Jakarta. HSBC, one of the biggest banks in the world, has been accused of funding deforestation in Indonesia by environmental group Greenpeace International.
In a report titled "Dirty Bankers: How HSBC is Financing Forest Destruction for Palm Oil," the environmental activist group accused HSBC of arranging loans and other credit facilities totaling $16.3 billion for six companies profiled in Greenpeace's Dirty Bankers report, as well as nearly $2 billion in corporate bonds since 2012, despite the lender's proclaimed sustainable policy.
The UK-headquartered bank is known as one of the largest lenders to the palm oil industry in the world.
Greenpeace's report specifically highlights a list of HSBC clients that have been linked to unsustainable palm oil practices.
The NGO accused six companies — Singapore’s Bumitama Agri and Goodhope Asia Holdings, Malaysia’s IOI Group, Noble Group, and Korea’s POSCO Daewoo and Indonesia’s Salim Group — of destroying tropical rainforests, land grabbing, operating with zero permits, employing child labor and peatland draining.
"For a bank that proclaims 'sustainability underpins our strategic priorities and enables us to fulfil our purpose,' funding companies like Noble is a strange move!" Greenpeace's campaigner Annisa Rahmawati said on the NGO's website.
Specifically, the NGO said in its report that evidences are now available in the public domain showing that the six companies were responsible for unacceptable activities including having been subjected to Roundtable on Sustainable Palm Oil (RSPO) complaints or suspensions.
They have also been been cited by the Indonesian government in cases of unrestrained fires and or been the subject of numerous critical reports from social and environmental NGOs.
"Even the most basic due diligence on these companies should have set alarm bells ringing, which raises the question: is HSBC failing to apply its policies altogether, or just failing to apply sufficient scrutiny when assessing whether current or prospective customers comply?" the Greenpeace report said.
The NGO called out HSBC to disclose details of all financial services to palm oil companies, halt financing to existing customers and refuse financing or other services to potential customers that do not comply to the "No Deforestation, No Peat, No Exploitation" policy.
HSBC released a statement on Tuesday (17/01) to comment on the Greenpeace report, which started in a diplomatic tone, saying HSBC shares Greenpeace's concern about deforestation in Indonesia.
The bank said it "has no interest in financing customers involved in: illegal operations; land clearance by burning; the conversion of high conservation value areas; harmful or exploitative child labor or forced labor; the violation of the rights of local communities, such as the principle of free prior and informed consent; and operations where there is significant social conflict."
Regarding companies named by Greenpeace, HSBC said "customer confidentiality restricts us from commenting on specific companies. We recognize that this can cause frustration but do direct stakeholders to public information where we are aware of it."
The lender also claimed that following its policy revision in 2014, it has closed about 60 forestry and 104 palm oil banking accounts for failing to comply with their so-called "No Deforestation, No Peat, No Exploitation" policy.
"We do not consider closing a relationship a success, as we lose influence to promote higher standards, although we have no doubt that our policies benefit from having a bar, below which relationships will be ended," HSBC wrote in the statement.
"We are not aware of any current instances where customers are alleged to be operating outside our policy and where we have not taken, are not taking, appropriate action," the bank added.
Looking specifically at the palm oil sector, HSBC said it "believes that palm oil can bring many benefits to society, such as economic development and the alleviation of poverty. And we agree with Greenpeace that palm oil can also result in negative impacts if not managed legally and sustainably."