The Disconnect Between Climate Goals And Funds For Factory Farms

Forbes

2 days ago

A pig farm next to the Toachi River in northeast Ecuador.
It's hard to overstate the importance of rivers like Peripa to residents of Santo Domingo de los Tsáchilas, Ecuador. 'For us, losing a river means losing our life, losing our identity, because there we find healing medicine, because we use the waters as a source of cleansing. For us, it's something very sacred,' says Ricardo Calazacón, who has continued the centuries-old Indigenous Tsáchila tradition of using local medicinal plants.
His father first noticed Proanaca's operations in Santo Domingo in the 1990s, when the food company established a farm of 2,000 pigs. The facilities ramped up over time. So too did the density of animals packed together, the manure, the stench, and the contaminants in the nearby rivers. People who went swimming there, as they had always done, started to notice rashes on their skin. The health effects were especially pronounced in children, who began developing gastrointestinal illnesses. While cases of stomach, lung, and skin cancer increased, the number of fish in the affected rivers declined.
Because of these issues, people started to migrate. Rifts also started to develop between community members, some of whom didn't want to go on record as opposing the powerful company.
Affected people also started filing complaints with the local and national governments, for instance to urge enforcement of laws on minimum distances between pig farms and communities. A key moment came in 2004, according to Calazacón, when many residents 'gathered to ask Pronaca not to cause this type of direct pollution to a river that means life to us.'
2004 was the same year that the International Finance Corporation (IFC), a World Bank Group organization focused on private-sector investment, began investing in Pronaca. From the start, IFC noted that the company was diverging from its guidelines. Thus, IFC and Pronaca agreed to an environmental and social action plan in order to receive the second tranche of money, in 2008. IFC has now invested $170 million in Pronaca, most recently during the Covid-19 pandemic. Following the 2004 loan, 'the subsequent loans that followed remain generally aligned with IFC Performance Standards,' according to IFC.
'Generally aligned' wasn't good enough for residents, who decided that IFC also should be held to account for the harm its investments were causing. In late 2010, two people complained to the Compliance Advisor Ombudsman (CAO), which handles grievances related to IFC projects, about water pollution, soil pollution, and foul smells from the Santo Domingo facilities. The CAO decided 11 months later that the case didn't justify an audit, even though it also found that Pronaca wasn't providing enough information about compliance with IFC guidelines.
According to a CAO spokesperson, 'The appraisal found that PRONACA's annual monitoring reports to IFC, such as in 2008, revealed various noncompliances with IFC/World Bank guidelines. However, in the years following, the quality of the company's reporting and data improved considerably and, by 2011, most wastewater non compliances were no longer present. CAO found that while reporting of data to IFC was insufficient to give full assurance of compliance, nevertheless IFC had worked with the company to recognize deficiencies, and design and implement improvements in environmental performance.'
Residents affected by Pronaca's operations have also filed complaints against the Inter-American Development Bank, another big lender to Pronaca. Overall, the expansion of Pronaca's operations has continued without sufficient community consultation, according to the Ecuadorian environmental network CEDENMA. IFC believes that broad community support is not applicable to these investments, and Pronaca has improved the collection and transport of animal waste. IFC states, 'Based on the information provided by the company to IFC, it is our understanding that Pronaca operates in line with the local regulatory framework and that all their operating facilities have the required permits and operating licenses.'
The multinational corporation Pronaca is the Goliath to the Indigenous communities' David. Pronaca, the fourth largest company in Ecuador, earned over a billion dollars in 2024. The people forced to live alongside thousands of pigs aren't satisfied. In April 2025, 'with new evidence of pollution and fresh testimonies from both the Tsáchilas and other affected communities, we submitted a new complaint to the CAO,' says Shady Heredia Santos, a veterinarian and activist who has been supporting the affected communities. A CAO spokesperson said that it is currently assessing this complaint, and expects to complete the assessment by October 2025.
Both sides talk about wanting to be good neighbors. Pronaca holds events in Santo Domingo de los Tsáchilas and has a 'Let's Talk to the Community' program. (Pronaca did not respond to a request for comments.) As for the Tsáchila, Heredia comments, 'they believe that coexistence in the territory is possible, provided the company improves its practices. Their main desire is to reclaim the health of their river.'
His community doesn't need Pronaca to leave, Calazacón says, but they want it 'to acknowledge the pollution, to acknowledge the harm it's done.' And he wants the big development banks that have lent money to Pronaca for decades to help it control that pollution. CEDENMA, meanwhile, calls for more consultation and information, including on water quality. A relatively straightforward recommendation is for Pronaca to bring in deep bedding materials, to improve both animal welfare and air quality for human neighbors.
IFC states, 'we acknowledge that although Pronaca has good processes and communications practices in place, including a grievance redress mechanism, these can always be further improved, since the relation with stakeholders and potential project affected people is dynamic and is always changing. As such, IFC is working with the company to enhance its stakeholder engagement process and ensure it remains current.'
Communities like those in Santo Domingo de los Tsáchilas aren't alone in their frustration with intensive animal farming operations financed by development banks that are supposed to help, not harm. From Ukraine to Uganda, people affected by factory farms have attempted to speak out. Yet even where IFC is responsible for harms that violate its own performance standards, it does not always provide remedy.
Recently hatched broiler chicks at a hatchery in Ukraine.
Why The World Bank Is Bankrolling Huge Animal Farms
Like its parent organization, the World Bank, the International Financial Corporation is hugely influential. It's the biggest global financial institution focusing on the private sector in low- and middle-income countries.
