INVESTIGATION. Three French banks ordered to stop financing the coal industry

“The sustainable investor of a changing world”. This is how BNP Paribas Asset Management, the BNP subsidiary responsible for asset management*, defines itself on its website. Amundi, its equivalent in the Crédit Agricole group, affirms, in its corporate social responsibility report, to be “a pioneer in the field of responsible investment”. The BPCE group is not left out. According to its 2022 climate report, it would have adopted “a net zero trajectory” in terms of financing and investment and “thus contributes to carbon neutrality by 2050”.

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It is difficult for a French banking group in 2023 not to make strong environmental commitments. But it is also difficult, apparently, to keep them. According to information from the Radio France investigation unit, the Crédit Agricole, BPCE and BNP Paribas groups have just received a formal notice ordering them to stop lending money and investing in the Swiss mining giant Glencore. This procedure was made possible by the 2017 law on the duty of vigilance which requires French companies with more than 5,000 employees to prevent the risks that their activities pose to human rights, health and the environment**. Otherwise, they can be sued and forced to repair the damage caused.

Lung cancer and lead in water

Glencore employs 155,000 people worldwide. Its main activities are mining (coal, zinc, copper, aluminium, etc.) and the trading of raw materials. It is an understatement to say that it is a controversial juggernaut. He is the subject of several legal proceedings. It was in particular sentenced in November 2022 by the British courts to pay 280 million pounds (320 million euros) for acts of corruption in Africa. An unprecedented judgment***.

However, it is not in Africa, but in Colombia that the formal notice procedure concerning the three French banks was initiated. At the origin of this approach, an NGO based in Bogota, Tierra Digna. “We discovered that the Crédit Agricole, BPCE and BNP Paribas groups financed Glencore’s activity, and were shareholders, explains Maître Emmanuel Daoud, the French lawyer for Tierra Digna. However, Glencore, via its subsidiary Prodeco, operates two open-pit coal mines in Colombia which have just been closed and which have dramatically polluted the environment”.

Aerial view of the Calenturitas surface coal mine in Colombia, closed by Glencore in 2021 for lack of profitability.  (Google Earth)

The NGO Tierra Digna has been documenting for years the deleterious effects of mining on land and people, particularly near the Calenturitas and La Jagua mines (northeast Colombia). “There is very significant air and water pollution”says Andrea Rocio Torres Bobadilla, one of the founding lawyers of Tierra Digna. “The Colombian State has established that there are more than five rivers contaminated by mining. There is lead in our waterways. The water is no longer drinkable”, she continues. More serious still, “abnormally high rates of respiratory diseases, probably linked to coal dust, have been noted, as well as numerous lung and stomach cancers and degenerative diseases”. The early and unannounced closure of these two mines in 2021 resulted in the dismissal of “6,200 direct and indirect workers who have not received any redeployment offer”, adds the lawyer. Andrea Rocio Torres Bobadilla talks about “true human tragedy”.

Legally speaking, the Calenturitas and La Jagua mines are no longer owned by Glencore. The group sold the rights in 2021 because the sites were no longer profitable enough in the post-Covid period. “Glencore-Prodeco has intensively exploited these mines for 25 years and decides overnight to sell them without respecting the legal site depollution plan”denounces Tierra Digna in a plea written for Europe. “Glencore is customary of the fact”adds the French lawyer of the NGO, Emmanuel Daoud. “Remember in 2003”. That year, the Swiss multinational, majority shareholder of Metaleurop, closed its heavy metals production plant in Noyelles-Godault (Pas-de-Calais) overnight, laying off 830 employees and leaving the the community the costs of decontamination of the site estimated at 150 million euros. At the time, President Jacques Chirac denounced methods of “thug boss”. Today, according to France 3 Hauts-de-France650 hectares of land would be polluted by lead around the old foundry, making it the most polluted area in France.

French banks closing their eyes?

