Washington D.C., April 1, 2011 –
The World Bank Group today announced the adoption of a World Bank Group
Framework and IFC Strategy to guide future engagement in the global palm
oil sector. The new framework and strategy were developed following extensive
consultations with a wide range of stakeholders including environmental
and social NGOs, farmers, indigenous communities, private sector companies,
Feedback received affirmed that, when guided by rigorous environmental
and social protections, the palm oil sector can be an important contributor
to growth and economic development and to overcoming poverty.
“Throughout the consultations,” said Rachel Kyte, IFC Vice President
for Business Advisory Services, “many voices in the private, public, and
civil sectors recognized the potential of the palm oil production to contribute
to reducing poverty when good environmental and social practices are followed.
Stakeholders look to the World Bank Group to support a new model
for financing in the sector to benefit the poor and protect the environment.
This is what we have committed to do.”
Palm oil is produced by and employs over six million rural poor worldwide.
Small farmers dominate production and continue to enter the industry
in increasing numbers. Some 70 percent of palm oil production is
used as staple cooking oil by poor households in Asia and Africa.
“Even though the World Bank is a small player in the palm oil sector,”
said Inger Andersen, World Bank Vice President for Sustainable Development,
“we can make a contribution to strengthening the sector’s sustainability.
Our focus on supporting small farmers and improving productivity
- particularly that of degraded plantations - can help poor rural communities
benefit while also helping the environment.”
Stakeholder consultations, held around the world over the last year, focused
on a range of social and environmental issues facing the palm oil sector
and the role the World Bank Group could play to address them. The consultations
helped to shape key areas of focus for Bank Group engagement in the sector,
World Bank Group Framework and IFC Strategy for Engagement in the Palm
Oil Sector will give priority to institutional and market initiatives that
support smallholders and foster benefit sharing with rural communities.
This will take place by helping to strengthen smallholder producer
organizations, promoting their access to finance and markets, improving
their agronomy practices and productivity, and fostering fair contractual
arrangements with larger companies.
- Regulatory and governance reforms;
- Responsible private investments;
- Improved benefit sharing with smallholders
and communities; and
- Development and widespread adoption
of environmentally and socially sustainable standards and codes of practice.
To help protect forests and biodiversity and to move palm oil expansion
from forested areas and peat lands, the Bank Group will give priority to
initiatives that encourage production on degraded lands and seek to improve
productivity of existing plantations.
The new approach also includes new analytical “tools”, such as a joint
World Bank-IFC Country Situation Analysis and IFC’s Risk Screening and
Assessment procedure. This will enable an assessment of key opportunities
and risks, particularly around the issues of land use and acquisition,
governance, community concerns, and working conditions. These tools
will guide the Group’s decisions on whether to engage, the level of appropriate
engagements, and measures to avoid or reduce potential risks.
In order to develop the new engagement approach, the World Bank Group suspended
its new investments in the palm oil sector in September, 2009 to review
lessons learned and to consult with stakeholders. With the adoption
of the new Framework and Strategy, it is now lifting that suspension.
For further information, please visit: www.ifc.org/palmoilstrategy.
About the World Bank Group
The World Bank Group is one of the world’s largest sources of funding
and knowledge for developing countries. It comprises five closely associated
institutions: the International Bank for Reconstruction and Development
(IBRD) and the International Development Association (IDA), the International
Finance Corporation (IFC); the Multilateral Investment Guarantee Agency
(MIGA); and the International Centre for Settlement of Investment Disputes
(ICSID). Each institution plays a distinct role in the mission to fight
poverty and improve living standards for people in the developing world.
For more information, please visit www.worldbank.org,