Banks warned over ESG risks of palm oil investments
Environmental and human rights groups have sent a global alert to several banks over their investment in Golden Agri-Resources (GAR), one of the world's largest palm oil companies.
Credit Suisse, Oversea-Chinese Banking Corporation and Mitsubishi UFJ Securities are acting for GAR in a new bond offering worth up to $400m, according to a Debtwire report.
The Banktrack Newtwork alert aims to make potential financiers aware of the extreme and outstanding social conflicts in the palm oil agribusiness sector. It stated: “Banks and investors must examine the full range of environmental, social, reputational, legal and market risks prevalent in the palm oil sector and ensure that they undertake enhanced, robust due diligence procedures to identify, understand and screen these risks prior to any financing.”
Golden Agri-Resources, or GAR, has been among the early adopters in a wave of company policies that pledge to protect forests, peatlands, and human rights, indicating the company’s commitment to become a more responsible business. However, campaigners say detailed field studies of GAR operations in Indonesia show numerous violations of national and international law.
“At this moment, an investment in Golden Agri-Resources is an investment in forest destruction and human rights violations,” said Jeff Conant, international forests campaigner at Friends of the Earth. “Like other companies in the palm oil sector, GAR is talking a good game on paper, but all evidence shows that their destructive practices continue. Any bank that involves itself with GAR should be prepared for managing a high-risk client under the scrutiny of civil society watchdogs.”