Regulatory Instruments For Granting Credit To The Meat Chain: Contributions To Mitigate Deforestation And Climate Change

A significant part of greenhouse gas emissions arises from agricultural activities. Brazil is responsible for 3% of global GHG emissions, and agricultural area emissions have furthermore increased by 3.2% since 2021. (SEEG,2023)!.. Worldwide the meat industry accounts for nearly 60% of all greenhouse gas emissions related to food production (Xu, 2021). It is, moreover, directly related to the accelerated deforestation of biomes, such as the Amazon, which are fundamental to the entire planet, thus contributing to the worsening of the climate crisis. The agricultural chain is complex and involves different actors globally such as livestock farmers, feed producers, slaughterhouses, the distribution and retail sector. Financial institutions play a fundamental role in this sphere, as they grant credit to different companies in the production chain and invest in companies in the meat value chain. According to Greenpeace press release in March 2024, since the 2015 Paris climate agreement, European banks have lent about €256 billion to corporations that put forests, savannahs and other climate critical natural ecosystems at risk, according to new research. !’In the agricultural sector, emissions from the digestion carried out by herds of ruminant animals, which emit methane – enteric fermentation, the popular “burp” of the ox -, from the treatment and disposal that the waste of these animals receive, from the cultivation of rice under the irrigated regime, the burning of agricultural residues from the cultivation of sugarcane and cotton and those caused by the way agricultural soils are managed, considering the increase in nitrogen through the use of inputs, agricultural operations and the use of limestone ( managed soils). Given the relevance of the necessary transformations in food systems for the G20, the T20 Indonesia published recommendations on sustainable agriculture. These recommendations attribute responsibility to governments for subsidies granted to farmers whose practices harm nature and suggest contributing financial resources to encourage sustainable transition of food systems. In this context, taking the Brazilian case as an example, in which agriculture is responsible for the rise of deforestation and, consequently, the worsening of climate crisis, and considering the important role of financial institutions in tackling these issues, this policy brief aims to contribute to the development of policies and recommendations for different actors in the value chain. It emphasises the role of governments and the G20, in establishing good practices and overcoming challenges and gaps to put in place a meat production chain aligned with socio-environmental protection. To reduce the environmental and social impact of the meat chain, it is necessary for G20 central banks and governments to require banks and investors to make more rigorous commitments regarding their financing of the food sector. Additionally, they should consider their role in making environmental and social due diligence processes binding for banks and investors.