"Fair Finance Guide Japan Case Study on “Green loans” and its Supply Chain Discontents," 15 February 2024

On September 27, 2023, a syndicated loan totaling 25 billion yen was announced as a "green loan" with Sumitomo Mitsui Banking Corporation as lead manager and Sumitomo Mitsui Trust Bank as co-lead manager. The loan was for Sumitomo Metal Mining Co., Ltd. (SMM) to build a new plant in the Besshi district of Niihama City, Ehime Prefecture, to increase production of cathode materials for rechargeable batteries used in electric vehicles, and also to expand facilities at the existing plant.

...research by Fair Finance Guide Japan (FFGJ) and its partner, Friends of the Earth (FoE) Japan has revealed significant human rights problems at the mines from which the nickel material that is highly likely to be used in this supposedly "green" plant will be sourced.

The Sorowako Nickel Mine in Indonesia is a mine that already supplies nickel matte to SMM. The open-pit nickel mining operation there has been negatively impacting the land and traditional lifestyles of Indigenous People, and it has been confirmed that the expansion of the mine is causing material impact on local agriculture while also contaminating the water supply for local residents with carcinogenic heavy metals. In addition, Indigenous Peoples who protest against these issues have been unjustly arrested and detained...

Under these conditions, it is not a leap to say that this so-called "green" factory project is actually in violation of the "Guidelines on Respecting Human Rights in Responsible Supply Chains," as developed by the Japanese Government.

And complicit in this are the financial institutions that finance and spread what can be articulated as typical "green washing"...

We strongly urge all financial institutions involved to stop the financing of any ongoing loans and to support efforts to remedy the situation. We also urge the arrangers and co-arrangers of the loans to strengthen their due diligence efforts including in the supply chains of loan applicants to prevent the financing of projects that benefit from problematic business practices...