Share

CLIMATE ACTION PROGRAMME


22 November 2010

World Bank funding of palm oil rousing controversy

The World Bank's proposed easing off on its palm oil strategy has roused relief for corporations worldwide whilst attracting mixed reactions to its plan to finance only firms pursuing green standards.

The revised palm oil strategy of the World Bank is nearing the end of the development stage. It purports financing primary producers of palm oil, prioritising investment to those firms that depend on small farmers for supply and that support sustainable requirements.

The suspension of International Finance Corporation (IFC) funding to the palm oil industry has continued since 2009 due to social and environmental concerns.

Companies worldwide subsequently boycotted the palm oil market. US fast food giant Burger King stopped buying palm oil from Sinar Mas and its subsidiaries after Greenpeace mounted a successful campaign against its land-clearing practices.

Fadhil Hasan, executive director of the Indonesian Palm Oil Producers Association (Gapki), voiced disagreement with the favoured new funding strategy. He said that the jobs created by palm oil producers should be taken into account.

A consortium of indigenous peoples, palm oil smallholders, and non governmental organisations is demanding the World Bank maintains its current freeze on funding the sector until it has a credible strategy to address the sector's manifold problems.

Environmental groups Greenpeace and Sawit Watch support this stance, believing that regulations for meeting environmental criteria should first be met.

Another major issue is that even if the IFC continues withholding funding, palm oil companies are still able to seek private investment for their damaging deforestation operations. Such private companies are considered to be out for profit, with little regard for biological diversity and the effects of climate change.

According to new figures from the Roundtable on Sustainable Palm Oil (RSPO), global production of sustainable palm oil has doubled so far this year. This suggests that buyers with concerns on biodiversity can exploit the supply of palm oil to a higher extent than ever before.

The World Bank's proposed plan to resume funding is good news for a diverse range of industries that use palm oil, from the manufacture of cosmetics and food products, to use in biodiesel.

Since 1965, the World Bank has channelled nearly $2 billion for 45 projects in the palm oil sector in 12 nations across Africa, Latin America and Southeast Asia, according to the company's own figures.

Figures suggest that Indonesia has been a major focus of the financing, receiving $618.8 million of the total investment until funding was ceased in 2009.

Indonesia is the world's largest producer of palm oil despite escalating environmental campaigns, while Malaysia remains the biggest exporter. Indonesia is also the third largest user of palm oil after China and India. The United States Department of Agriculture (USDA) currently estimates Indonesian palm oil production in 2010/11 at a record 23.0 million tons, up 2.0 million or 10 per cent from last year. Edible oil supply is dependent on this, with palm oil as the cheapest vegetable oil on the market.

The number of foreign-listed plantation groups in Indonesia has grown rapidly since the early 1990s, with over half of the planted area now owned by private companies. Many have been seeking listing on the Stock Exchange of Singapore (SGX) and the Jakarta Stock Exchange (JSX).

Indonesia is gradually being recognised as the future CPO price benchmark setter instead of Malaysia. This may contribute to increased desire to invest in the market.

With regard to the damage to jobs markets in the developing world, some green groups believe the new investment would create only short term jobs because when global warming continues unchecked, the warmer temperatures will be unfavourable for growing palm oil.

The IFC has taken into account input from almost 3000 stakeholders in its creation of a new framework within the $30 billion palm oil industry.

In the first months of 2011, the framework will be disclosed for 30 days before it is finalised and presented to World Bank President Robert Zoellick for approval.

The World Bank claims to now be in the concluding stages of a multifaceted consultation.

Robert Zoellick was responsible for freezing World Bank Group funding worldwide in the palm oil sector, pending the social and environmental concerns. It is now his responsibility to ensure safeguards are in place to protect all stakeholders.

