JP Morgan investing $250M in Glencore through ‘sustainability’ funds — reports

JP Morgan, one of the world’s best-known financial institutions has reportedly been investing hundreds of million of dollars through its various “sustainability” funds in miner and commodities trader Glencore (LON: GLEN), which is also major producer of coal.The sustainability priorities of mining companies covering environmental, social and governance (ESG) issues have become increasingly important as investors and asset managers seek to align their funds with positive change. Bloomberg estimates that ESG assets are on track to surpass $40 trillion by 2030.Yet, in recent years, these investments have also caught increased scrutiny due to a lack of clarity surrounding the rules governing the so-called “ESG funds.”An investigation by the Bureau of Investigative Journalism (TBIJ), among others, reveals that JP Morgan, the world’s largest bank outside China, is currently using sustainability funds to invest as much as $250 million into Glencore, whose coal operations in South African had been accused of environmental breaches.The finding further amplifies calls to “clean up” the ESG fund landscape.Glencore exemptionTo qualify as a “sustainable fund,” JP Morgan requires that at least 51% of its investments demonstrate positive environmental and/or social characteristics. It must also exclude companies that derive more than 20% of their revenues from thermal coal extraction.Despite being the world’s largest shipper of thermal coal, Glencore is included in the bank’s “sustainable” investment funds because its coal-generated revenues are below the 20% threshold. Coal, however, accounts for nearly half of the group’s profits, and in 2022, it reported its highest ever profit, making a staggering $18.6 billion from coal alone.Jakob Thomä, chief executive of ­climate think-tank Theia Finance Labs, told The Guardian that: “The overwhelming majority of retail investors, in my view, would feel misled if they knew that was the ­criteria for labelling something as a sustainable fund.”He also said some of these sustainable funds may be breaking EU law, which says anything that “deceives or is likely to deceive the average consumer” is misleading commercial practice.In August of 2024, Glencore announced that it has scrapped plans to separate from its coal mining after pressure from shareholders, who mostly preferred the cash-generating capacity of the fossil fuel over the industry’s carbon goals. The Swiss miner had previously said it planned to run down its thermal coal mines by the mid-2040s, closing at least 12 by 2035.Environmental damageAccording to TBIJ, these findings have angered campaigners who have highlighted environmental breaches in Glencore’s operation in South Africa’s coal belt.“Our regulators are often compromised and give in to the pressure of the coal mining industry. [They] do not have the political will to enforce our laws,” Mariette Liefferink, chief executive of the Federation for a Sustainable Environment, a local campaign group, said.“It is often the case that mining companies build up their profits while not reporting to their shareholders the environmental and social costs that are absorbed by the surrounding poor and disempowered communities,” she added.Glencore currently operates three mining complexes around the mining town of Phola, Mpumalanga, about 112 km east of Johannesburg. A recent South African government report, obtained via a freedom of information request, one of those has been breaking environmental laws since 2017, TBIJ said. The Tweefontein coal mine has been accused of several breaches including seriously contaminating a local river, storing hazardous waste in open containers and failing to fix broken walls at a sewage facility. As of November 2023, the mine was still in breach despite multiple requests to clean up its operations, an inspection report by the South African water and sanitation department showed.In Colombia, Glencore’s Cerrejón was also accused of human rights abuses and environmental destruction many years ago.Glencore has said it is “committed to responsible engagement and the wellbeing of all workers, and that mitigating negative impacts of its mines is imperative to building trust with local communities,” highlighting the water treatment plant in Phola as one of the examples.Weiter zum vollständigen Artikel bei Mining.com Weiter zum vollständigen Artikel bei Mining.com