JP Morgan has invested over £200m in Glencore through its sustainable funds, raising concerns about ethical investment practices amidst scrutiny of Glencore’s coal operations in South Africa. Critics argue that JP Morgan’s definition of sustainability is misleading, as the firm continues to support a company with a disputed environmental record. Community voices reflect discontent with the impacts of mining, emphasizing the need for accountability in financial investments labeled as sustainable.
JP Morgan, a major global bank, has promoted its environmental and “sustainable” funds, which have collectively invested over £200 million in the mining firm Glencore. The rise of ethical investing has led to a substantial increase in sustainable funds, projected to exceed $40 trillion by 2030. However, recent investigations have raised concerns regarding the adherence to environmental, social, and governance (ESG) investment standards by notable financial institutions like JP Morgan.
The Bureau of Investigative Journalism, along with other news agencies, uncovered that several “sustainable” funds under JP Morgan are backing Glencore, a company criticized for its coal mining operations in South Africa. Although JP Morgan claims to prioritize sustainability, there is scrutiny about how much of their funds genuinely avoid investments in firms with detrimental environmental practices.
JP Morgan mandates that at least 51% of investments in its sustainable funds demonstrate positive environmental or social impacts, meaning that the remaining 49% can be allocated without such criteria. This percentage has raised questions from experts, such as Jakob Thomä of Theia Finance Labs, who believes many consumers would be deceived by this classification.
Glencore is known for its substantial coal operations. While JP Morgan’s funds avoid companies with over 20% of their revenue generated from thermal coal, Glencore falls below this threshold regarding revenue. However, the firm’s coal mining profit contributes significantly to its income, raising concerns about the apparent contradiction in JP Morgan’s sustainable investment claims.
The mining operations in South Africa have faced environmental law violations since 2017. Specifically, Glencore’s Tweefontein mine has been reported for serious offenses, including river contamination and hazardous waste mismanagement, raising alarm among local residents about the safety of their water supply. A resident expressed distrust in the local water quality, stating, “Most of the people, when they do drink this water they get stomach aches.”
Local community sentiments reflect a broader frustration with Glencore’s presence, as residents report high unemployment and inadequate infrastructure, despite living close to rich mining resources. Daisy Tshabangu lamented, “We don’t benefit from the mines,” emphasizing their feelings of neglect amidst the mining activity.
In response to allegations of environmental breaches, Glencore maintains that it is responsible for providing clean water and asserts that it monitors water quality rigorously. Nevertheless, the company has faced demands from activists to enhance its operational practices and address ongoing environmental law infractions as recently as November 2023.
Mariette Liefferink, a local environmental advocate, criticized JP Morgan for investing in Glencore, urging a reassessment of these investments given the company’s alleged breaches of environmental regulations. Despite these concerns, the response from JP Morgan has been non-committal, indicating a necessity for clarity in sustainable investment practices amid growing global scrutiny of ESG investing guidelines.
Globally, investments in sustainable assets face pressure to define clear parameters. Glencore, as a leading global coal miner, faces criticism not just for its South African operations but also for global controversies, including human rights issues in Colombia. Glencore claims to engage responsibly with affected communities and is committed to addressing adverse impacts of its operations.
JP Morgan has chosen not to comment on this investigation, leaving many questions regarding its sustainable investment strategies unanswered. This ongoing dialogue highlights the urgent need for clarity and accountability in the realm of sustainable finance and the implications for communities impacted by such investments.
JP Morgan’s substantial investments in Glencore, commonly promoted as sustainable, have sparked debate regarding the transparency and integrity of ethical investments. The discrepancies in Glencore’s practices raise concerns about the definition of sustainability in the financial sector. As scrutiny increases, the industry must reevaluate its commitment to true sustainable investing and ensure alignment with the principles of ethical behavior and community welfare.
Original Source: www.theguardian.com
