New ActionAid report reveals EIB supports climate-harmful industrial agriculture projects in the Global South

A new report published today (Wednesday, June 19th) reveals that the European Investment Bank (EIB) is supporting harmful agriculture practices that are having devastating impacts on climate.

The report from ActionAid International and Counter Balance shows that by the end of 2023, the EIB had €5 billion in outstanding loans to the agriculture and forestry sector, with an estimated €800 million directed towards agribusiness projects outside the EU.

It further shows that from 2020 to 2022, the EU provided €337 million in guarantees for agribusiness loans by the EIB and other European Development Finance Institutions (DFIs). Case studies illustrate that the EIB’s financing supports cash crops and resource-intensive and industrial agricultural practices, and large corporations with obscure financing models and management without proper environmental and human rights impact assessments.

Titled “The European Investment Bank’s development and climate finance – what’s in it for sustainable agriculture?” the report criticises ongoing support for unsustainable agriculture projects in the Global South and exposes stark contradictions with its stated climate commitments and the Paris Agreement.

Karol Balfe, ActionAid Ireland CEO, said:

“Industrial agriculture is the second largest contributor to climate change after fossil fuels and, at the same time, the most at risk from climate impacts. The EIB has boosted its levels of climate lending, but it fails to invest in sustainable agriculture which has limited profitability. The Bank therefore fails to demonstrate the development and climate additionality of its investments which alone can justify the use of public money. The EIB is supporting an unsustainable agriculture model that locks vulnerable communities and countries into food insecurity and debt.”

The report calls on the EIB to:

• End support to climate harmful and export-oriented agriculture projects.
• Create a sustainable agri-food system and agroecology task force that can develop a strategy towards financing sustainable agriculture and prioritise lending for sustainable agriculture and agroecology with priority to small-scale farmers and women.
• Carry out a thorough analysis of the climate and developmental impact of projects financed directly and via financial intermediaries to ensure that impact on local food security and developmental, environmental and human rights impacts are minimised.
• Refrain from financing agricultural projects through financial intermediaries that lack a strong public development and environmental mandate, but instead invest resources to improve the EIB’s own capacity to select projects with a strong positive local environmental and social impact and which clearly contribute to local food security.
• Increase its share of adaptation finance in the form of highly concessional finance to avoid exacerbating the debt burden of partner countries. In this context, the EIB should develop its own debt assessment mechanism and include climate resilience debt clauses in its lending operations.

Alexandra Gerasimcikova, head of policy and advocacy at Counter Balance, added:

“The EBI and other DFIs prioritise private investors in the agrifood sector, worsening already prevailing imbalances of power and wealth in the food system at the expense of small farmers, who provide food for up to 70% of the world’s population. Agriculture support in developing countries remains a token gesture in the EIB’s portfolio, echoing a wider trend that sees the economic risks and limited profitability of agriculture projects as a deterrence for their financing.

Frank Vanaerschot, director at Counter Balance, concluded:

“To be a truly progressive force on climate issues, the EIB should cease funding export-oriented agribusiness projects that displace labour, livelihoods, and local knowledge, and must protect small-scale farms by financing a transition from intensive, industrial agricultural methods to sustainable and agroecological systems, which reduces emissions and empowers communities. Only in this way, it will effectively address both its climate footprint and vulnerability.

To learn more about ActionAid Ireland’s work on climate justice, click here.