9 September 2009
In response to pressure from civil society and a CAO report detailing violations of the IFC's social and environmental standards in Indonesia, IFC agreed to suspend all palm oil financing until the gaps in procedures that allowed these violations to happen are closed. Over the next six months, IFC will study how failures have happened in the palm oil sector and how they can be overcome in the future.
In June 2009, years of complaints by civil society against the Wlmar Group's practices in Indonesia were vindicated by the release of an audit by the office of the Compliance Advisor Ombudsman (CAO) finding that not only had Wilmar violated a number of the International Finance Corporation's (IFC) social and environmental standards, but that the IFC had ignored its own policies in both letter and spirit. The CAO report concluded that commercial pressures had dominated the assessment process, painting too rosy a picture of the likely ecological impact, and allowing investments that the policy should have forbidden.
In response, President of the World Bank Group Robert Zoellick has announced an intensive, six month long review process in order to address the specific problems associated with the palm oil industry. During this period, the IFC will consult broadly with civil society, including organizations such as the Forest Peoples Programme that were central in calling attention to the failures of current procedures. At the end of the process, the IFC will produce a comprehensive strategy which will include increased engagement with the Roundtable on Sustainable Palm Oil, the creation of an Advisory Services program for stakeholders in Indonesia, and rewriting the environmental and social risk classification system for trade finance investments, which were categorically defined as "C" or low risk.
Read More
Read the Forest Peoples Programme Press Release, September 2009 (FPP website)
Robert Zoellick's Letter to NGOs, August 2009 (FPP website)
CAO audit report of IFC investments in Wilmar, June 2009 (CAO website)
Original complaint from Forest Peoples Programme, July 2007 (FPP website)
Other Publications, Reports, and Letters about Oil Palm, (FPP website)