Illustration by Tjeerd Royaards

After more than a year and a half of work, Voxeurop‘s investigative unit has published the first two chapters of an exclusive investigation on European green finance.

The report was conducted in partnership with Tempo magazine in Indonesia, with the support of IJ4EU and the Global Initiative Against Transnational Organized Crime.

It concerns an industrial rubber-plantation project in Indonesia, launched in 2015 by a joint venture between the world’s number-one tyre manufacturer, Michelin, and its local partner Barito Pacific.

On the basis of its allegedly positive environmental and social impact, this scheme was financed with $95 million in green bonds issued in 2018.

In 2020, the NGO Mighty Earth was the first to publicly warn of the project’s environmental shortcomings.

Voxeurop‘s investigation reveals what appears to be a vast greenwashing operation. 


From the sources and documents consulted, Voxeurop reveals:

  • That a significant portion — up to 44 percent according to recent estimates — of the area planted with rubber trees had been deforested by Michelin’s partner before the joint-venture contract was signed;
  • That Michelin was aware of the prior deforestation carried out by its partner, thanks to an independent report commissioned by the company itself but kept confidential, as well as alerts from environmental NGOs;
  • That Michelin and its Indonesian partner Barito Pacific nonetheless took the initiative to obtain financing via an issue of green bonds, in particular for the purpose of reforestation with rubber trees. This was done through the Tropical Landscape Finance Facility, an innovative financing platform for projects related to the Paris Climate Agreement, co-founded in 2016 by the French bank BNP Paribas and with backing from the United Nations Environment Programme (UNEP);
  • That this step was taken at a time when the project was threatened by a fall in the price of natural rubber and after traditional banks had refused to finance it due to doubts over its profitability;
  • That the evidence of prior deforestation was not factored into the sustainability certification of the French auditor Vigeo Eiris (later acquired by Moody’s), an accreditation that allowed the green bonds to be issued;
  • That the bank BNP Paribas, which marketed the bonds, was also aware of the prior deforestation by Michelin’s Indonesian partner but also failed to mention it in its sales prospectus;
  • That the investors who bought these green bonds were therefore never aware of the environmental controversies surrounding the project;
  • That Michelin bought out all of its partner’s shares in the joint venture in June 2022, and in the process paid off the green-bond holders early (11 years earlier than planned). Michelin is thus no longer required to generate social and environmental benefits in return for the financial support obtained through the green bonds;
  • That the green-bond mechanism as it exists today is fundamentally flawed, as it relies on the declarative documents of the companies that use it, without any need for on-the-ground checks.

 

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