- A recent Greenpeace report accused the bank of marshalling $16.3 billion in financing for six firms since 2012 that have illegally cleared forests, planted oil palm on carbon-rich peat soil and grabbed community lands.
- The investigation prompted scores of people to join a campaign to change the bank’s policies, including thousands of HSBC’s own customers.
- The bank’s new policy requires HSBC customers to commit to protecting natural forest and peatland by June 30, and provide independent verification of their own NDPE commitments by Dec. 31, 2018.
Europe’s largest bank has published a new “no deforestation” policy in what environmental campaigners have dubbed a “first step” towards sustainable palm oil finance, which they urge other major creditors to follow if the world’s tropical rainforests are to be saved.
HSBC last month revised its Agricultural Commodities Policy to include “No Deforestation, No Peat and No Exploitation” (NDPE) commitments in its financing of palm oil firms.
The move by the bank, one of the largest providers of financial services to the palm oil industry, follows an investigation by environmental NGO Greenpeace, which linked it to plantation companies destroying the forests of Indonesia, the top palm oil producer.
“Our rainforest is being carved up at a frightening rate and high street banks all over the world are funding this destruction,” Greenpeace Indonesia forest campaigner Annisa Rahmawati said.
“Coming from the world’s sixth-largest bank, HSBC’s new policy provides impetus for the rest of the banking sector to stop financing destructive palm oil companies,” she added.
In its report, Dirty Bankers, Greenpeace accused the UK-headquartered bank of marshalling $16.3 billion in financing for six companies since 2012 that have illegally cleared forests, planted oil palm trees on carbon-rich peat soil and grabbed community lands.
“Its links to some of the most damaging companies in the sector leave HSBC exposed to serious reputational risk, in addition to the financial risks associated with the palm oil industry,” the report said.
The investigation prompted scores of people to join a campaign to change the bank’s policies, including thousands of HSBC’s own customers.
In a statement announcing the changes, HSBC said its existing policy already made clear that it had “no interest in financing illegal operations.”
But, it said, it was always willing to review its approach.
“We first introduced a forest policy in 2004 and have reviewed it periodically since, further tightening the policy each time,” a bank spokesperson told Mongabay.
“The 2016 High Carbon Stock Convergence Agreement between palm oil supply chain companies and NGOs, which defines a common methodology for application in the palm oil sector, has allowed us to strengthen our policy.”
The new policy will require HSBC customers to commit to protecting natural forest and peatland by June 30, and provide independent verification of their own NDPE commitments by Dec. 31, 2018.
The commitments extend to refiners and traders, as well as growers and mills, and customers are required to agree that HSBC may disclose that it provides them financial services.
“In the short transition period before customers have to make a commitment to NDPE, HSBC will not agree new financing facilities to customers who have not made the appropriate commitment,” the statement said.
HSBC told Mongabay this week that it hoped the changes would “act as a boost to the drive to sustainability – and ending the deforestation that neither we nor NGOs wish to see.”
The upgraded policy could prove vital for Indonesia, where the rate of deforestation has overtaken Brazil as land is cleared to produce the world’s most popular oil, found in everything from snack foods to cosmetics and detergents.
Following HSBC’s announcement, Greenpeace wrote to other banks found to have funded destructive palm oil companies, urging them to “follow suit.”
“Without a proper policy, monitoring and enforcement, it is inevitable that your bank will be financing deforestation,” the NGO warned in letters to banks including ANZ, Bank of America and Standard Chartered.
Greenpeace says a crucial test for HSBC’s commitment to sustainability will be its response to the alleged plans of South Korean conglomerate POSCO Daewoo to destroy a vast area of rainforest in Indonesia’s easternmost Papua province.
Recent satellite images of POSCO Daewoo subsidiary PT Bio Inti Agrindo show an estimated 4,000 hectares of rainforest crisscrossed by newly constructed roads, which Greenpeace says is a “key indicator” of imminent plantation development.
According to Greenpeace, HSBC has been involved in providing POSCO Daewoo and some of its subsidiaries with significant loans.
“Announcing a policy is one thing, but implementing it is another,” Rahmawati told Mongabay, adding that HSBC should publicly cut ties with the company if it refuses to “halt this destruction.”
When asked about its funding of POSCO Daewoo, HSBC said it was unable to comment on specific customers, even to confirm or deny their relationship, because of commitments to client confidentiality.
However, the bank said it always investigates “credible evidence” of companies failing to comply with policies, and was “not aware of any current instances where customers are alleged to be operating outside our policy and where we have not taken, or are not taking, appropriate action.”
Greenpeace warned that it will be “watching closely” to make sure HSBC delivers on its promises.
Banner: An oil palm plantation on Indonesia’s main western island of Sumatra. Photo by Rhett A. Butler for Mongabay