20 years later, the scenario seems to be repeating itself. For Master Emmanuel Daoud, “he is the responsibility of the French banks to put an end to it by putting pressure on Glencore. They can afford it.”, says the lawyer. The financial commitment of the Crédit Agricole, BPCE and BNP Paribas groups within Glencore is, in fact, far from being anecdotal. According to the NGO Reclaim Finance, which studies the activities of banks and investors in the fossil fuel sector, “Groupe BPCE is the leading European investor in Glencore and the ninth worldwide at a level of one billion dollars”. In detail, the BPCE group holds $821 million in shares and $182 million in bonds, via its subsidiaries Loomis Sayles and Harris Associates.

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List of French investors in Glencore, led by Groupe BPCE and its $1.003 billion investment.  (Source Investing On Climate Chaos)

More modest, the exposure of Amundi (Crédit Agricole group) within Glencore still amounts to more than 92 million dollars, including 89 million shares and four million bonds. Finally, BNP Paribas Asset Management owns seven million euros of Glencore shares. “As a shareholder, we have rights, believes Mr. Emmanuel Daoud. Why do these French banks not give Glencore, of which they are shareholders, formal notice to respect its environmental obligations and protect the health of workers? These banks cannot clean themselves the hands of who’s going on the ground. They have the power to ask questions of the Glencore board about the situation in Colombia.”retorts the lawyer again.

But for the moment, the mining giant does not seem to be a scarecrow for French banks. “Their commitment to Glencore is not limited to investments in stocks and bonds. They also lend him money, notes Nathan Guillot, political analyst at Reclaim Finance. In 2022, Crédit Agricole made a loan estimated at 46 $.4 million to Glencore International, a subsidiary of Glencore. BNP made a loan of the same amount”.

Loans from French banks to the subsidiary Glencore International for the year 2022 in dollars.  (Banking On Climate Chaos, Rainforest Action Network and 6 other NGOs, including Reclaim Finance, 2023)

These loans, disclosed in the report Banking On Climate Chaos 2023to which Reclaim Finance contributed, may have been used to finance activities in the mining sector. “They are directed towards a subsidiary of Glencore, not towards the parent company. It is possible that in the end, they will finance the coal”explains Nathan Guillot. “No French bank will admit that it lends money to Glencore. It would be too bad in terms of reputation. So they go through subsidiaries that are not directly exposed to the coal business”.

Asked about the loan of 46.4 million dollars, the Crédit Agricole Group replied that to date, it “suspended all new funding with Glencore pending clarification of their position on coal”. The group also specifies that Glencore is normally “excluded” of their stock and bond portfolio unless a client “expressly requests” to acquire these titles. Crédit Agricole renews its commitment to exit “definitely of the thermal coal industry in OECD countries in 2030 and by 2040 for the rest of the world”.

For its part, BNP Paribas indicates that it will completely stop financing (via bank loans) companies linked to thermal coal “by 2030 in OECD countries and by 2040 in the rest of the world”in accordance with its commitments made in 2020. It also undertakes to exit from its coal-related investments in the same period. “BNP Paribas’ exposure to the coal sector is now only residual”believes the group. Groupe BPCE does not wish to comment.

Asked about the environmental and health impact of its coal mines in Colombia, a spokesperson for Glencore answers us “not being aware of evidence of an increase in lung disease and cancer due to alleged river pollution”.

After the formal notice sent to them, the banks have three months, according to the law, to respond to Tierra Digna and, if necessary, to comply with their duty of vigilance. After this period, the NGO may take legal action. Diane Alvarez, the president of Tierra Digna, intends to address this dispute on the sidelines of the annual general meeting of Glencore, which will be held in Switzerland this Friday, May 26. She made the express trip from Colombia.

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* Asset management is the management of the assets of private or institutional clients via, for example, the purchase of shares, bonds or real estate.

** In 2022, 23 procedures were initiated on the basis of the duty of vigilance law in France, i.e. twice as many as in 2021 (De Gaulle Fleurance observatory).

*** The UK investigation, launched in 2019, revealed that Glencore, through employees and agents, paid bribes of more than $28 million to gain access preference to oil in Nigeria, Cameroon, Côte d’Ivoire, Equatorial Guinea and South Sudan.

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