Oil palm action

Down to Earth No 52, February 2002

Three of the biggest banks in the Netherlands - ABN AMRO, Rabobank and Fortis - have agreed to stop or substantially restrict financing for oil palm development in Indonesia on environmental and social grounds. This is the result of a joint campaign by the Indonesian oil palm advocacy network, Sawit Watch, Milieudefensie (Friends of the Earth NL) and Greenpeace Netherlands following the disastrous 1997/8 forest fires in which10 million hectares of forest land were burnt. Oil palm and pulp plant feeder companies were the main offenders. Dutch banks have financial ties with several of the major plantation groups in Indonesia.

The NGOs confronted the banks with this issue and pressed them to limit their investment in the oil palm sector to plantation companies which adhered to the following basic requirements:

  • No destruction of tropical rainforest
  • No forest burning
  • Acting within the legal framework
  • Respecting the rights and wishes of the local communities. (See DTE 49)

With field data from Indonesian researchers, Milieudefensie and Greenpeace published three reports on the involvement of the banks in the destruction of the tropical rainforest in Indonesia, but the banks were reluctant to change their position. So, in February 2001, Milieudefensie started a postcard campaign targeting the banks, which resulted in 20,000 responses.

Negotiations moved forward and three of the four leading banks agreed to adopt sustainability criteria for investments in the oil palm sector. In the case of ABN Amro, the bank's new policy goes even further. It will apply to all investments that might affect forests, including logging, pulp & paper, mining and oil & gas development. It will also not invest in plantation projects where forests have been cleared less than 5 years ago. The banks' decision is timely, as many experts believe that the El Niño effect and subsequent forest fires will hit Indonesia again in 2002. Sawit Watch, who are campaigning against large-scale expansion of oil palm plantations, is calling for financing agencies all over the world - including Indonesian banks - to follow the steps taken by the Dutch banks.

Negotiations with the Dutch banks continue. All three banks continue to limit their commitment to primary or 'High Conservation Value' forests. This disregards the fact that any forests have important social, economic and cultural value to the communities living in and around them and all forest on customary lands should be protected. Rabobank only imposes a three-year limit between forest clearance and loans for plantation development, increasing opportunities for conglomerates to benefit twice from forest destruction - from timber sales and easy credits. Fortis's policy does not apply to export credits for foreign palm oil trade. Another major bank, ING, has yet to make any commitments, but there are signs that it is reviewing its position following correspondence with the Dutch NGOs.

This is just one example of the ways NGOs are using to make European companies, financiers and consumers accept responsibility for their actions (see also article below for action on APP). In January, Switzerland's largest retail chain, Migros, became the first European retailer to commit to source all of its palm oil from plantations that have not been established at the expense of tropical forests. Migros contacted WWF Switzerland for assistance in developing a list of minimum environmental and social criteria for its own-brand palm oil products, after consumers expressed concern over the links between forest fires and oil palm plantations. Its first step has been to develop a brand of margarine with palm oil from a sustainable source in Ghana. Migros, whose total annual turnover amounts to approximately 20 billion Swiss Francs (around US$ 12 billion), is the largest Swiss buyer of palm oil which it uses in a range of consumer products from margarine to lipsticks and detergents.

(Sources: Press Statement Milieudefensie & Greenpeace NL 31/Oct/01. 
For further information on Dutch banks & oil palm see: www.focusonfinance.org/Dutchbanks2.htm
Press statement WWF-CH 23/Jan/02. 
For further information on the Migros-WWF initiative, contact Andrea.Ries@wwf.ch)