How a project decried for its environmental impact became a flagship of European green finance

This is the second part of our investigation into the financing of rubber plantations in Indonesia that was orchestrated by Michelin and BNP Paribas through the green-bond mechanism. We reveal that the tyre manufacturer ignored the warnings of NGOs and local stakeholders and was not transparent about the responsibility of its local partner in the prior deforestation of the areas concerned.

Published on 9 November 2022 at 15:43

Stefano Valentino, Voxeurop, Emanuela Barbiroglio
Translated by Harry Bowden

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Chapter 2 Europe’s green finance at the expense of Indonesia’s fores

Michelin seeks a “green” partner in Indonesia

Fully established in Indonesia since 2004, in the early 2010s Michelin was looking for a local partner to strengthen its presence in Southeast Asia. The French tyre giant approached the Indonesian group Barito Pacific. Founded and directed by the billionaire Prajogo Pangestu, nicknamed the Indonesian "timber king", the conglomerate (now specialised in petrochemicals and energy) had a notorious reputation for environmental abuses. (See Chapter 1.)

According to Glenn Hurowitz, executive director of the NGO Mighty Earth, the first contact between the two companies took place in mid-2013. This was a few weeks before a first field visit by Michelin officials to Jambi province (on Sumatra Island) in October 2013. These dates, as he told Voxeurop, were confirmed to him by Hélène Paul, Michelin's purchasing manager at the time.

👉 All the articles from our investigation are available here.

Contacted by telephone, Hervé Deguine, Michelin's public affairs director, described the birth of this Franco-Indonesian partnership as follows: "It all started when Barito's staff wanted technical advice on how to improve the efficiency of their natural rubber production. [...] We proposed a collaboration geared towards sustainable production so that the benefits would accrue not only to the companies, but also to the local communities."