Australian banks urged to ‘cut ties’ with palm oil firms as $6.4 billion investments revealed

Wednesday, July 17th, 2019

Friends of the Earth report says that in financing the likes of Wilmar and Olam International, major banks are complicit in illegal deforestation and human rights violations  

Four of Australia’s largest banks have helped enable deforestation and environmental abuses in global palm oil supply chains by providing more than $6 billion in financing to some of the sector’s largest and most suspect operators, a new Friends of the Earth Australia (FoE) report has claimed.

Via a series of loans, bond holdings and shareholdings, ANZ, Westpac, Commonwealth Bank of Australia and National Australia Bank invested AUD9.5 billion ($6.4 billion) in six companies between 2010 and 2018, according to analysis in the Draw the Line report published in June.

According to the report around AUD$1.3billion ($928 million) would be directly exposed to the palm oil business, given that the companies are involved in various other business sectors.

All four banks were found to have a financial relationship with Wilmar – the world’s largest palm oil firm – as well as separate dealings with Astra International, Goodhope Asia, Noble Plantations Pte, Olam International and Triputra Agro Persada.

The study details 68 reports of human rights and environmental violations – from land grabbing to rainforest destruction – across the palm oil companies’ supply chains.

From 2010 to 2017, the report estimates the four banks had a financial involvement worth AUD2.9 billion ($2 billion) with Wilmar and its subsidiaries and in doing so have supported a company that has been a “notorious subject of scandal”.

In 2018, Greenpeace named Wilmar as buying from multiple Indonesian producers guilty of deforestation, its subsidiaries in Sumatra have reportedly conducted illegal land evictions, while this month IDM linked Wilmar’s purchases in Malaysia to illegal deforestation and corruption in Indonesia.

FoE said that the banks’ refusal to “recognise the disastrous consequences” of investing in a sector linked to the widespread destruction of global forests and marginalisation of communities shows the failure of sustainability policies.

“The real challenge is around due diligence as these banks refuse to recognise the disastrous consequences of providing finance to the palm oil sector,” FoE economic justice campaigner Nisha Skillbeck said.

“It is high time the Australian government regulated the banks with regards to their human rights and environmental impact overseas. We call on the banks to cut financial ties with the palm oil sector and to acknowledge that financing this sector carries too much risk for rainforests and the people whose lives and livelihoods depend on them.”

Image on homepage courtesy of Friends of the Earth Netherlands / Milieudefensie.