Environmentalists Welcome World Bank President's Halt to Palm Oil Investments

Friends of the Earth International
welcomed today's announcement by the IFC, the World Bank's private
sector arm, that it will stop all palm oil investments.

"Investments
in large-scale oil palm plantations lead to deforestation and human
rights violations", said Torry Kuswardono of Friends of the Earth
Indonesia/WALHI. "We are encouraged that the World Bank Group is
finally recognizing the problems, and we hope that other banks will
follow suit."

The
World Bank Group statement was unveiled on September 9 in a letter
from its president Robert Zoellick, responding to an appeal from
Indonesian and international NGOs. [1] The 28th August letter, which
became public yesterday, announces suspension of all World Bank
private sector arm funding for palm oil until a revised strategy for
the financing of this troubled sector is in place.

A
coalition of local and international NGOs, spearheaded by the UK
organization Forest Peoples Program, [2] had previously filed a
complaint at the IFC's internal watchdog, the Compliance Advisory
Ombudsman office (CAO) about a series of loans to palm oil giant
Wilmar International.

A
joint report by three NGOs (Friends of the Earth Netherlands, Kontak
Rakyat Borneo and Gemawan), which examined Wilmar's plantations in
Sambas, West Kalimantan, Indonesia, found that the company is working
with dubious licenses, and is entangled in land rights conflicts and
illegal logging activities. [3]

The
complaint triggered an audit by the CAO, which concluded that the IFC
had violated its own procedures, and that commercial interests had
overruled the IFC's environmental and social standards. [4]

In
his letter, World Bank Group President Zoellick states that "until
we have a new strategy in place, IFC will not approve any new
investments in palm oil. I have also asked IFC to review the
environmental and social performance of all portfolio investments in
palm oil." [5]

"This
assessment should be applied to other monoculture agrofuels
plantations. We encourage other banks to follow the World Bank's step
and review such investments," said Friends of the Earth
International's Torry Kuswardono.

This
was the second blow to the agrofuels sector this week. On Wednesday,
Friends of the Earth International welcomed the banning by the UK
Advertising
Standards Authority of an advert by the Malaysian Palm
Oil Council claiming palm oil is "sustainable". This was the
result of an earlier complaint filed by Friends of the Earth
International. [6]

A
note on agrofuels

Friends
of the Earth groups from Indonesia to Colombia have fought for years
for an end to destructive large- scale palm oil plantations and their
financing. The large- scale expansion of palm oil plantations is
responsible for the destruction of forests and peatlands, high carbon
dioxide emissions, and land grabs from indigenous peoples.

Palm
oil is prominent not only in the food and cosmetics industry, but is
increasingly used as a biodiesel, despite its substandard
environmental record. European and US mandatory targets for the use
of biofuels are a major driver behind the unsustainable expansion of
oil palm plantations.

Friends
of the Earth International strongly opposes the use of edible oils
for energy purposes, and denounces agrofuels such as palm oil as a
false solution to climate change.