In 2011, the World Bank Group (WBG) adopted a Framework and Strategy for investment in the palm oil sector. The new approach was adopted on the instructions of former World Bank President Robert Zoellick, after a damning audit by International Finance Corporation’s (IFC) semi-independent Compliance Advisory Ombudsman (CAO) had shown that IFC staff were financing the palm oil giant, Wilmar, without due diligence and contrary to the IFC’s Performance Standards. Wilmar is the world’s largest palm oil trader, supplying no less than 45% of globally traded palm oil. The audit, carried out in response to a series of detailed complaints from Forest Peoples Programme and partners, vindicated many of our concerns that Wilmar was expanding its operations in Indonesia in violation of legal requirements, Roundtable on Sustainable Palm Oil (RSPO) standards and IFC norms and procedures. Almost immediately after the audit was triggered, IFC divested itself of its numerous other palm oil investments in Southeast Asia.
The right to Free, Prior and Informed Consent (FPIC) in the Round Table on Sustainable Palm Oil (RSPO) Principles and Criteria establishes how equitable agreements between local communities and companies (and governments) can be developed in ways that ensure the legal and customary rights of indigenous peoples and other local rights-holders are respected.
A new oil palm plantation being developed in Indonesian Borneo (West Kalimantan) has relinquished community lands to which it had gained a government permit. The company PT Agro Wiratama, a member of the Roundtable on Sustainable Palm Oil (RSPO) and subsidiary of the giant Musim Mas group, agreed to relinquish more than 1,000 hectares of its 9,000 hectare concession back to the community, following interventions by community representatives and NGOs. This is a breakthrough in the context of a pattern of development whereby millions of hectares of large-scale oil palm plantations have been established without consent on indigenous peoples’ land. Forest Peoples Programme spotted PT Agro Wiratama’s plans to open up this area on the RSPO website and alerted NGO partners in Borneo, who were able to work with the community and help them negotiate with the company and local government to get their lands recognised.
In response to a complaint made to the World Bank's International Finance Corporation (IFC) by a coalition of international NGOs, the World Bank's president, Robert Zoellick, has agreed to suspend further investment in the oil palm sector, pending the development of a revised strategy for dealing with the troubled sector.