JP Morgan’s Sustainable Funds Controversy: Investing in Glencore’s Coal Operations
JP Morgan has invested over £200 million in Glencore through its sustainable funds, raising questions about the bank’s adherence to environmental criteria given Glencore’s coal operations in South Africa. Despite the promotion of ethical investing, this situation highlights potential misleading practices in ESG labeling. Community concerns and regulatory violations further complicate the legitimacy of such investments, prompting calls for clearer guidelines in sustainable finance.
JP Morgan, one of the largest banking institutions globally, has been promoting sustainable funds that have cumulatively invested over £200 million in Glencore, a major mining company criticized for its environmental practices. The trend towards ethical investing has gained momentum, with predictions indicating that sustainable investments will exceed $40 trillion by 2030. However, the financial sector is now facing scrutiny regarding its adherence to environmental, social, and governance (ESG) investment criteria.
Numerous JP Morgan sustainable funds are currently allocating investments to Glencore, which is under fire for its coal operations in South Africa. Reports from various investigative bodies, including the Bureau of Investigative Journalism and Voxeurop, have brought attention to these investments. Despite promoting over 500 funds as environmentally friendly or sustainable, many still invest in firms with questionable environmental practices.
JP Morgan mandates that a minimum of 51% of investments in its sustainable funds display positive environmental or social characteristics. Consequently, up to 49% can be allocated without such restrictions. Jakob Thomä, CEO of Theia Finance Labs, expressed concern, suggesting that most retail investors would feel deceived if they realized the criteria for labeling funds as sustainable.
The bank’s sustainable funds also outline that firms generating more than 20% of their revenues from thermal coal extraction are excluded from investments. However, Glencore, despite being a significant coal producer, qualifies under these criteria concerning revenue percentage, while almost half of its profits stem from coal mining. This has raised alarms among environmentalists regarding the legitimacy of JP Morgan’s sustainable investments.
Recent investigations have revealed ongoing environmental law violations by Glencore’s Tweefontein coalmine in South Africa since 2017. The mine has been flagged for contaminating local water sources and for inadequate handling of hazardous waste. Residents near the mine report distrust in their water supply, with some experiencing illnesses attributed to water quality issues.
Community members feel neglected by Glencore and other mining enterprises, facing high unemployment and deteriorating infrastructure. Daisy Tshabangu, a resident, remarked, “We don’t benefit from the mines. There’s a lot we don’t have but we are surrounded by mines. So to us, it seems like we are being sidelined as a community.”
In response to environmental concerns, Glencore asserts that it contributes to local water supplies, attempting to maintain a commitment to sustainable development. However, the company maintains that it is not directly responsible for local water quality and claims no complaints have been filed through its grievance procedures. Nevertheless, ongoing regulatory scrutiny indicates multiple lapses in adherence to environmental law at the Tweefontein mine.
Mariette Liefferink, head of the Federation for a Sustainable Environment, criticized the tacit support JP Morgan provides to Glencore by investing in the company. She called for a reassessment of the bank’s investments in light of Glencore’s environmental law violations. Following her outreach to former MP Chuka Umunna, who currently occupies a role at JP Morgan, no response was received regarding her concerns about the sustainable funds’ involvement with Glencore.
As scrutiny over ESG investing grows, there is a concerted effort worldwide to clarify what constitutes ‘‘sustainable’’ investment and to establish clearer labels for investors. Glencore’s global footprint is significant, as it ranks as the fifth largest coal producer, further amplifying the environmental impacts associated with its operations across various regions.
JP Morgan’s substantial investments in Glencore under the banner of sustainable funding have drawn significant criticism due to the discrepancies between promoted ESG standards and actual practices. With environmental violations and community concerns surrounding Glencore’s operations, the integrity of the sustainable investing movement faces intense scrutiny. This situation highlights the urgent need for clearer regulations and honest practices within the financial sector to ensure true sustainability in investment strategies.
Original Source: www.theguardian.com
