Conservation news

New report spotlights financiers of palm oil giant clearing Liberia’s forests

A chimpanzee in Liberia. Photo by Cameron Zohoori/Flickr. https://www.flickr.com/photos/newhouse-school-mpd/6040678365/in/photolist-acQSKd-acN4dZ-pCYRsM-EfzNUk-acN3M8-FaDymu-oiHjKy

  • A new report by Friends of the Earth highlights deforestation by Golden Veroleum Liberia, an arm of the billionaire Widjaja family’s conglomerate.
  • The largest financiers of Golden Veroleum’s parent company include U.S. financial firms Vanguard, BlackRock, Kopernik Global Investors, Dimensional Fund Advisors, Northern Trust and CitiGroup; Dutch firms Robeco and Rabobank; and Asian firms China Merchants Bank, Maybank Indonesia and Bank Mandiri.
  • Golden Veroleum cleared some 150 square kilometers of land between 2010 and 2016, according to the report.

An Indonesian-owned plantation company operating in Liberia has come under renewed scrutiny for allegedly clearing hundreds of hectares of protected forestland, including chimpanzee habitat, wetlands and river buffer zones.

Between 2010 and 2016, Golden Veroleum Liberia (GVL) cleared and planted some 150 square kilometers (58 square miles) of land, according to a recent Friends of the Earth investigation, which found that the firm had cleared or fragmented more than 3 square kilometers (2 square miles) of ecologically rich forest in Kpanyan, Sinoe County.

Investigators found that GVL had damaged streams, wetlands and river buffer zones, that it had failed to compensate local communities for the damage, and that it had taken their land without their “free, prior and informed consent,” a conclusion supported by a decision issued in February by the Roundtable on Sustainable Palm Oil (RSPO).

GVL, which has rejected the RSPO decision, is owned by Golden Agri-Resources (GAR), a Singapore-registered palm oil company, through a Cayman Islands private equity firm. The firm’s ultimate owner is Indonesia’s billionaire Widjaja family. In 2014, GAR promised to stop clearing forest.

Palm oil is one of the most ubiquitous products found in the world today, with estimates suggesting it is used in about half of all consumer goods in the U.S. and Europe. Palm oil firms operating in Africa and Asia often promise to work with local communities to develop the economies of host states, but their investments are routinely accompanied by allegations of deforestation, land grabbing and human rights violations.

In 2010, GVL was granted a 3,500-square kilometer (1,350-square-mile) concession agreement by the Liberian government, covering some 2.3 percent of the country’s land mass. Since then, GVL has faced consistent allegations of environmental degradation and disregard for community land rights, according to Friends of the Earth.

James Otto, campaigner with the Sustainable Development Institute, said the allegations against GVL highlighted the need for more-secure land rights in countries like Liberia. “Otherwise,” he said, “companies like GVL will continue destroying the forests Liberians depend on for their livelihoods.”

A tropical forest in Liberia. Image by John Atherton/Flickr

Liberia has implemented a dual land-tenure system since its founding in 1847, with statutory and customary rights often leading to conflicting claims. While natural resources in rural Liberia are predominantly communally owned and managed, the government in Monrovia, the capital, has treated land where local communities do not possess deeds as state-administered and has granted vast concessions covering almost a fifth of the country to foreign investors and local elites, with about a tenth of the total land mass leased to plantation companies.

In the case of GVL, Friends of the Earth alleges that GAR’s investment constitutes a violation of international standards, Liberian national law and the companies’ own corporate sustainability policies. It also notes that GAR’s investments in Liberian palm oil could pose wider reputational and regulatory risks to its financiers.

“Deforestation, environmental degradation and associated human rights issues, including social conflict stemming from violations of communities’ land rights, can significantly undermine economic development and stability and can pose material financial risks to donors and investors,” the report says.

“As GVL’s primary investor, GAR bears substantial responsibility for the risks and impacts of GVL’s operations. GVL’s ownership structure may prevent GAR from being held legally liable for GVL’s activities in Liberia. However, GAR’s sustainability policies clearly indicate its responsibility for GVL’s business practices,” it adds.

GAR’s largest international creditors and investors include U.S. financial firms Vanguard, BlackRock, Kopernik Global Investors, Dimensional Fund Advisors, Northern Trust and CitiGroup; Dutch firms Robeco and Rabobank; and Asian firms China Merchants Bank, Maybank Indonesia and Bank Mandiri. Commercial customers of GAR include numerous household brands, such as Nestlé, Procter & Gamble, Unilever and Pepsico.

“GVL’s forest destruction and its disregard for human rights poses serious material and reputational risks for both investors and commercial palm oil buyers,” Jeff Conant, senior international forests program manager with Friends of the Earth U.S., said in a statement. “Stakeholders in these rogue companies need to recognize the risks and the wrongdoing and use their leverage to pull the brakes on GVL’s destruction.”

Wulan Suling, head of corporate communications for GAR, said all banks and financial institutions that do business with GAR “conduct in-depth due diligence and risk assessment on a continuous basis and are in regular contact with GAR.”

“GAR has obtained satisfactory explanations from GVL when it was alerted to earlier, similar allegations via other reports. GAR understands that GVL is investigating new allegations about forest clearance contained in the latest reports,” he added. “GAR has asked GVL for a detailed response to all the claims made in the latest report.”

A GVL spokesman did not respond to requests for comment.

Banner: A chimpanzee in Liberia. Photo by Cameron Zohoori/Flickr.

Correction, 7/18/2018: A previous version of this article misstated the area of ecologically rich forest GVL has cleared.