'They define the no-go areas,' believes Divya Narain, a researcher focusing on how food systems are financed. Because the World Bank and IFC set the tone for a lot of private-sector funding, including through providing risk capital, 'they are favorably positioned to make a difference in the entire financing of livestock.'
This comes with great responsibility, Narain comments. 'The World Bank and IFC should set a standard by keeping expansion of industrial animal agriculture totally off the table, because it's equivalent to funding coal. And they can't possibly be doing that if they are to if they are to fulfill their commitment of adhering to the Paris agreement,' a climate treaty whose overall goal is to limit the global average temperature increase to below 2°C over pre-industrial levels. Back in 2021, the World Bank Group publicly stated a goal of aligning its funding with the Paris agreement. This included full compliance of new IFC investments by today, July 1.
According to IFC, it is meeting this objective, in line with principles developed jointly by multilateral development banks. Industrial agriculture appears to fall into a grey area under these principles: neither universally eligible nor universally ineligible. Livestock with considerable greenhouse gas emissions would require further assessment. Activists are calling for more precision about how the banks will decide whether a project is Paris-aligned.
This responsibility is especially critical now, to avoid lock-in of harmful trends. Industrialization of animal agriculture in sub-Saharan Africa is mainly happening already through intensification, vertical integration, and corporate consolidation. It's very hard to backtrack once this industrialization sets in, Narain says, making this a 'one-way road' to highly polluting animal farming. Development banks have a major role to play in preventing this lock-in.
The World Bank isn't alone in providing external funds for intensive, industrial animal farming. According to the campaign network Stop Financing Factory Farming, 75% of what international financial institutions invested in animal agriculture in 2024 went to factory farms. While the 16 leading international finance institutions have been reducing investments in industrial animal agriculture over time, the funding for more sustainable alternatives remains paltry in comparison. Analysis by Stop Financing Factory Farming found that the industrial type received $1.23 billion in 2024, compared to $244 million for the sustainable type.
And according to the recent report Unsustainable Investment, which analyzed IFC's investments in 387 industrial meat, dairy, and feed companies between March 2020 and March 2025, these companies are often failing to meet IFC's climate objectives. Many recipients of IFC investments do produce more food per animal. In part, this is due to moving to smaller mammals, compared to methane-belching cows. However, 'even if you invest in chicken and pork, the overall emissions may cancel any reduction that you will achieve in terms of reduction in emission intensity,' argues Narain, who together with Kelly McNamara authored Unsustainable Investment for Stop Financing Factory Farming. 'Overwhelmingly,' according to the report, IFC investees fell short of the organization's recommendations to reduce emissions.
Food & agriculture is responsible for almost a third of greenhouse gas emissions, mostly from animal-source foods. So it's just not feasible to address climate change without tackling this thorny topic. According to the World Bank itself, 'Emissions from agrifood alone are so high that they could by themselves make the world miss' the target of keeping global average temperatures within 1.5° C of pre-industrial levels. This is the stretch goal of the Paris climate agreement.
However, IFC maintains that animal protein is superior nutritionally in some respects. For instance, it promotes animal protein as a way of quickly improving nutrition in Asia. In Africa, a number of governments and nutrition organizations have sought to make eggs more abundant and affordable within a generation, in order to improve nutrition.
Nutrition security has been a powerful argument for ramping up the farming of animals. But opponents contend that industrial animal agriculture actually jeopardizes food security, by damaging local ecosystems, undermining traditional agricultural practices, and intensifying climate harms. 'On a global basis, climate change has already diminished agricultural productivity by 20%,' according to Unsustainable Investment.
Protestors in Bogotá call for development banks to exclude funding for industrial farms.
Mixed Messages On Industrial Farming
In October 2024, the World Bank Group announced that it would be doubling its financing of agribusiness, to $9 billion each year. This announcement emphasized 'climate-smart production practices' to reduce emissions and improve air and water quality.
Overall, the World Bank's messaging has been mixed. It has suggested that low- and middle-income countries reduce the amount of forest converted to agricultural land and (for middle-income countries) cut livestock methane emissions. Meanwhile, it has recommended that high-income countries consume less high-emitting animal-source food.
On the one hand, the World Bank is supporting stronger pastoral systems, which are diverse and regenerative. At the same time, it's bankrolling industrial farming.
By its own account, IFC is working with 'some of the biggest industrial-scale agribusiness' in order to build up small-scale farmers. The organization does not view this as a contradiction. IFC has also stated, 'Residents of poor countries eat less than half the recommended amounts of pulses or peanuts,' yet used this as a justification for intensification of animal farming rather than more support to grow pulses and peanuts.
IFC maintains that it's possible to have it all: nutritional, economic, and environmental benefits of investing in concentrated livestock. Many climate researchers consider this magical thinking.
Instead of supporting the intensification of industrial livestock, researchers and advocates are urging IFC to encourage transitions toward agroecological systems that typically use fewer fertilizers, pesticides, and antibiotics. These systems are kinder to the planet while allowing for nutritious and culturally appropriate food production. This could look like more cowpeas, but fewer cows. It could respect traditional smaller holdings of grazing livestock, rather than massive herds crammed into factory-scale barns. Civil society groups like the Alliance for Food Sovereignty in Africa are calling for financial institutions to stop propping up corporate industrial agriculture, urging more public investment in agroecology instead.
Narain emphasizes, 'Funding of large-scale animal agriculture is not at all compatible' with global climate goals.