If the World Bank makes the decision to resume funding, businesses are urged to continue their own assessment on sources of palm oil supply, with regard for land and sustainability of crops. Demand for palm oil has increased across various markets and it is up to all those in the supply chain to ensure healthy growth of the industry. Author: Marianna Keen | Climate Action Image: oneVilliage Initiative/ Flickr

Related Articles

blog comments powered by Disqus

CLIMATE ACTION UNEP PUBLICATION

Climate Action and UNEP have launched the ninth edition of Climate Action for COP21 - read and download the new edition here

Download Here Find Out More

NEWSLETTER

TWITTER

CLIMATE NEWS
  • Opening Speech By UNEP Deputy Executive Director Ibrahim Thiaw at the 19th Conference of Parties to...

    [No supplied article summary]

    World Humanitarian Summit must be 'turning point' in cooperation to tackle crises - UN chief...

    At the launch of One Humanity: Shared responsibility report...

    G20 Green Finance Study Group Meets for the First Time in Beijing...

    The GFSG will collaborate with other G20 groups and related external initiatives....

    International Meeting to Protect the World's Sharks Convenes Next Week...

    The second Meeting of Signatories to the Convention on Migratory Species Sharks MOU will take place in San José, Costa Rica, from 15 to 19 February....

    Speech by UNEP Executive Director Achim Steiner at the Launch of Kenya Green University Network...

    [No supplied article summary]

  • FAO calls for international action on antimicrobial resistance

    Antimicrobial resistance" or AMR is “one of the greatest threats to public health worldwide” and calls for a globally coordinated effort to counter the risks it poses to food security, FAO Deputy Director General Helena Semedo warned European ministers of health and agriculture at a conference on antibiotic resistance in Amsterdam.

    Zika: FAO Director-General says agency is ready to contribute to international efforts

    As the leading UN agency on animal health and pest control, FAO can assist affected nations with targeted interventions while ensuring that people and the environment are not exposed to health and other risks stemming from the inappropriate use of potentially dangerous chemicals.

    UN agencies warn of escalating food crisis in South Sudan

    South Sudan is facing unprecedented levels of food insecurity, as 2.8 million people - nearly 25 percent of the country's population - remain in urgent need of food assistance, and at least 40,000 people are on the brink of catastrophe, three UN agencies warned today.

    Somalia continues to face large-scale food insecurity compounded by poor rainfall and drought

    Somalia will continue to face large-scale food insecurity between now and June 2016 as a result of poor rainfall and drought conditions in several areas, trade disruptions, and a combination of protracted and new population displacements.

    FAO Food Price Index starts 2016 dropping to nearly 7-year low

    The FAO Food Price Index fell in January, slipping 1.9 percent below its level in the last month of 2015, as prices of all the commodities it tracks fell, sugar in particular.

  • Lima Call for Climate Action Puts World on Track to Paris 2015

    A new 2015 agreement on climate change, that will harness action by all nations, took a further important step forward in Lima following two weeks of negotiations by over 190 countries.

    New Portal Highlights City and Private Sector Climate Action

    A way to increase the visibility of the wealth of climate action by cities, regions, companies and investors was launched today by the government of Peru.

    New Documentary Raises Awareness for Adaptation Needs

    A new documentary released on 11 December 2014 highlights the growing recognition of the need for adaptation to climate change around the world, as recognized by governments at this week’s UN Climate Change Conference in Lima.

    Winners of United Nations Climate Change Awards Honoured in Lima

    Delegates at the United Nations Climate Change Conference in Lima, Peru, were treated to an evening of hope and optimism as the winners of the 2014 Momentum for Change Awards were feted tonight at a gala event.

    Forest Announcements Pave Way for Climate Action

    At the UN Climate Change Conference in Lima, a group of five countries has taken steps towards improved national and global forest action.

