European banks, pension funds and insurance companies are increasing global hunger and poverty by speculating on food prices and financing land grabs in poorer countries, according to a new report released today (January 12) by Friends of the Earth Europe and the World Development Movement.
The report, ‘Farming Money’, analyses the activities of 29 European banks, pension funds and insurance companies, including Barclays, RBS, HSBC, Deutsche Bank, Allianz, BNP Paribas, AXA, Generali, Allianz, Unicredit and Credit Agricole.
It reveals the significant involvement of these financial institutions in food speculation, and the direct or indirect financing of land grabbing.
Environmental and development organisations are calling for strict regulation to rein in these destructive activities.
Hannah Griffiths, head of policy and campaigns at the World Development Movement, said: “Financial speculation on food and the financing of land grabbing have destabilised global food prices, with steep price hikes forcing millions of people into poverty and hunger. Banks like Barclays are making vast profits at the expense of the lives of the world’s most vulnerable people. Governments must step in with regulation to stop the finance industry gambling with food.”
The European Commission’s proposed new rules for improving transparency in commodity derivatives markets are a first step in the right direction, but serious omissions and loopholes need to be addressed. ‘Farming Money’ recommends a set of key measures to regulate European financial markets and tighten corporate policies on financial services and investments in food commodity derivatives and land deals.
Daniel Pentzlin, sustainable finance campaigner at Friends of the Earth Europe, said: “2012 offers a big opportunity for Europe to put a stop to the environmental and social damage done by financial markets. Politicians need to step in and end excessive and harmful speculation.”
Food speculation, with billions of pounds flooding in and out of financial products based on foodstuffs, causes price volatility. These rapid and unpredictable price swings hit the most vulnerable hardest, threatening their right to food, and making it more difficult for farmers to maintain an income – creating instability, hunger and poverty, the report suggests. Land grabs, following direct and indirect investments in land by large European financial institutions, mean European companies are snatching up land, increasingly in Africa, at the expense of local livelihoods and food sovereignty, in addition to causing knock on environmental devastation through land use change.
Friends of the Earth Europe and the World Development Movement are calling on European regulators to introduce caps on the size of bets speculators can make, to curb excessive speculation. Financial institutions should investigate, publish and reduce their involvement in food speculation and investments in land, which threatens the human right to food.