EIB’s agricultural funding under scrutiny in new report by ActionAid Europe and Counter Balance

The report titled “The European Investment Bank’s development and climate finance – what’s in it for sustainable agriculture?” by ActionAid Europe and Counter Balance critically examines the European Investment Bank’s (EIB) ongoing support for unsustainable agriculture projects in the Global South. It exposes stark contradictions between the EIB’s actions and its stated climate commitments under the Paris Agreement.

Agricultural funding from the EIB, the world’s largest multilateral bank, continues to promote agriculture practices that have negative impacts on the climate and small farmers’ livelihoods, promote unsustainable export-oriented agriculture, ignore local food security and nutritional needs, and lock low and middle income countries in food dependency and poverty.

The EU’s “Farm to Fork Strategy” and the European Green Deal acknowledge the environmental impact of industrial agriculture. However, these policies fail to translate into a coherent framework for sustainable agriculture in external policies. The lack of sufficient public financial resources for sustainable agriculture and agroecology in the EU’s external funding highlights this gap. Core EU policies continue to lock developing countries into an export and import-dependent intensive agriculture model, undermining sustainable agriculture efforts.

Key findings show that by the end of 2023, the EIB had EUR 5 billion in outstanding loans to the agriculture and forestry sector, with an estimated EUR 800 million directed towards agribusiness projects outside the EU. From 2020 to 2022, the EU provided EUR 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, resource-intensive and industrial agricultural practices, and large corporations with obscure financing models and management while lacking proper environmental and human rights impact assessments.

To align with its climate commitments, the EU must improve its agriculture policies and lending practices. The EIB should:

1. End support for export-oriented agriculture projects and focus on climate-resilient development.
2. Create a task force for sustainable agri-food systems and agroecology to finance sustainable agriculture, prioritising small-scale farmers and women.
3. Conduct thorough impact assessments for all projects, ensuring transparency and public scrutiny.
4. Avoid financing through intermediaries lacking a strong development mandate, instead building EIB’s capacity for selecting impactful projects.
5. Increase adaptation finance to avoid exacerbating debt burdens, developing debt assessment mechanisms, and including climate-resilient clauses in lending.

Member States, as EIB shareholders, and the European Parliament must ensure the Bank’s investment policies align with international guidelines and standards. These steps are essential for the EU to be a progressive force on climate issues and ensure a just development and climate finance for agriculture.