  • UN-Habitat supports a community initiative in East Jerusalem

    Ramallah, February 11, 2016 – On February 8th, 2016 UN-Habitat jointly with Bimkom – Planners for Planning Rights and the Local Community Center of Sur Baher inaugurated a playground in Sur Baher. This initiative comes as part of the Scaling up and Deepening of Planning Support to Palestinian Communities in East Jerusalem project funded by […]

    Improving the quality of life of people through sustainability

    Rio de Janeiro, 11 February 2016 – The phrase belongs to Elkin Velasquez, UN-Habitat´s Regional Director for Latin America and the Caribbean, during the signing of the agreement between the UN agency and the government of Risaralda (Colombia). Pact for Sustainability and Competitiveness is a document that includes actions for development in 14 municipalities through the implementation of […]

    CPI Global City Report – 2015

    In 2012, UN-Habitat created a tool to measure the sustainability of cities. This tool known as The City Prosperity Index was accompanied by a conceptual matrix, the Wheel of Urban Prosperity. In 2013, UN- Habitat received numerous requests from local authorities and central governments to estimate their respective prosperity indexes. Mayors and other decision makers […]

    The City Prosperity Initiative – Brochure

    In 2012, UN-Habitat created a tool to measure the sustainability of cities. This tool known as The City Prosperity Index was accompanied by a conceptual matrix, the Wheel of Urban Prosperity. In 2013, UN- Habitat received numerous requests from local authorities and central governments to estimate their respective prosperity indexes. Mayors and other decision makers […]

    The Global Goals for Sustainable Development and City Prosperity Initiative

    The high-level plenary meeting of the General Assembly for the adoption of the post-2015 development agenda was held from25 to 27 September 2015, in New York, during the United Nations summit. The 2030 Agenda for Sustainable Development is a plan of action for people, planet and prosperity. All countries and stakeholders, acting in collaborative partnership, […]

  • In Mogadishu, WFP Is Supporting The Most Vulnerable People With Cash-Based Transfers

    Across Somalia, more than a million people are struggling to meet their basic food needs, particularly internally displaced people and the urban poor. With support from the European Union’s humanitarian aid and civil protection department (ECHO), WFP is now providing the most vulnerable people in Mogadishu with cash-based assistance so they can shop for the food they need. WFP is increasingly providing cash-based transfers in places where food is available in the markets, but lack of income prevents vulnerable families from accessing it.  

    “We Bend Like Reeds But Do Not Break” Coping With Drought In Haiti

    WFP in Haiti is working with people there as they cope with the effects of a devastating drought, made worse by El Nino. Singing as they work helps this community through the hard labour of soil preservation and land restoration. “Fanm yo, nou se wozo, nou se wozo, se wozo nou ye, yo met boule nou, yo met koupe racin nou, lé la pli a tonbe n’ap boujonnen…”: “Women, we are reeds… they may burn us, they may cut our roots, when the rain falls, we will sprout again…”

    Drought In Ethiopia: 10 Million People In Need

    Ethiopia is in the grip of its worst drought in recent history. More than ten million people are in need of assistance according to the Government and humanitarian agencies. On Sunday 31 January, the UN World Food Programme (WFP) Executive Director Ertharin Cousin and UN Secretary-General Ban Ki-moon visited Ethiopia to see first-hand the consequences of the drought in one of the worst affected areas.

    Sierra Leone: Moms And Their Babies Are Returning To The Health Centres

    Use of basic health services drastically reduced at the height of the Ebola outbreak. The population was hesitant to approach the health centres due to fears of either contacting Ebola or being labelled as someone affected by it. Getting mothers and children back to the health centres to access critical maternal and child health services has been challenging. In partnership with the Government of Sierra Leone, The World Food Programme (WFP) is supporting the Ministry of Health and Sanitation (MoHS) to increase uptake of services. Through the treatment of moderate acute malnutrition in children aged 6-59 months and pregnant and nursing mothers at Peripheral Health Units (PHUs), WFP is also helping to improve the nutrition status of vulnerable groups, reaching more than 43,000 children and mothers across the country.

    University of Notre Dame Students Fighting Hunger

    Next month, students, educators and academic leaders from across the U.S. will come together to amplify their voices in the global fight against hunger at the annual Universities Fighting World Hunger Summit. Over 250 anti-hunger advocates will convene in Columbia, Missouri, 26-27 Feb. to exchange ideas on ways to stamp out hunger around the globe.