Introduction

Methane is a particularly powerful greenhouse gas responsible for roughly 0.5°C of current global warming. It has more than 80 times the warming effect of CO2 over a 20-year period and is responsible for 30% of the global rise in temperature since the industrial revolution. Agriculture, including livestock and rice, generates around 40% of methane emissions, more than fossil fuels. Methane’s short atmospheric life of around 12 years means that reductions in emissions lead more quickly to a decline in atmospheric concentrations. Consequently, accelerated methane mitigation is a powerful lever in limiting temperature rise over the medium-term.

Banks’ agricultural methane emissions

Planet Tracker examined 25 banks that provide and facilitate finance to 15 of the largest meat, dairy, and rice companies. These banks provide lending and underwriting worth USD 159 billion to these companies, whose total debt is approximately USD 206 billion. The 15 companies generate an estimated 1.3 million tonnes of methane emissions annually, heavily concentrated in a small number of multinational processors including Tyson Foods and JBS. Analysis indicates that 96% of the debt finance provided to these companies is in the form of bonds, which represents facilitated finance rather than direct financing on a bank’s balance sheet.

Banks’ targets and strategies largely fail to comprehensively incorporate methane

While all 25 banks have targets for reducing greenhouse gas emissions from high-emitting sectors, only two banks—Barclays and Rabobank—have targets specifically for Agriculture, Forestry, and Other Land Uses (AFOLU) sectors. None of the 25 banks have policies or targets explicitly for agricultural methane. Rabobank is the only bank to name methane, though its commitment is to “significantly reduce” emissions by 2050 rather than providing a 2030 target. Furthermore, only JPMorgan, Barclays, and Citi have greenhouse gas targets that cover arranging bond financing; the remaining 22 banks only cover bank loans, despite bonds accounting for 96% of the total debt of the companies analysed. Only Deutsche Bank has a stated policy of withdrawing funding from companies unable to transition, and only then as a last resort.

Existing standards and guidelines for banks also fail to fully capture methane emissions

A review of 12 sustainability standards finds that current approaches do not yet fully capture emissions from methane-intensive value chains. The GHG Protocol remains the most widely used standard, but it currently captures less than 1% of greenhouse gas emissions from banks’ food processing clients because it does not require Scope 3 disclosure or include facilitated emissions. The Partnership for Carbon Accounting Financials (PCAF) represents a significant step forward as it requires banks to report borrowers’ Scope 3 emissions and covers both financed and facilitated exposures. This requirement is being expanded from 2025 onwards to cover all sectors, including agriculture.

The risks of inaction for banks

Banks face material financial, regulatory, and reputational risks from unchecked methane emissions. Short-term risks include physical climate impacts disrupting agricultural production, which impacts the credit quality of borrowers through supply-chain disruptions. Medium-term risks involve market differentiation between issuers with credible transition strategies and those without, potentially leading to higher risk premia. Regulatory risks include expanding disclosure requirements and the rising risk of misstatement where banks make broad net-zero claims unsupported by measurable plans. Reputational risks act as an amplifier, accelerating market repricing when underlying resilience is in doubt.

Recommendations

Planet Tracker recommends that banks adopt robust and credible policies for methane emissions that cover both financed and facilitated debt. Banks should set quantitative targets aligned with a 30% reduction by 2030, consistent with the Global Methane Pledge, and use absolute reduction targets rather than intensity-only metrics. Methane-intensive clients should be required to publish methane-specific reduction targets, disclose upstream supply chain emissions, and provide time-bound transition plans. Banks should move beyond engagement-only approaches by integrating methane risk into credit assessments, using sustainability-linked loan KPIs, and establishing escalation frameworks that culminate in capital withdrawal for clients unwilling or unable to transition.