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Case Study

Green or greenwashing? A 95 million dollar sustainability paradox for Michelin and BNP Paribas

By Vanina Farber and Shih-Han Huang

24 pages

September 2025

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Reference: IMD-7-2646

The Tropical Landscapes Finance Facility Sustainability Bond (TLFF I) was initially celebrated as a best-in-class example of sustainable finance. Issued in 2018, this $95 million financial instrument aimed to create a promising future: sustainable natural rubber plantations in Indonesia that balanced ecological preservation, local livelihoods and corporate profits. The ambitious venture sought to redefine the possibilities of transition finance and brought together several organizations: Michelin, ADM Capital and BNP Paribas, USAID, the World Wide Fund for Nature (WWF) and the World Agroforestry Centre (ICRAF). However, the promise of progress soon collided with the complexities of reality. The initiative faced mounting challenges, including allegations of greenwashing, community grievances and questions about compliance with emerging sustainability regulatory standards. In the end, TLFF I – the “climate-smart, wildlife-friendly, socially inclusive” sustainable finance facility used to finance Michelin’s Indonesian natural rubber plantation joint venture – found itself at the center of a growing controversy that threatened to unravel years of work in corporate sustainability efforts. The case examines the paradoxes in the TLFF I and challenges students to grapple with the complexities of legitimacy, innovation, accountability, sustainability transition and regulation-timing in blended finance mechanisms. While the TLFF I case focuses on natural rubber, the challenges encountered by the different players and the lessons learned are applicable to other industries undergoing brown-to-green transitions and implementing multistakeholder solutions. The case reflects the reality that many business challenges are not dilemmas to resolve but instead involve persistent tensions that demand integrative thinking. For students, engaging with paradoxes sharpens critical thinking, fosters metacognitive awareness and builds the capacity to lead amid contradiction.

Learning Objective

Analyze the paradoxes of reputation, innovation-risk, stakeholder governance and transition credibility in green finance by identifying interdependent tensions and exploring their systemic roots.
Engage with conflicting stakeholder perspectives to evaluate the strategic, ethical, reputational, accountability and governance tradeoffs of blended finance.
Reflect on how assumptions, power asymmetries and institutional trust shape your interpretation of ESG credibility and proposed solutions.
Optional: Examine how regulatory evolution affects the ethics of judging past innovations by current standards.
Optional: Experiment with AI-supported tools to enhance critical thinking, generate insights and help recognize the assumptions and blind spots that shape your leadership approach in ESG dilemmas.

Keywords

Sustainability, Stakeholder Management, Crisis Management, Social Innovation, Transition, Finance, Greenwashing, Environmental Social and Governance, Regulation, Compliance, Governance, Innovation, Responsible Consumption, Responsible Production, Life on Land, Goal Partnerships

Settings

Asia, Indonesia
Michelin, BNP Paribas, ADM Capital, Barito Pacific
2018-2021

Type

Published Sources

Available Languages

English

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Teaching note

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