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.
UpdateFPP and 18 other NGOs, including local organisations in Indonesia, have been involved in a long-running process to get redress for the IFC’s persistent violations of its social and environmental policies in the palm oil sector in Indonesia. For over five years IFC has been providing financial support to the company Wilmar Trading / Wilmar International, one of the world’s largest palm oil dealers, directly and through various subsidiaries. In August 2007, FPP with other concerned NGOs and local organisations in Indonesia filed a complaint with the IFC Compliance Advisory Ombudsman (CAO) about this financing, alleging serious social and environmental problems in Wilmar’s operations, as well as violations of IFC’s own standards and procedures in making these credits and loans.