Palmed off: World Bank’s palm oil framework ‘business as usual’ despite environmental and rights con

30 September 2010

The World Bank’s draft framework for investment in the palm oil sector was met with dismay from civil society groups, who said that it failed to offer a credible strategy to address manifold social and environmental problems.

The draft was published in late July for consultation throughout August, following a Bank freeze on palm oil investment last year, prompted by environmental and human rights concerns (see Update 67).

Convinced that the Bank “in partnership with others, can play a significant role in promoting change in the palm oil sector”, the draft sets out four themes for the Bank’s future engagement: supporting enabling policy and regulatory environments; mobilising socially and environmentally sustainable private investment; encouraging benefit sharing with smallholders and communities; and supporting sustainability codes of practice.  The draft commits to strengthening monitoring and evaluation and to promoting smallholder inclusion in certification schemes. 

The Bank's draft palm oil framework plans 'business as usual' despite rights concerns

The International Finance Corporation (IFC), the Bank’s private sector arm, says it will invest “only where its interventions will meet IFC’s performance standards and will have clear and measurable development impacts that contribute to economic growth and poverty reduction.”  It will strengthen its due diligence and require plantations to be internationally certified as sustainable, or have a time-bound plan to become so.

However, it will invest “even if the public sector legal/regulatory enabling environment is less than ideal, if [the] IFC is convinced that the project will have strong and measurable impacts and that any risks can be mitigated through other governmental or non-governmental programmes.”

Rethink needed

The draft was met with criticism from civil society groups, with Knud Voecking of German NGO Urgewald saying: “We are dissatisfied that the authors of the Bank’s framework have left our core inputs on rights and accountability to one side.”

A consortium of 105 indigenous peoples’, smallholders’ and non-governmental organisations called for the freeze on Bank investment to continue until an adequate strategy is developed.  Norman Jiwan of Indonesian NGO SawitWatch, commented: “The World Bank Group says it is ‘aware of negative environmental and social impacts, including deforestation, biodiversity loss, greenhouse gas emissions, land use conflicts and questions over land tenure and human rights’, but the ‘framework’ document they have produced looks like business as usual to us. No new standards, nothing about how they address the deficient legal frameworks in Indonesia and Malaysia, and no measures to curb global warming.”

Particular concerns raised in the consortium’s comments on the draft include the unresolved disparities between the standards of the multi-stakeholder Roundtable on Sustainable Palm Oil (RSPO) and Bank policies and performance standards, notably with regard to recognition of customary rights and the right to free, prior and informed consent.  The consortium condemns the draft’s lack of guidance on issues including carbon emissions caused by forest and peatland clearance for oil palm plantations, forced resettlement, and internal staff incentives that were previously found to prioritise financial over social and environmental considerations (see Update 67).

The consortium finds the Bank’s plans to strengthen monitoring and evaluation to be unsubstantial, certification requirements vague and open to abuse, and conservation reliant on inadequate legal frameworks.  It notes that “the current legal framework in Indonesia does not provide legal means to protect [high conservation value habitats] in areas permitted for plantations so companies seeking to follow the RSPO standard are finding that government agencies are taking these unplanted areas off them and handing them to less scrupulous companies to develop.” The consortium called on the Bank to rethink its draft strategy and engage further with affected peoples.

The Indonesian Oil Palm Smallholders Union expressed concerns that smallholder schemes would continue to deprive people of land and cause indebtedness.