NEW REPORT: European banks fuelling food price volatility and hunger

12 January 2012

Brussels, January 12, 2012 – 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 [1].

The report analyses the activities of 29 European banks, pension funds and insurance companies, including Deutsche Bank, Barclays, RBS, Allianz, BNP Paribas, AXA, HSBC, 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. 

Daniel Pentzlin, sustainable finance campaigner for Friends of the Earth Europe said: “Food speculation and the financing of land grabbing leads to a catastrophic instability in global food prices – forcing millions of people into poverty and hunger. European banks, insurers and funds that speculate with food and land are gambling with peoples’ lives whilst reaping huge profits. This industry needs strict regulation to protect the poorest in society.”

The European Commission’s proposed new rules for improving transparency in commodity derivatives markets [2] 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 continued: “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 Euros 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. 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 is calling on financial institutions to investigate, publish and reduce their involvement in food speculation and investments in land. Banks, pension funds and insurers should phase-out and refrain from speculating in financial products based on staple foods, which threatens the human right to food. European regulators should introduce caps on the size of bets speculators can make to curb excessive speculation.

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NOTES:
[1] The full report, ‘Farming Money: How European banks and private finance profit from food speculation and land grabs', was published by Friends of the Earth Europe, in collaboration with BankTrack, WEED, CRBM, World Development Movement, Corporate Europe Observatory, CNCD - 11.11.11, SETEM and Les Amis de la Terre. It can be downloaded and read here
[2] On October 20, 2011, the European Commission published their proposals for a revised Market in Financial Instruments Directive (MiFID II) and a new Regulation (MiFIR), found here: http://ec.europa.eu/internal_market/securities/isd/mifid_en.htm

    • Agriculture

      Food and farming in Europe and its global impacts

    • Agrofuels

      Plant-based fuels from agriculture. Also known as biofuels

    • Biodiversity

      Species and habitat protection in Europe and around the globe

    • GMOs

      Genetically modified crops and organisms

    • Land

      Measuring Europe’s land footprint and tackling the drivers of land grabbing

    • Biodiversity

      Species and habitat protection in Europe and around the globe

    • Extractive industries

      Oil and gas exploration, and mining

    • Land

      Measuring Europe’s land footprint and tackling the drivers of land grabbing

    • Tar sands

      Unconventional oil, also known as oil sands

    • Water use

      Measuring Europe’s water footprint