German bank dumps palm oil company stock

March 25, 2011

Oil palm plantations on peatlands in Central Kalimantan. Photo by Rhett A. Butler 2009

DWS, a fund management company run by Deutsche Bank, has dropped all Wilmar International stock from its financial products over concerns that the palm oil giant has failed to produce palm oil in a responsible manner despite being a member of the Roundtable on Sustainable Palm Oil (RSPO), a eco-certification initiative. The move follows a campaign by Robin Wood, a German activist group.

DWS has now removed Wilmar shares from its DWS AgriX financial product. Wilmar International is listed on the Singapore Stock Exchange.

"ROBIN WOOD applauds the decision taken by DWS," said Peter Gerhardt, tropical forest campaign coordinator at ROBIN WOOD. "This is a clear signal to the financial market that investors should not be supplying fresh funds to bodies that destroy the world's rain forests."

Greenpeace climber on the anchor chain of the Gran Couva during a 2008 protest against Wilmar. © Greenpeace/Novis
Wilmar has been targeted by environmental groups over alleged clearing of carbon-dense peatlands and forests. The company was also cited in a complaint filed on behalf of local communities. That complaint ended up causing the World Bank's investment banking arm, the International Finance Corporation, to issue a moratorium on all lending to palm oil companies.

Wilmar did not immediately respond to request for comment on the latest development, but has maintained in other communications that it now abides by RSPO rules, which aim to improve the sustainability palm oil production and reduce conflict with local communities.

The DWS news comes as activists step up campaigns against financial institutions holding shares in companies associated with deforestation. Greenomics Indonesia, an Indonesian activist group, recently reported that several of the companies held by the Norwegian Pension Fund appeared on an Indonesian Ministry of Forestry list of oil palm plantation developers that failed to acquire the proper permits in Central Kalimantan on the island of Borneo (Wilmar Group companies were on the list). The Norwegian Pension Fund also owns shares in a subsidiary of Asia Pulp & Paper, a Chinese logging company that has been criticized for converting rainforests and peatlands in Sumatra into wood-pulp plantations. The investments raised eyebrows because Norway last year pledged a billion dollars toward reducing deforestation in Indonesia. Given its commitment, some critics have asked why its pension fund continues to invest in companies linked to deforestation and forest degradation.

The Ministry of Forestry report found that less than 20 percent of plantation operators in Central Kalimantan have the proper permits. Some companies contend they have been unfairly included on the Ministry of Forestry's list, arguing their plantations secured proper permits prior to development, but that a change in the law—which was subsequently backdated—left them in legal limbo and subject to fines. Mongabay.com has been unable to substantiate these claims.
"If the Norwegian government continues with these investment policies that are linked to deforestation, it will become increasingly unclear what precisely Norway hopes to achieve from the letter of intent with Indonesia," said Greenomics Indonesia's Executive Director Elfian Effendi a press release.

The Norwegian Pension Fund divested from Samling, a Malaysian logging company with a particularly bad environmental reputation, last year.

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mongabay.com (March 25, 2011).

German bank dumps palm oil company stock.