How Big Banks Are Putting Rain Forests in Peril
Rajawali’s plantations have been accused by environmental and labor groups of deforestation and illegal burning. Indonesia is one of the world’s biggest palm oil producers, and forestry loss there and elsewhere ranks as one of the biggest single contributors to global warming.
Sebastian Sharp, a spokesman for Rajawali’s plantation arm, acknowledged that the burning and clearing on its West Kalimantan forest sites might be illegal but said local communities encroaching on its properties and starting the fires were to blame. He said the company did not engage in illegal burning or clearing.
Credit Suisse declined to comment on its Rajawali deal or to say whether the deal violated its sustainability policies. A Bank of America spokesman, Bill Halldin, said that the most serious accusations against Rajawali came after the 2014 loan, in which the bank played “a very small role.”
“Today, we would certainly consider more information before making any decision on any client,” he said.
Brigitte Seegers, a spokeswoman for ABN Amro, declined to comment.
A Deadly Haze
Climate concerns have been brought into sharp relief by the impending presidency of Donald J. Trump, who has called climate change a hoax. Mr. Trump has said he will pull the United States out of the Paris accord, a commitment by 195 countries to take concrete measures to reduce planet-warming carbon emissions.
Daily emissions from Indonesia’s forest fires last year at times exceeded emissions produced by all economic activity in the United States. A recent Harvard and Columbia study estimated that the fires caused at least 100,000 premature deaths across Southeast Asia. The World Bank estimates that the fires cost Indonesia’s economy $16 billion.
Although deforestation has slowed in many parts of the world, notably in the Brazilian Amazon, forest clearing is on the rise in Southeast Asia. Indonesia, in particular, suffers the world’s highest rates of forest loss, an average of almost 2.1 million acres a year, a study published in 2014 found.
About 15 percent of the world’s historical forest cover remains intact, according to the World Resources Institute. The rest has been cleared or degraded or is in fragments.
Rajawali originally operated its palm plantation business, Green Eagle Holdings, as a joint venture with the French conglomerate Louis Dreyfus. But starting in 2014, Rajawali took the first step to consolidate the palm oil business under its control, and invest in new infrastructure.
Its loans from Western banks were crucial. In January 2014, Green Eagle attracted a $120 million loan from a group of lenders led by ABN Amro. In July of that year, it scored an even bigger loan of $235 million from a syndicate led by Credit Suisse. Bank of America also took part in that loan.
The financing allowed Green Eagle to buy out Louis Dreyfus to invest in new palm oil mills and increase its landholdings. In November 2014, Green Eagle merged with another plantation operator, BW Plantation; Rajawali is majority shareholder of the resulting company, Eagle High Plantations.
The banks issued those loans as Rajawali was being accused of extensive forest and peatland destruction, illegal burning, use of child labor and the use of force against workers at plantations under its control.
Land-cover mapping by the Indonesian Ministry of Environment and Forestry, and satellite imagery from Global Forest Watch, show forest loss at two sites in West Kalimantan from 2011 to 2013 and again in 2015, with much of the forest gone by the end of the year. Those sites included around 11,000 hectares of peat, which, when set alight, can smolder for months underground.
Zamzami, who goes by one name, a Greenpeace staff member in Indonesia who visited a Rajawali plantation in West Kalimantan in September 2015, said the burning continued. “It was difficult to breathe because of the smoke,” he said in field notes. “Far away, on the horizon, I could see the forest wall.”
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