A new report from Greenpeace claims that the major British bank (HSBC) is financing the destruction of vast areas of rainforest in Indonesia. Despite the banks promise to not finance deforestation, HSBC has allegedly helped provide billions in funding for companies that are directly involved in the destruction of natural forests. Greenpeace International reported that the bank is part of a group that provided over $16 billion (£13.2 billion) in loans and a further $2 billion (£1.7 billion) in corporate bonds to palm oil producers. Greenpeace accused the companies of their involvement in illegal forest clearing, while some companies were also accused of workers exploitation and child labor.
HSBC has a sustainability policy says it does not “knowingly” finance deforestation and in a statement, a spokesman for the bank said: “HSBC’s policies prohibit the financing of operations that are illegal, damage high conservation value forest/landscaping or violate the rights of workers and local people.”
Jamie Woolley, Forests Campaigner for Greenpeace UK, said:
“The damage being done to Indonesia’s rainforests and air quality by destructive palm oil companies is one of the world’s great environmental scandals, and HSBC’s continued support for palm oil producers who deforest and increase the fire risk in Indonesia is only making matters worse.
“HSBC’s funding is allowing these companies to expand their palm oil plantations, which means less rainforest, fewer orangutans, more carbon emissions, and thousands of deaths across Southeast Asia every year from air pollution.
The bank provided two loans to Bumitama Agri Ltd., a company that is allegedly responsible for the clearing and planting of 160,000 hectares of palm oil plantations in Indonesia – much of it land that was previously natural peatland and rainforest . The company has denied any wrongdoing while in its prospectus, they boasted of their “aggressive planting program” and stated they had turned 120,000 hectares of land into palm oil plantations since 2004. Greenpeace claims more than half of this plantation was created without full ownership rights or proper permits.
Another case the Greenpeace highlights is the alleged financial support ($360 million) that HSBC provided to companies of the Salim Group. Greenpeace alleges “extensive forest destruction” has taken place on the group’s plantations in Kalimantan, Indonesia. Furthermore, one of the group’s companies, Indofood, has been accused of using child labor and abusing workers. “A joint report published last year by the Rainforest Action Network, Indonesian labor rights group OPPUK and Washington-based International Labor Rights Forum claimed children as young as 13 were working on Indofood plantations, employees were being paid less than the minimum wage and female workers were made to handle highly toxic pesticides without adequate protection.”
The palm oil and timber sectors have caused havoc to Indonesia’s forests and peatlands over the past two decades. The widespread destruction created the perfect conditions for the massive forest and peatland fires that burn across Indonesia’s forests every year and threaten wildlife, the climate and people. While this Greenpeace report focused on HSBC as one of the largest funders supporters of the palm oil sector, it is by no means the only bank providing financial support to destructive palm oil companies. At least they have stated that they want to adhere to a sustainable no deforestation policy, let’s hope that they will put their promises to practice and that more players of the financial sector will follow. Urgent action against climate change should involve producers and consumers, but it attention should be brought to the financial institutions as well.