tracked by the EWS according to their relation to animal agriculture value chains. The categories we included aimed to cover not only direct investments in animal farms or slaughterhouses, but also those supporting the expansion of animal feed production, the development and distribution of other essential inputs such as animal vaccines and veterinary services, the reinforcement of irrigation systems to cultivate feed crops, investments in financial intermediaries with potential linkages to animal agriculture, and projects which would influence national policies, shaping them in a way that promotes industrialization in the animal agriculture sector.
Analysis shows a lack of transparency in many project disclosures
We analyzed a large dataset of project disclosures from the EWS, covering the period from January 1, 2022, onwards. Due to the lack of transparency in many IFI project disclosures, we encountered challenges in fully understanding the context and activities of certain projects, particularly those involving financial intermediaries (see the example). The low level of transparency prevented us from clearly understanding whether the funds would be delivered or not to companies in the industrial animal agriculture sector. This limitation forced us to narrow our focus to investments made in the solar year 2023, specifically those related to the production and processing of livestock products, as well as the production and distribution of animal feed and vaccines.
Despite its reduced scope, our analysis of 62 projects tracked by the Early Warning System (EWS) in 2023 revealed that 11 of the 16 IFIs invested US$3.33 billion in animal agriculture. This funding primarily supported industrial-scale projects (US$2.27 billion), or interventions with an apparent focus on industrializing the sector. Only a small portion (6.7%) of the projects targeted non-industrial systems.
Furthermore, the majority (64.5%) of these 62 projects were categorized as high or moderate risk. 18 projects or 29%, were not assigned any risk category. This suggests that many projects may have underestimated potential risks, potentially leading to unforeseen negative consequences at the local level. Given that this analysis represents only 2% of all EWS-tracked projects in 2023, the overall impact of IFIs financing on the animal agriculture sector could be even more significant.
This shows that apart from understanding how many projects actually relate to the animal agriculture sector, it is important to keep in mind that many of these are likely to have large adverse impacts on local communities, environments, farmed animals, as well as the global climate. Therefore it is graver to have 62 projects, most of which are categorized as potentially high-risk, rather than 620 with limited, or no risks at all. Examples of better practices exist, so why not implement them more often?
Where did the investments flow in 2023?
IFIs invested in animal agriculture systems across 56 countries in 2023, with every region except North America receiving funding. Sub-Saharan Africa saw the most investments (22 projects), reflecting the significant potential for industrial agricultural development in the region. IFIs seem to be seizing this opportunity to drive the industrialization of animal agriculture in Africa.
However, Latin America and the Caribbean also received numerous investments, with three of the top five recipient countries located in this region (Honduras — 5 projects; Argentina, Ecuador — 3 each). This region is known for its large-scale animal farms and has recently experienced devastating wildfires, some allegedly linked to land clearing for agribusiness expansion. Alongside these Latin American countries, Kenya and Ukraine also received 3 projects each, placing them among the top recipients of IFI funding for animal agriculture in 2023.
IFIs mostly invested in private sector actors (33 projects, or 53.2% of the total number of projects), and the companies that received the most investments in 2023 were MHP in Ukraine and ETG Group in the Africa region. The former has been the subject of complaints by local residents for years now, with allegations of repeated episodes of human rights abuses against local environmental defenders. However, despite this strong and ongoing opposition, IFIs did not stop heavily investing in the company’s expansion, therefore perpetuating the risks for local communities and the environment in Vinnitsiya, Ukraine.
World Bank Group: the biggest financiers of industrial animal agriculture
The data we gathered has already been used to support advocacy efforts with the World Bank and its private sector arm, the International Finance Corporation (IFC), by and large, the biggest financiers of industrial animal agriculture among the institutions we tracked.
The World Bank Group — which includes the IFC — spent about US$ 750 million in industrial animal agriculture projects or companies in 2023. Among its clients, there was Alvoar Lacteos, a company that has been linked to grave violations of animal welfare standards; including those promoted by the IFC itself as good practices.
Despite strong civil society organizations’ opposition to the investment — both at the national and global levels — the IFC approved it anyway, delivering US$ 32 million in the pockets of a company whose CEO believes cows can just be treated as milk-producing machines, rather than sentient animals.
IFIs have firm commitments to align their operations with the international climate change legal framework, and therefore invest in operations that do not risk augmenting global emissions. However, as far as they will be investing in factory farming, they will not be able to meet these commitments; but most importantly, they will put the planet, people, and animals at risk.
Now that the methodology is in place, the work has been kick-started, and it has already proven to be useful in demanding accountability and respect for human and environmental rights, as well as for animal welfare, we plan to continue analyzing the investment trends of these 16 financial institutions and disclose updated data for the solar year 2024.
Moreover, we aim to expand this research and include those sub-sectors we could not cover earlier, such as interventions on national agricultural policies, irrigation infrastructure, agrochemicals, seeds distribution, and access to finance for agribusinesses.
With time, we hope this work will evolve into a comprehensive, data-based analysis of IFIs’ involvement in the animal agriculture sector, and ultimately push these institutions to adopt more sustainable approaches to their investments in the food sector and promote better practices — such as regenerative agriculture and agroecology — that benefit local communities and biodiversity and do not endanger animal welfare.
The Early Warning System contributes timely information to the members and partners of the Stop Financing Factory Farming Coalition, allowing them to effectively respond to projects of concern for local communities, environments, or animals.
Read the new report, Development Finance Support for Animal Agriculture: Analyzing 2023 project disclosure data from 16 development finance entities. (available in Es) In addition, the International Accountability Project and the Early Warning System, in collaboration with the Stop Financing Factory Farming Coalition, developed the Factory Farming Finance Tracker, an interactive tableau to track international financial institutions’ investments in animal agriculture, and ultimately promote civil society organizations’ advocacy actions that aim to achieve climate justice and a transition to sustainable food systems.
Alessandro Ramazzotti is the researcher focusing on the Early Warning System at the International Accountability Project.
