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Conflict or Consent? The oil palm sector at a crossroads

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Growing global demand for palm oil is fuelling the large-scale expansion of oil palm plantations across Southeast Asia and Africa. Concerns about the environmental and social impacts of the conversion of vast tracts of land to monocrop plantations led in 2004 to the establishment of the Roundtable on Sustainable Palm Oil (RSPO), which encourages oil palm expansion in ways that do not destroy high conservation values or cause social conflict. Numerous international agencies have also called for reforms of national frameworks to secure communities’ rights and to develop sound land governance.

The World Bank’s Palm Oil Policy

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[1] 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.

Making Palm Oil Accountable?

Globally oil palm plantations continue to expand at a rapid rate. World leader, Indonesia, has raced past Malaysia to become the number one producer. Latest data from the Indonesian watchdog NGO, SawitWatch, suggests that oil palm plantations in Indonesia now cover 11 million hectares, up from 6 million hectares only five years ago. New plantings are spreading to the smaller islands of the archipelago and to the less developed areas of eastern Indonesia. Hopes that a Presidential promise of a 2 year moratorium on forest clearance would slow the crop’s expansion – part of a deal to reduce green house gas emissions - have also evaporated as the government has excepted areas where preliminary permits have already been handed out.