JP Morgan's ‘sustainable' funds invested £200m in mining giant Glencore
One of the world's biggest banks, JP Morgan, has promoted environmental and 'sustainable' funds to customers which have invested more than £200m in the mining giant Glencore, it can be revealed.
Ethical investing has become big business for JP Morgan and other financial giants, with worldwide 'sustainable' investing expected to surpass $40tn by 2030. But the industry now faces scrutiny over the rules around investments focusing on environmental, social and governance (ESG) issues.
Several of JP Morgan's 'sustainable' funds are investing in the London-listed commodity trader Glencore, which is under fire for its coal operations in South Africa, an investigation by the Bureau of Investigative Journalism, the news website Voxeurop and the Daily Maverick, an online South African news publication, has revealed.
JP Morgan's asset management arm has more than 500 funds promoted as environmental or sustainable investments, ranging from a climate change solutions fund to a global healthcare fund. Under current rules, some of these may still hold investments in firms criticised for environmentally damaging practices.
For many of its funds that are promoted as sustainable, JP Morgan specifies that at least 51% of investments must have positive environmental and/or social characteristics. The remaining 49% can be invested without such restrictions.
Jakob Thomä, chief executive of climate thinktank Theia Finance Labs, said: '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 said some sustainable funds may be breaking EU law, which says anything that 'deceives or is likely to deceive the average consumer' is misleading commercial practice.
JP Morgan's sustainable funds also exclude companies that make more than 20% of revenues from thermal coal extraction. Despite being one of the world's biggest coal companies, Glencore slips under this threshold in terms of revenues. In terms of actual profit, however, coal mining accounts for nearly half.
The investments have angered campaigners who have highlighted environmental breaches in Glencore's operation in South Africa's coal belt. Glencore runs three mining complexes around the mining town of Phola, Mpumalanga, which is about 70 miles east of Johannesburg. According to a recent South African government report, obtained via a freedom of information request, one of those has been breaking environmental laws since 2017.
The company's Tweefontein coalmine has been accused by the South African water and sanitation department 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.
Residents at Phola say they don't trust the local water supply. Daisy Tshabangu, 52, moved to Phola because her family worked at the coal-fired power station that looms on the horizon. 'Most of the people, when they do drink this water they get stomach aches,' she said.
Phola residents say they feel abandoned by the companies whose mines dominate the landscape. Unemployment is high and infrastructure is crumbling.
'We don't benefit from the mines,' said Tshabangu. '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.'
Glencore says that its water treatment plant supplies clean water to Phola as part of its 'commitment to sustainable development'. It says it is not directly responsible for the overall supply of water and cannot comment on claims about water quality. It says it has had no complaints via a grievance procedure regarding the supply of water.
Despite repeated requests to clean up its operations, the Tweefontein mine was still in breach of multiple environmental laws as recently as November 2023, an inspection report by the South African water and sanitation department reveals. Campaigners question why the company's licence has not been revoked.
Sign up to Observed
Analysis and opinion on the week's news and culture brought to you by the best Observer writers
after newsletter promotion
'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,' said Mariette Liefferink, chief executive of the Federation for a Sustainable Environment, a local campaign group.
Angered that finance promoted as sustainable is supporting Glencore, Liefferink wrote to the former Labour MP Chuka Umunna in November last year about the environmental risk, ecological degradation and pollution associated with JP Morgan's investments in Glencore. Umunna is now head of sustainable solutions and head of green economy for investment banking at JP Morgan. However, the Observer understands that the former shadow secretary of state for business, who did not respond to the letter, is involved only in the activities of the investment bank, and is not involved in and does not have oversight over the sustainable policies of the asset management arm.
Liefferink urged the bank to review its investments in Glencore due to the company's alleged breaking of environmental laws, as well as the pollution, wildlife damage and environmental risk its activities were causing. Liefferink's correspondence highlighted two JP Morgan funds with ESG in their name, both of which had millions of pounds invested in Glencore.
After a rapid rise in popularity, ESG investing is the subject of increasing scrutiny around the world. Regulators are trying to settle on what it means, and create labels that are easy for investors to understand.
The Mpumalanga mines form a small part of Glencore's global operations. It is the world's fifth biggest coal miner, selling more than 100m tonnes in 2023 – including from the Cerrejón mine in Colombia where there have been allegations of human rights abuses and environmental destruction.
Glencore says 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, which it maintains through ethical and responsible business practices. The company said the water supply in Phola is a municipal service, but that it contributes to a reservoir that also receives water from other sources. It said it monitors the quality of the water provided by its treatment plant on a weekly basis to ensure it is suitable for consumption.
The company said it has been taking action in response to Department of Water and Sanitation (DWS) inspections since 2017 and that incidents identified in the 2023 audit have been addressed.
'Our industrial assets are closely linked to the communities and regions where they operate. We aim to avoid harm to people from our activities, respect human rights, and establish and maintain trusting relationships with stakeholders, through ethical and responsible business practices,' the company said.
