Palm Oil supplier Bumitama cuts ties with illegal plantation following Friends of the Earth pressure
International finance regulator accepts Friends of the Earth complaint against Dutch financier Rabobank
WASHINGTON, D.C – The ongoing campaign for responsible finance in the palm oil sector won another victory this month. In September 2014, following a public campaign by Friends of the Earth groups in Europe and the U.S., the Indonesian palm oil company Bumitama Agri terminated its contract with an illegal palm oil plantation in Borneo. The company, which sells the bulk of its palm oil to the international market through global trader Wilmar International, is no longer selling palm oil from the illegally-held plantation, as Friends of the Earths had documented in the 2013 report, Commodity Crimes: Illicit land grabs, illegal palm oil, and endangered orangutans.
Anne van Schaik, Accountable finance campaigner at Friends of the Earth Europe, said: “It is good news that Bumitama has terminated its contract with the illegal plantation. However, it took almost a year of intensive campaigning against its financiers to bring this about.”
Building on that progress, Friends of the Earth Europe also submitted a formal complaint to the Organization for Economic Cooperation and Development — or OECD — against Dutch banking giant Rabobank, which has provided a number of loans to Bumitama. On December 16, the Dutch office of OECD accepted the complaint, and pledged to facilitate a dialogue between Friends of the Earth and Rabobank regarding the bank’s financing of environmentally destructive palm oil companies.
Friends of the Earth Europe and Milieudefensie (Friends of the Earth Netherlands) requested in their complaint that Rabobank implement its Environmental, Social and Governance policies in a more transparent and effective way.
The Dutch National Contact Point of OECD will now begin facilitating a dialogue with stakeholders focused on the implementation of Rabobank’s Palm Oil Supply Chain Policy in relation to the OECD Guidelines for Multinational Enterprises.
This decision is significant because it has been exceedingly rare for the OECD to take action that shows the direct responsibility of financiers for the violations of their client companies.
“When a bank finances a company, it should be held responsible for all of that company’s impacts — the good, the bad, and the ugly,” said Jeff Conant, Senior international forests campaigner for Friends of the Earth-U.S. “There is a precedent to be set here that should lead to greater due diligence by EU and U.S. banks regarding the social and environmental impacts of their lending and their compliance with legal requirements.”
While the OECD’s acceptance of Friends of the Earth’s complaint is a significant step toward more responsible financing, Bumitama Agri continues to produce palm oil from contested plantations, and advocacy will continue to bring the company into compliance with global best practices and with Indonesian law.
For more information on the international palm oil fight, visit our campaign page.