JP Morgan has directed over £200 million into the mining firm Glencore through its advertised sustainable funds. Despite promoting ethical investing, scrutiny has emerged regarding compliance with environmental standards, particularly due to Glencore’s controversial coal operations in South Africa. Local communities express dissatisfaction with the company’s environmental impact, raising questions about JP Morgan’s investment ethics.
JP Morgan, one of the largest banking institutions globally, has marketed its environmental and ‘sustainable’ funds, which have collectively invested over £200 million in the mining company Glencore. This trend towards ethical investing is significant for JP Morgan and other financial firms, with global sustainable investments projected to surpass $40 trillion by 2030. However, scrutiny has arisen concerning the standards governing such investments focused on environmental, social, and governance (ESG) metrics.
Numerous JP Morgan sustainable funds currently hold stakes in Glencore, a company facing criticism for its coal mining operations in South Africa. An investigation by the Bureau of Investigative Journalism and other outlets has brought to light the environmental controversies surrounding Glencore. The bank’s asset management division manages over 500 funds marketed as environmentally friendly, ranging from climate solutions to global health initiatives. Under existing regulations, some of these funds may still invest in companies with harmful environmental practices.
JP Morgan asserts that at least 51% of investments in its sustainable funds must demonstrate positive environmental or social impacts, with the remaining 49% lacking such criteria. Jakob Thomä, CEO of Theia Finance Labs, expressed concern that most retail investors would likely feel misled by this categorization of sustainable investments. He also identified potential violations of EU law, particularly regarding misleading commercial practices.
While JP Morgan’s sustainable funds exclude firms deriving more than 20% of revenues from thermal coal, Glencore remains beneath this threshold financially, despite coal mining representing nearly half of its profitability. Critics highlight significant environmental violations associated with Glencore’s coal operations in Phola, South Africa, including legal breaches reported since 2017. Local residents express distrust in their water supply and feel neglected by the mining companies that dominate their region.
Residents like Daisy Tshabangu illustrate the discontent, noting the lack of resources amid proximity to mines. Despite Glencore’s claims regarding water treatment efforts, persistent criticism exists about its alleged environmental infractions. A lack of regulatory enforcement and accountability for these violations further aggravates community concerns. According to Mariette Liefferink, CEO of the Federation for a Sustainable Environment, ineffective regulations often succumb to the pressures from the coal industry, undermining environmental protections.
Liefferink has reached out to Chuka Umunna, head of JP Morgan’s green economy initiative, urging the bank to reconsider its investments in Glencore due to ongoing environmental risks. Her inquiries outlined two JP Morgan funds significantly invested in Glencore, highlighting the need for a reassessment of fund management policies in relation to environmental compliance. As scrutiny surrounding ESG investing increases globally, regulators aim to establish clearer definitions and labeling to assist investors.
Glencore’s operations, while a minor aspect of the company’s global activities, place it as the fifth largest coal producer, selling over 100 million tonnes in 2023. The conglomerate has faced serious allegations regarding human rights violations and environmental damage related to its Cerrejón mine in Colombia. Glencore claims to adhere to responsible practices for worker welfare and community relationships, maintaining it is not directly accountable for water supply issues but does contribute to a reservoir for local services.
Despite representing a commitment to sustainability, recent inspections continue to reveal discrepancies in Glencore’s environmental practices. The company states that they have addressed issues raised in past inspections dating back to 2017. However, concerns remain about the broader implications of their investments in coal, as financial support for companies with questionable environmental records continues to spark debate within the ESG investing community.
JP Morgan has refrained from commenting on these developments. This investigative work was supported by the Bertha Challenge fellowship, and additional reporting was provided by Ed Stoddard.
In summary, JP Morgan has invested significant resources into Glencore through its sustainable funds, raising ethical concerns amid the company’s environmental practices. The tension between promoting ethical investing and the reality of investment compositions highlights the complexities within the ESG landscape. Enhanced scrutiny of these practices is necessary to ensure accountability and transparency in sustainable investing moving forward.
Original Source: www.theguardian.com