JP Morgan declined to comment.
This investigation was supported by the Bertha Challenge fellowship; Stefano Valentino is a 2024 Bertha Challenge Fellow. Additional reporting by Ed Stoddard
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Finextra
an hour ago
- Finextra
How Artificial Intelligence is Empowering SMEs to Prevent Employee Turnover: By Dmytro Spilka
Employee turnover can be a highly costly burden on small to medium-sized enterprises, but could emerging technologies like artificial intelligence prompt improvements in retention rates? With the average employee costing an estimated £12,000 to replace for SMEs, instances of high turnover can be severely damaging to operational efficiency. With around 70% of employee turnover coming as a voluntary decision, it's a significant challenge for enterprises to manage engagement and satisfaction rates in a way that prevents the rigmarole of continuous job listings and onboarding strategies. For HR professionals, countering turnover is a frustration that can threaten the long-term growth of businesses. However, there are many measures that can be taken to limit the negative impact of turnover. Calculating Turnover Calculating your staff turnover can be a useful way to monitor for emerging trends within your SME while helping to report on current rates. To do this, find the average number of employees for the period you're observing while excluding temporary or seasonal staff members for the sake of accuracy. By adding the number of employees at the start of the observation period to those at the end, and then dividing them by two, you can calculate the average number of employees within your business. Now, to work out the turnover rate, you'll need to divide the number of employees who left the company by the average number of employees. Finally, multiply the result by 100 to calculate staff turnover as a percentage. With CIPD suggesting that the average staff turnover rate in the UK is 34%, any figure higher than this should be a suitable cause for revising your employee retention strategy. The emergence of artificial intelligence has also paved the way for unprecedented control in improving the engagement of enterprise staff, helping to improve the long-term satisfaction of employees. The AI boom carries some significant implications for employee turnover, and there are many ways in which the technology is already helping to prevent staff from looking elsewhere for work. With this in mind, let's explore some of the growing use cases of artificial intelligence in action: Predictive Analytics Artificial intelligence is capable of performing predictive analytics to forecast potential staff turnover by identifying trends and patterns at a rate that human HR professionals can't replicate. For instance, AI could find a correlation between the different management approaches of team leaders and employee disengagement. This can help to refine your SME's management styles to improve satisfaction levels and offer proactive training or support to your management team. With 92% of employees recognising the importance of working for an enterprise that values their emotional and physiological well-being, AI tools can also use predictive analytics to monitor work patterns and identify early signs of dissatisfaction before adapting the workloads of affected workers. These predictive insights can help stamp out instances of burnout, boost engagement, and lead to higher productivity among the workforce. Appraisal Accuracy Crucially, 69% of employees claim that receiving regular recognition from their employers would motivate them to work harder and stay longer in their respective roles. This means that optimising your appraisal system should be a priority if your turnover rates are too high. Artificial intelligence tools are helping to improve retention by empowering HR teams to craft personalised engagement strategies that improve the quality of feedback and recognition for employees. These real-time feedback loops help to alert management to instances of outperformance, and the ability of AI systems to identify and reward employees for their efforts can help to create a fair reward system that can help all workers enjoy seeing their hard work acknowledged accordingly. Additionally, artificial intelligence can help to drive more engagement among employees by creating bespoke development plans that match the individual skills, preferences, and career goals of workers to a program designed to enhance their strengths and overcome any weaknesses. This can help to provide a sense of purpose that can prevent instances of 'quiet quitting' or turnover. Personalized Training Employee training and upskilling can also be a key factor in retention over long periods of time, and AI's ability to generate personalised, engaging, and accessible learning experiences can form the cornerstone of a more engaged and productive workforce. By delivering tailored content recommendations based on the monitoring of prospective skill gaps and preferred learning styles, artificial intelligence can deliver relevant and effective training materials. Because skill gaps can be a leading cause of employee turnover, mitigating these shortcomings can significantly reduce instances of staff quitting SME roles. AI can also deliver interactive experiences and simulated environments that offer far more engagement than simple text-based training, and the ability to access bespoke models at the click of a button means that employees can enhance their skills in between workloads. The implementation of AI training can help employees feel more valued and equipped to grow within their roles, boosting their contentment and longevity in their positions. Boosting Retention Retaining employees can be a challenge for SMEs with ambitions towards balancing budgets and sustaining growth strategies, but the emergence of artificial intelligence tools can help to deliver greater levels of efficiency in retaining talented staff for longer. Through predictive analytics and a personalised approach to employee management, training, and appraisals, more SMEs can improve their employee retention, preventing harmful and expensive turnover rates and building a consistent level of productivity into the future. Embracing AI tools today can make a significant difference in shaping your plans for tomorrow, and building an employee-first culture with the help of technology gives you the best chance of overcoming the challenges that all ambitious enterprises face as they continue to grow.
