Harvesting Inequality - The Social Impact of Financial Institutions’ Investments in Asia’s Agribusinesses

Published on 08 March 2022, Fair Finance Asia’s latest study reveals that gender equality is the most ignored issue by financial institutions enabling over 100 of the biggest Asian agricultural conglomerates that employ thousands of Asian women majorly as informal workers. Read the key findings and recommendations of the study.

Summary And Highlights

Across South and Southeast Asia, national economies, workers’ livelihoods and household food security depend heavily on agriculture and fishing. In 2020, the food and agriculture sector was the largest employer in Asia, accounting for 10.3% of total GDP in the ASEAN region. In addition to agricultural workers, Asia is home to approximately 350 million smallholder farmers, who together produce around 80% of the food consumed in the region. Nearly all global fish production (89%) is in Asia where fish and seafood provide the main source of animal protein in people’s diets.

However, agribusinesses in Asia are mired in challenges. Agricultural products are grown and distributed in complex value chains where exploitative working conditions and human rights violations are pervasive. The landless farmers and small-scale producers who grow most of Asia’s food are experiencing the double blow of climate change and the COVID-19 pandemic, which are reversing hard-won gains in food sovereignty and poverty and threatening the livelihoods of rural communities.

As agribusinesses in Asia have grown and attracted more investment, they have received increased scrutiny from international investors, regulators, consumers, the media and civil society, to ensure human rights and labor rights are respected in their supply chains. Fair Finance Asia (FFA) and Gender Transformative and Responsible Agribusiness Investments in Southeast Asia (GRAISEA) support a shift away from socially harmful financing practices in the food and agriculture sector and promote responsible and inclusive business and investment standards in agribusiness value chains.

This study examines financial flows to agribusinesses across Asia, the role and responsibility of the financial sector in implementing responsible social practices and sustainability, the most prevalent social issues in the food and agriculture sector and the gap between what is required by international standards and banks’ sustainable finance policies and practices. Thirteen countries are covered by this report: Brunei, Cambodia, India, Indonesia, Japan, Laos, Malaysia, Myanmar, Pakistan, Philippines, Singapore, Thailand and Vietnam.

The role of the financial sector in intraregional financial flows to agribusinesses

Banks play an essential role in financing the agribusiness sector in FFA and ASEAN countries. Financial research of 125 agribusinesses operating in the ASEAN region and countries where FFA operates has shown that between January 2016 and December 2020, these companies received $22.6 billion in loans and underwriting attributable to their agribusiness activities from financial institutions active worldwide. Most of this amount (81%) has been provided by financial institutions from ASEAN and FFA countries themselves. The largest creditors are Japanese, Singaporean and Malaysian banks. These three countries also provided agriculture-attributable credit to most of the other selected countries.

Financial institutions from other regions are also important creditors, as 19% of credit to the selected companies were provided by banks headquartered in Europe, the US, China and Taiwan.

Investments in shares and bonds of the selected companies amounted to nearly $7.8 billion, although the dynamics were different; nearly 60% of investments came from the US and Europe, and one third of total investments ($2.6 billion) from American investors. Financial institutions from ASEAN and FFA countries accounted for the remaining 42 per cent.

Figure 2 shows that, once again, financial institutions from Japan, Malaysia and Singapore provided the greatest proportion of agriculture-attributable investments to other selected countries. Companies based in Singapore, Indonesia, India, Thailand and Vietnam received investments from the greatest number of countries in this category.

The human rights and labor rights policies of banks are critically underdeveloped and gender-responsive policies are missing entirely

To understand the extent to which financial institutions are integrating social issues in their policies, this study assessed the policies of 54 financial institutions active in financing the agriculture sector in the 13 focus countries. Using the Fair Finance Guide International (FFGI) methodology, which is based on international sustainability standards, the banks were assessed in five areas: gender equality, human rights, labor rights, financial inclusion and transparency and accountability.

Overall, social issues were very poorly integrated in their sustainability policies, with average scores of less than 2.0 out of 10.0 for gender equality, human rights, labor rights and transparency and accountability. Gender equality was the most-ignored issue; nearly 90% of financial institutions do not disclose information on how gender issues and women’s rights are addressed in their relationships with clients or the companies they invest in.


Based on the findings of this study, the FFA and GRAISEA offer the following recommendations:

Recommendations for financial institutions

  • Commit, in policy and in practice, to respecting internationally recognized human rights conventions

  • Develop sector policies for industries associated with significant environmental and social risks, including food and agriculture.

  • Build internal capacity to implement sustainability standards and regulations

  • Adopt a gender-responsive approach to human rights due diligence

  • Collaborate in regional platforms and initiatives that promote responsible investments and business practices in the agriculture sector

  • Develop engagement strategies to pressure agribusinesses clients and investees to cease and mitigate human rights abuses in the sector.

  • Support and promote the adoption of binding legislation on responsible financing and business and human rights

  • Develop processes to enable remediation

Recommendations for ASEAN and Asian governments

  • Sustainable finance taxonomies should help uphold human rights and labor rights standards

  • Develop enforcement mechanisms to ensure the ASEAN RAI Guidelines are adopted effectively

  • Asian countries should adopt national human rights due diligence legislation

  • Monitor, evaluate and communicate about the implementation of national and regional policies for responsible financing

  • Develop and implement a National Action Plan (NAP) on business and human rights.

Recommendations for civil society organizations

  • Actively engage in the key consultative processes of financial institutions

  • Build capacity and strengthen strategic alliances to monitor the policies of financial institutions as well as government regulations that impact lending and investment decisions towards projects and businesses

  • Monitor the implementation of grievance redress mechanisms and the quality of engagement by financial institutions towards the businesses they finance

  • Work together to track the cross-border financing and create platforms for sharing data, knowledge and experiences