From The Third World Institute’s Choike program, here’s a recent report that World Bank and International Finance Corporation (IFC) head Robert Zoellick has agreed to suspend World Bank/IFC financing of the agrofuel sector (oil palm, in this case) in Indonesia, in response to activists’ concerns about environmental degradation and social troubles:

“In response to an appeal by a global coalition of NGOs, IFC / World Bank President Robert Zoellick has agreed to suspend IFC funding of the oil palm sector pending the development of a revised strategy for dealing with the troubled sector.

The response follows a highly critical audit by the IFC’s independent ‘complaints advisory ombudsman’ which had shown that, as claimed by the NGOs, IFC funding of the Wilmar Group had violated the IFC’s own procedures, and commercial concerns had been allowed to override the IFC’s environmental and social standards.”

My Comment:

The IFC is an arm of the World Bank group and is based in Washington, DC. It differs from the World Bank in being entirely private and for-profit and in not being backed by sovereign (i.e. government) guarantees. It’s focus is on investment in the private sector in emerging markets.

This will be a big blow to top agro-fuels producer Singapore-based Wilmar International, whose business activities in Sumatra and Kalimantan have provoked complaints from some 19 environmental groups, plantation small holders, and indigenous people’s organizations:

“IFC’s ombudsman had conducted an audit following the NGO complaints and found that IFC funding of Wilmar International, listed on the Singapore Stock Exchange, had violated IFC’s procedures and commercial concerns had been allowed to override IFC environmental and social standards.

The ombudsman’s report was released earlier this month and focused on four financing arrangements made by the IFC between 2003 and 2008 in favor of Wilmar International, which runs more than 200,000 hectares of palm oil plantations in Indonesia and Malaysia.

IFC had earlier agreed to provide the company with US$33.3 million in investment guarantees and $17.5 million in loans over five year.” (Jakarta Post, Sept 14, 09)

Wilmar is also the supplier of cheap palm kernel that’s used to feed cows by New Zealand dairy giant Fonterra. Fonterra uses 1/4 of the world’s palm kernel – a trade that has drawn fire from NZ environmental groups, which  call it a national scandal that a company in a country known for its environmental quality should be doing business with a corporation they describe as destroying Malaysian and Indonesia rain-forest at unsustainable rates.