The palm oil industry in Indonesia has been linked to illegal deforestation
Related Articles
- This week's changes to the Ecologist.org
- Climate change 'will wreak havoc on Britain's coastline by 2050'
- Huhne accused of 'hypocrisy' for promoting offshore oil in Scotland and Arctic
- Tanzania urged to accept World Bank funding of alternative Serengeti highway route
- UK's 'fracking' gas-extraction is not unconventional says industry
World Bank breaks rules in lending to palm oil companies
Ecologist
27th August, 2009
Campaign groups call for a suspension on lending to palm oil plantation developers after critical internal audit
The World Bank has admitted errors in its procedures for lending money and safeguarding against social and environmental abuses.
An internal audit found the World Bank's International Finance Corporation (IFC) had mis-categorised loans to the Wilmar Group, one of the world's largest producers of palm oil and based in Indonesia.
Loans that should have been classified as higher risk were listed as 'low-risk' thereby avoiding more comprehensive social and environmental checks.
The Palm Oil industry has been linked to the large-scale destruction of forests in Indonesia - endangering wildlife and increasing greenhouse gas emissions.
Suspension on lending
Campaign groups including the indigenous rights organisation, The Forest Peoples Programme, are now calling for a suspension on lending to palm oil plantation developers.
'IFC staff knew of the environmental and social risks in the palm oil sector, including unresolved land disputes and non-compliance with its social and environmental standards, but chose to ignore the risks,' said Marcus Colchester of the Forest Peoples Programme.
'It is clear to us, and the audit confirms this, that IFC suffers a systemic problem whereby the pressure to lend and to support business interests overcomes prudence, due diligence and concern for social and environmental outcomes.'
The IFC said that it was now reviewing its procedures.
'It is anticipated that in future, programmes such as Wilmar Trading would be categorised as higher risk,' said a management response to the audit.
Useful links
Forest Peoples Programme
The IFC
See also
World Bank unfit to manage global climate funds
Previous Articles...
Users Comments
Re: World Bank breaks rules in lending to palm oil companiesOrangutans are critically endangered in the wild because of rapid deforestation and the expansion of palm oil plantations.
If nothing is done to protect these majestic creatures, they could be extinct in just a few years.
Visit the Orangutan Outreach website to learn how YOU can make a difference!
http://redapes.org
Reach out and save the orangutans! | |
Re: World Bank breaks rules in lending to palm oil companiesCongratulations to the Ecologist for being one of the very few media outlets to report on the World Bank's CAO (Compliance Advisor Ombudsman)'s independent audit of the IFC (International Finance Corporation)’s four (4) loans to the Wilmar Group, the world's largest Crude Palm Oil (CPO) manufacturer.
The CAO is an indepentent post of the World Bank which reports directly to the World Bank president, Mr. Robert Zoellick. The report was sent to Mr. Zoellick on 19 June 2009 and made public on 9 August 2009. The audit report seems to have been removed from the CAO website, but a complete copy can be downloaded at:
http://www.forestpeoples.org/documents/ifi_igo/ifc_wilmar_cao_audit_report_jun09_eng.pdf
One of the more damning sentences in the audit report is in section 2.7.6 which reads: "The CAO finds this approach counter productive to IFC‘s mission of reducing poverty and improving lives, when it was clear from the earliest project documentation that IFC was fully aware of the significance of its engagement with the Wilmar Group, and the challenges that existed within the Indonesian palm oil sector."
Note that it does not say that IFC's actions "undermined" or "failed to advance" its mandate. It says "counter-productive". This means that instead of reducing poverty and improving lives, IFC was actually increasing poverty and making lives more miserable.
What is also discouraging is the lack of media coverage which the World Bank CAO audit has thus far received. According to the Google news search engine the only daily newspaper in the entire world to report on the CAO audit, was - contrary to expectation - the New York Times. See Lisa Friedman's 19 August 2009 article entitled: "How the World Bank Let 'Deal Making' Torch the Rainforests":
http://www.nytimes.com/cwire/2009/08/19/19climatewire-how-the-world-bank-let-deal-making-torch-the-33255.html
The New York Times! "All the News that Fit to Print"! It wasn't some rag tag, small town, yellow press that wrote how the "stinging report... lambastes the agency [IFC] for allowing commercial pressures to influence four separate loans aimed at developing the industry". Not one other newspaper (American, European or Asian) nor indeed any international newswire (Reuters, Bloomberg, AP, AFP) followed the New York Times’ lead on reporting on this issue.
This Ecologist report therefore deserves high praise. | |
Re: World Bank breaks rules in lending to palm oil companiesGreat post Zebra. Perhaps even more shocking is the fact that the world's most respected Civil Society organizations have likewise been cowed by these powerful corporate interests. Greenpeace - an organization with an esteemed 40 years experience in fighting for causes of the greater public good - has nothing to say about the World Bank's CAO audit report on the International Finance Corporation (IFC). According to Greenpeace the most significant events regarding Crude Palm Oil (CPO) in the month of August 2009 is the fact that the New Zealand subsidiary of Cadburys will no longer use Palm Oil in the production of its chocolates for New Zealand's domestic market of 2 million. Is this really a major victory that is going to save the rainforest? Phew, sure makes me think twice about chaining myself to some stationary object in front of a battalion of baton wielding riot cops! Better we go after the financing that is making the destruction of the rain forest possible. I can't believe that public organizations like the World Bank are supporting the Wilmar Group. We need to get IFC to cancel those loans. The World Bank shouldn't be making money of Crude Palm Oil (CPO). | |
Re: World Bank breaks rules in lending to palm oil companiesJust read an article that said that China consumes 18% of global palm oil output versus Europe's figures of 16%. So indeed, as Janine points out, curbing the funding of palm oil projects, rather than relying on local consumer boycotts of palm-oil containing products seems a more effective strategy from the UK.
Nevertheless, are there any lists out there of all UK food products containing palm oil? And what could be used as a substitute ingredient? All that surplus EU butter?
Palm oil plantations can only grow in a very limited range of conditions, which unfortunately ( I think!) coincide with the habitat of the Orang Utan.
So its important that companies that use palm oil so extensively can substitute it with something else.
Otherwise the only way to meet an ever increasing demand for the oil will mean the eradication of all forests in palm-oil friendly locations in Indonesia/Malaysia |
Post a Comment
Members
