Long-term climate risks facing 31 meat, dairy and feed production companies could cause losses to the tune of US$5.4 trillion, according to a report from sustainability research provider Profundo. The three largest US-based lenders to the sector (Bank of America, Citigroup, and JP Morgan Chase) could face costs of US$9.3 billion in 2025 as a result of these risks, the research found. Looking to the near term, these firms face losses of US$116 billion between now and 2030. According to the report, the big three could reduce climate-related financing risk by 83% to 95% if they stopped financing these 31 corporations in the near term. The research considered variables such as deforestation impacts, methane and other greenhouse gas emissions, water scarcity, and weather volatility-related risks in key supply chain regions. “This analysis highlights the opportunity for financial institutions to reduce long-term financial risks through reducing their investments in the meat, dairy and feed sector,” said Gerard Rijk, Senior Equity Analyst at Profundo. “The analysis and the numbers are a wake-up call: continued investment in this unsustainable industry creates very high externalized climate damage costs as well as potential high cash costs. These hurt the planet as well as the portfolios of banks and asset managers.” The report did not include financial risks related to biodiversity loss, the impact of meat and dairy production and consumption on human health, and the impact on human rights. However, the report said that these additional financial damages and risks would “further escalate the total financial risks”.
