A new report released today by the London-based Environmental Investigation Agency (EIA), Banking on Extinction, reveals that despite adopting polices to keep it from financing deforestation, the UK bank HSBC is a leading financier of the palm oil industry - and provides loans worth hundreds of millions of dollars to some of its worst elements.
This means that HSBC is giving financial support to companies whose activities are driving the type of destructive deforestation that threatens orangutans and other endangered species, in breach of the bank's own policy on forests.
"HSBC's 60 million customers around the world would be surprised and appalled to learn that such a high-profile and trusted brand is profiting from large-scale deforestation even as it projects a wholesome public image of sustainability", said EIA Forests Campaigner Jago Wadley.
Delving into specific case studies, Banking on Extinction shows that HSBC's reliance on the Roundtable on Sustainable Palm Oil (RSPO) as an indicator of third-party compliance with its own sustainability policies is fundamentally misguided.
"In our experience, the RSPO lacks credible mechanisms to ensure its members protect High Conservation Value (HCV) forests, and even when such violations are brought to its attention its measures are insufficient to either compensate for the damage or serve as a disincentive," said Wadley.
"In effect, HSBC is delegating responsibility for its ethics to a broken system and that's just not good enough when the future of some of the world's last remaining precious rainforests and species are at stake."
In the first of two case studies, the report documents how RSPO member Bumitama Agri Ltd forged ahead with rainforest clearance even though it didn't have the required HCV assessment; as recently as February this year, rescuers were removing endangered orangutans threatened with starvation from the barren, deforested land - land which their presence automatically qualified as HCV.
The second case concerns RSPO member Triputra Agro Persada, which was found by EIA investigators to be clearing an area covered in closed-canopy forests holding rare species of flora and fauna including ulin, or ironwood, and gibbons. The report calls for HSBC to immediately engage with Bumitama and Triputra to ensure no further clearance occurs prior to HCV assessments.
The bank should also update its forest policy to forbid the financing of deforestation or exploitation of peatlands; should institute a process of due diligence prior to financing any land expansion, directly or indirectly; and should use its position as a member of the RSPO Executive to institute regular and formal, but independent, monitoring.
"HSBC is one of the world's largest banks and is a key player in the plantation sector," added Wadley. "It now has a clear choice between choosing to be a force for good or to carry on hiding behind a fig leaf of sustainability while making huge profits from deforestation."
HSBC has also been implicated in coal mining in Indonesian Borneo, causing huge damage to rainforests and local communities, as already described by The Ecologist in Borneo's rainforest coal: City of London profit (by John Vidal) and UK-financed coal mining is devastating Indonesian Borneo (by Miriam Ross).
Paul Newman works on Press and Communications at the Environmental Investigation Agency (EIA)
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