North Wales Chronicle
an hour ago
- North Wales Chronicle
Bus powers could help TikTok-famous villages deal with problem parking
Jon Pearce praised the Government for proposing a suite of new powers which councils can use to run their own bus routes and prevent companies from pulling 'socially necessary' services. Transport Secretary Heidi Alexander said the Bus Services (No. 2) Bill, which secured a second reading on Monday, would 'streamline' the franchising process when authorities bid to set up London-style networks, and would better secure 'lifeline routes' elsewhere. 'In part thanks to a TikTok craze to photograph sunset and sunrise over Mam Tor, communities where I live in High Peak have been plagued by illegal parking,' Labour's Mr Pearce told the Commons. The 517 metre-high hill in Derbyshire has become popular on social media, with several videos filmed at the landmark racking up more than 100,000 likes on TikTok. Mr Pearce continued: 'I'm co-ordinating a response to these issues with local stakeholders like the Peak park, police and councils, and a key tranche of what we need to do is deliver better bus services that are integrated with local train services. 'This Bill will transfer powers away from Westminster and empower local communities to take decisions necessary for our commuters to get to work, our students to get to college, our vulnerable to access the healthcare they need, and our honeypot villages to manage tourism sustainably.' Gritting crews were unable to reach a Peak District road near the hill earlier this year after more than 200 cars were double parked on it, according to Derbyshire County Council, and Mr Pearce previously wrote to authorities, when he warned that emergency services had been obstructed. The Bill would give councils the power to set up franchised bus networks to regulate routes, timetables, fares and vehicle standards, without the need for ministers' permission. Ms Alexander said the Government is 'fixing the broken' franchising process and told MPs: 'Proposed schemes need to jump through a myriad of hoops and they still require my consent to proceed, which is odd to say the least. 'The idea that I understand more what passengers in Leicestershire or Cornwall need than their local leaders is for the birds. In December, we opened up franchising to every local authority and now through this Bill we will further streamline the process making it simpler for franchise schemes to be granted and assessed.' Ms Alexander said the franchising model 'won't work everywhere', and added: 'That's why this Bill also strengthens enhanced partnerships and removes the ideological ban on establishing new local authority bus companies. 'Furthermore, by giving local authorities the power to design and pay bus operator grants in their areas, this Bill gives greater protections for socially necessary local services – securing those lifeline routes that keep communities connected.' Pressed about funding to local authorities for the £3 bus fare cap, Ms Alexander said: 'There is a spending review under way but I can confirm that I fully appreciate the importance of an affordable and accessible bus route.' Ms Alexander also said the Government will 'press pause' on so-called floating bus stops 'perceived to be poorly designed', amid concerns over accessibility issues and potential hazards for visually impaired people and others. Liberal Democrat transport spokesman Paul Kohler said the Bill 'rightly lifts the outdated, ideologically driven ban on municipally owned bus companies, empowering local authorities who wish to use it, rather than infantilising them' and added that 'it is not and must not become a one-size-fits-all approach'. He added: 'Empowering local authorities in law is one thing. Enabling them in practice is quite another. 'Whilst this Bill hands councils a set of keys to a new bus network, it doesn't ensure there's fuel in the tank.' Conservative shadow transport secretary Gareth Bacon earlier said improvements for passengers 'simply won't happen' without more Treasury money. He said: 'The Bill does not prioritise passengers and there is nothing in it that guarantees an improvement in service standards. 'The truth is that this Bill appears to be driven by political nostalgia. It is in many ways a thinly veiled attempt to recreate the municipal model of the pre-1986 era without fully considering the financial and operational realities of today.' The Bill will undergo further scrutiny in the Commons at a later date.
Leader Live
an hour ago
- Leader Live
Buy now pay later provider Zilch to launch first physical card
The fintech, which has been named one of the fastest-growing in the UK, said it means more of its customers can make payments in stores. Zilch currently offers a virtual card, stored in its app or in people's mobile wallets, which links to customers' debit cards and means they can pay for shopping flexibly. People can choose to pay in full, or spread payments over six weeks or three months, at retailers from Primark and Asos to Just Eat and eBay. While the virtual card can be used in shops as well as online, Zilch said that nearly 80% of UK adults do not regularly use mobile wallets so having a physical card will drive more transactions. It is also set to open up buy-now-pay-later options for bigger purchases like home repairs, hotel check-ins, and car rentals. The cards will become available to its existing customers from September. The London-based company has grown its customer base to more than five million since launching five year ago and securing authorisation from the UK's Financial Conduct Authority. It reached a valuation of two billion dollars (£1.5 billion) in 2021 and was named one of the UK's fastest-growing fintech unicorns this year. Buy now, pay later providers like Klarna and Clearpay have come under new standards since legislation was introduced last month. It came amid concerns that a lack of regulation has led some of the 10 million people who use it to take on too much debt.
