HSBC has bankrolled logging companies causing widespread environmental destruction and human rights abuses in Sarawak, Malaysia, violating its sustainability policies and earning around US$130 million in the process, an investigation by a London-based group, Global Witness, has revealed.
Global Witness investigates and campaigns to prevent natural resource related conflict and corruption, and associated environmental and human rights abuses.
Malaysia’s Sarawak region exports more tropical timber than South America and Africa combined and now has just five per cent of its forests left intact following decades of industrial-scale logging and plantation development. The Global Witness report, “In the Future There Will Be No Forests Left”, identifies loans and services to seven of the region’s largest logging conglomerates that would have generated HSBC an estimated US$130 million in interest and fees.
An article from The Economist about the Global Witness report said:
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The Economist asked HSBC to comment. The bank declined to discuss its clients because of confidentiality, but said it is “not accurate” to state that its clients are in violation of its forestland and forest-products policy. It said current data show that 99% of its forest-sector clients worldwide (by size of lending) are “compliant” or “near-compliant” with its policy. What precisely it means by “near-compliant” is unclear. HSBC said: “We consider engagement rather than exclusion as the right approach for a responsible bank to take…In this way, we believe HSBC contributes more to sustainable development—and the long-term commercial viability of our customers’ businesses—than if we were merely to exit customer relationships.” It adds that it will stop working with firms that “do not make credible progress towards compliance within a given timeframe,” though in some cases “we are obliged to wait until a loan facility expires.”
The bank has parted ways with at least one Sarawak logger. It appears to have dropped Samling Global in 2010, around the time that the Norwegian Council on Ethics reported that the group had been logging inside a national park. It is true, too, that the bank is now lending only small amounts, if anything, to its remaining clients: the two most recent credit-related transactions identified by Global Witness were for less than $1m, and it is not clear if they were fresh loans or restructurings.
But as principal banker HSBC is likely to be offering other services, such as cash management. And its continued involvement, however modest, allows logging firms to claim credentials they don’t deserve. Ta Ann, for instance, has run adverts saying it holds forest-policy certification from HSBC. That looks like a figleaf.