HSBC have triggered an investigation into Noble Plantations following allegations that the company was planning to clear thousands of hectares of rainforest in Papua for the cultivation of palm oil, in what is being hailed as the first for a major bank.
HSBC have asked the Roundtable on Sustainable Palm Oil (RSPO), a sustainability body for the palm oil industry to investigate the claims, which would result in significant damage to one of the world’s most vital and varied habitats. The tip off came from campaigning organisations the Environmental Investigation Agency and Greenpeace, who wrote to four banks linked to a £580m bond issued by the Noble Group.
Those bodies asked HSBC, ABN Amro, ING and Rabobank to take action against Noble Plantation’s plan to clear an astonishing 18,000 hectares of rainforest. Whilst none of the banks chose to make a formal complaint, HSBC thought it serious enough to forward the documents on the RSPO, which instigated a probe into Noble Plantations. A HSBC spokesperson said that the bank “is keen to ensure that the RSPO’s standards are observed and that any credible allegations of non-compliance are investigated”.
Palm oil is a common component of a dizzying array of everyday consumer products from lipstick to sliced bread, shampoo to margarine and ice cream to detergent. It’s also a large driver of deforestation across the world. As of 2017, palm plantations cover an estimated 27m hectares of land, a number which increased by an average of 270,000 a year, according to one study.
An RSPO spokeswoman said “Given the seriousness of the allegations and supporting documentation, the RSPO has advised the company to stop all further development on the concession pending full independent investigations and assessment by RSPO, and possible referral to its complaints panel.”
Greenpeace joined the chorus of campaigns and customers on the contact HSBC line who congratulated HSBC on their principled stance on this issue, saying that “After years of turning a blind eye, the financial sector is finally starting to take a tougher line on rogue palm oil companies,”
The news comes after Greenpeace named HSBC in their “Dirty Bankers” report, which accused them of providing funding to palm oil companies who help contribute to environmental destruction. In response to that report, HSBC announced a stricter lending policy, based on a “no deforestation, no peat, no exploitation” commitment, whilst suggesting that “the financial sector can play a greater role” in helping to prevent deforestation.
Numerous reports have been made by sustainability organisations regarding the links between investment funds and palm oil. Allan Pearce of Trillium Asset Management remarked “Palm oil supply chains are perhaps the clearest example of where investors have seen the environmental and social impacts translate into financial risks. Investors have seen share prices drop as producers fail to protect forests.”
Following HSBC’s decision to adopt a more ecologically sound investing approach, other major banks have begun to make the shift too, including BNP Paribas, who last month announced a new set of guidelines around palm oil investment.