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The role of Norwegian Banks in the Borneo Crisis

Saturday, April 1, 2017

Norway - This case study will be taking a closer look at Norwegian financial institutions’ investments in companies which are at risk for imposing on indigenous peoples’ rights, labour rights and environmental destruction in the island of Borneo. The purpose of this case study is to illustrate how financial institutions in Norway can maximise their leverage and take a strong stance for companies’ respect of labour and indigenous peoples’ rights in Borneo, which is divided between Malaysia, Indonesia and Brunei. This study focuses on areas belonging to the two former.

The rationale for focusing on Borneo lies in the combination of its high cultural diversity and the rich biodiversity. Borneo is home to a large group of indigenous groups with forest-based livelihoods, ass well as to one of the world largest rainforsts. In this high-risk environment, a number of companies have been implicated for breaches of indigenous peoples’ rights andenvironmental destruction. Also, a number of international banks have been linked to financing problematic projects and companies, as well as to money laundering which has facilitated unsustainable resource extraction and serious environmental destruction.

In order to illustrate how well financial institutions in Norway comply with international minimum norms and conventions, and also whether they have incorporated international good practice in their investment processes, four companies with land-based projects and supply chains in Borneo have been selected for the study: one mining company (BHP Billiton), two palm oil producers (IOI Corporation and Wilmar), and one European importer of palm oil (AAK). The study also addresses the role of a bank (Deutsche Bank) accused of involvement in money laundering and corruption in connection with illegal logging in Borneo.

Financial institutions in Norway have great potential when it comes to ensuring that their investments do not contribute to abuse of labour rights and indigenous peoples’ rights to land and forests – in particular High Conservation Values (HCVs), livelihoods and Free and Prior Informed Consent (FPIC). A number of international norms and conventions oblige banks to use and maximise their leverage to influence companies and other stakeholders to strictly respect labour and indigenous peoples’ rights. In addition, a number of industry specific standards such as for example the Roundtable on Sustainable Palm Oil (RSPO) and the International Council on Mining and Minerals (ICMM) outline good practice elements.

The HCV methodology, which is included in many industry standards, underlines how forests and biodiversity resources are at the centre of many indigenous peoples’ traditional cultures. It further elaborates on how indigenous communities depend on forests to meet their livelihoods needs, and to maintain good health and nutrition. This case study focuses on two types of HCVs, namely ‘HCV 5: Community needs’ and ‘HCV 6: Cultural values’.

The study also serves as a test to examine how well the financial institutions comply with their own policy commitments regarding environment, corruption, labour and human rights.

The case study is conducted by Etisk Bankguide, a cooperation between Framtiden i våre hender and Forbrukerrådet.

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