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Shareholders for the world's "local bank" will be met today (Friday 28th May 2004) by campaigners from Indonesia highlighting the impacts of the bank's investments on the other side of the world [1].

The bank, which recorded pre-tax profits of US$ 12,816 million in 2003, has invested considerable sums in the development of the palm oil industry. Palm oil plantations have spread rapidly across South East Asia as demand for the cheap vegetable oil, found in around 10 per cent of food products in Europe, has grown. But the spread of palm oil in Indonesia has lead to conflict with local communities over land rights, rainforest destruction, the loss of wildlife and environmental pollution [2].

Representatives from two Indonesian organisations are in London to join Friends of the Earth at HSBC's annual general meeting (AGM) to highlight the impact of the bank's investments on their communities and their lives.

They are particularly concerned by HSBC's investments because the bank was until very recently a major backer of the Indonesian palm oil plantation company London Sumatra (Lonsum), which is accused of intimidating local communities in Indonesia. Earlier this year the company dug a six-foot deep trench around a village in Sumatra where the community is protesting about land being forcibly taken from them by the company.

There are also concerns about HSBC's involvement in the Indonesian plantation company Agro Indomas. Agro Indomas is accused of breaking environmental laws and clearing rainforest on the Indonesian island of Kalimantan, where plantations have been established next to water sources without the legally-required buffer zone.

Friends of the Earth has also raised concerns about the bank's commitment to the Equator Principles, the banking sector's green guidelines. While HSBC has signed up to the principles, it has failed to demonstrate how they will be put into practice.

Friends of the Earth's palm oil campaigner Robin Webster said:

"HSBC claims to "think locally" and to be leaders in corporate social responsibility but local communities in Indonesia tell a very different story. As responsible investors, HSBC should be aware of the impacts of investing in palm oil and they should make use of their financial muscle to ensure higher standards are met. If this is an example of a socially responsible British company, then it truly is time for the British Government to legislate and ensure more is done to protect people and the environment."

The UK Government has recently launched a Consultation on a Draft International Strategic Framework on Corporate Social Responsibility [3], but Friends of the Earth has criticized the draft, describing it as a "missed opportunity". The environmental campaign group is calling on the UK Government to instead introduce corporate accountability legislation to hold UK companies to account for the environmental and social damage they cause. It is a founder member of the CORE Coalition (Corporate Responsibility) which is campaigning for changes to legislation [4].

A full briefing detailing HSBC's involvement in the palm oil trade is available from Friends of the Earth. Pictures and video footage of palm oil plantations are also available. 

Notes

[1] Abet Nego Tarigan, who works with communities as part of the Indonesian organisation SawitWatch (Palm Oil Watch) and Safaruddin Siregar, who works with palm oil communities through Friends of the Earth's partner organisation in North Sumatra will attend HSBC's AGM at 11am on Friday 28th May. 

[2] Friends of the Earth's report, highlighting the impacts of the palm oil industry is available at www.foe.co.uk/resource/reports/greasy_palms_summary.pdf  (PDF†)

[3] Department of Trade and Industry CSR- Consultation on a Draft International Strategic Framework.

[4]The CORE Coalition is campaigning for changes to UK company law so that financial obligations are counterbalanced by social and environmental concerns. Specifically, the Government must introduce:

  • Mandatory reporting - requiring all UK companies to report annually on the impact of their operations, policies, products and procurement practices on people and the environment both in the UK and abroad

  • New legal duties on directors - to take reasonable steps to reduce any significant negative social or environmental impacts

  • Foreign direct liability - to enable affected communities abroad to seek redress in the UK for human rights and environmental abuses resulting directly from the operations, policies, products and procurement practices of UK companies or their overseas subsidiaries.

See: www.corporate-responsibility.org

See: HSBC - Financing forest destruction and social conflict FOE media briefing


†To view PDF files you will need to download Adobe Acrobat Reader. Visually impaired users can get extra help with these documents from access.adobe.com.

 

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