Rimisp-Latinamerican Center for Rural Development

E- Consultation on the WBG´s Draft Framework for Engagement in the Palm Oil Sector

9 – 20 August 2010

E-Consultation. Objective

Provide the WBG with reactions of the participants and experts on the current development of its strategy to (re) engage in the palm oil sector, as articulated in the framework document that was provided for the debate.

Consultation Process

The WBG’s Draft Framework for Engagement in the Palm Oil Sector was subject of an electronic consultation organized by Rimisp –under contract with WBG.

The initial invitation was sent out to a list of 3432 persons or groups from around the world.

There were 282 registered participants from 51 different countries.

Nine lead discussants were asked two-page comments to foster discussion.

Consultation Process

The electronic platform used to house the e-consultation was D-Groups.

This report was produced by Rimisp staff based on the comments from the participants.

A draft was shared with the participants and with WBG staff who had 48 hours to send comments and recommendations for improvements.

Comments from WBG staff were treated in the same way as those of the other participants; it was Rimisp's decision what to include or exclude and how to report it in this document.

The strengths of the framework document

The moratorium on IFC and WB investment in the palm oil sector, is important for the development of a competitive and socially and environmentally sustainable global palm oil sector.

The document identifies the many and important negative social and environmental impacts of the palm oil industry: deforestation, biodiversity loss, greenhouse gas emissions, land use conflicts and questions over land tenure and human rights.

The strengths of the framework document

The potential of the palm oil sector to contribute to poverty reduction and to protect High Conservation Value Forests and critical habitats.

The emphasis on smallholders.

Better coordination between the IFC and the WB, would be a major positive step in improving the economic, social and environmental performance of the palm oil sector

Results. ISSUE 1. A framework or a Strategy?

It´s not clear the purpose of the document: “framework” or “comprehensive strategy”

One participant proposed an understanding that “a framework is a menu of possible options/actions that can be chosen during the development of a specific strategy, while a strategy is a specific set of actions that is guided by a clear, measurable objective.”

The document falls short of expectations concerning the anticipated "comprehensive strategy” that the WBG promised and committed. To achieve this some participants thought that a complete rewriting was necessary.

In another perspective, other participants felt that the Draft Framework represented an instrument to move forward to support the palm oil sector raise living standards and reduce poverty in the developing world.

Results. ISSUE 2. What is off limits?The WBG must establish more definitive and clear boundaries about the different issues, taking in consideration CAO´s 2009 audit recommendations.

Three aspects that need to be clarified in the document:

Set of activities to be implemented will be driven by the host country's or client's interest .

The IFC will support to the private sector only if requested by the private sector

IFC may invest in oil palm plantation operations and other palm oil sector companies even if the public sector regulatory enabling environment is less than ideal.

Results. ISSUE 2. What is off limits?

The Draft Framework should also be more context specific and reflect the African and Latin American countries issues.

The Draft Framework should be explicit in adopting the principle that "no lands are used for oil palm plantations without communities’ Free, Prior and Informed Consent.“

The Draft Framework should be more clear in stating that the WBG will decline to finance any investment or policy that can lead to the destruction of critical natural habitat.

A number of comments centered on the need to better define and to attach clearer guidelines and boundaries to a number of important statements of purpose, related to: Aceptable action plan?, meeting performance standards?, what monitoring?, what measures for small holders?

Results. ISSUE 3. Reliance on RSPO or other certification schemes?

This is a particularly weak section identified by participants.

While many support RSPO certification, they feel that constantly expanding certification standards, specially for the small and mid-sized plantations, makes it difficult to all stakeholders to follow.

The certification process needs to be made less costly and its costs need to be more evenly distributed. The is a need to have better and more transparent definitions of key concepts.

The WBG will engage host governments to advocate for regulatory reform which will effectively institutionalize stakeholder commitment to the principles of environmental and social sustainability in the Palm Oil industry.

The IFC needs to align its standards with RSPO. IFS should play more proactive role in relation to RSPO.

Results. ISSUE 4. Indicators, monitoring, evaluation and accountability

To define a better set of indicators in particularly sensitive areas, such as the environmental sustainability.

There needs to be some form of impartial oversight, which is capable of ensuring that the strategy is implemented independently of all kind of interests.

The stricter categorization of loans by IFC could help monitor more strictly the projects as they entail a number of risks.

Results. ISSUE 5. Smallholders and poverty focus.

The document should make a better argument of how palm oil contributes to poverty reduction.

It is crucial to provide assistance in key aspects such as smallholder organizations, sustainable medium to long-term business models, best production practices and technical assistance, and access to certification schemes.

It is important to address in more specific terms the key institutional issues that the document itself recognizes as key challenges, including land titling and access to land rights, missing or highly imperfect financial markets, or costly and cumbersome certification schemes.

Results. ISSUE 6. Impacts on vulnerable populations

There is the need for a better evaluation of the impacts of palm oil on specific vulnerable groups such as children, bonded workers, migrant workers, rural women, indigenous peoples and in general on the working conditions in the sector. It´s necessary include in the Draft Framework, more stringent criteria, guidelines and M&E indicators to safeguard the rights of vulnerable populations.

Some participants mentioned that the Draft Framework omits the issue of restitution for past damages to indigenous peoples and other vulnerable groups.

Results. ISSUE 7. Environmental impacts

The need to define a comprehensive and systematic methodology for prioritizing acceptable areas for palm oil development away of HCV (forest land, peatlands, wetlands and high conservation value areas) toward marginal lands.

The document doesn’t address the indirect impacts of large-scale monocrops which cause synergic and cumulative environmental effects, favor land concentration and hinder food security at the local level.

The participants suggested linking the Draft Framework to the on-going global climate change and bio-fuel versus food security debates.

Results. ISSUE 8. Research and development

Under the Draft Framework, the WBG must increase investment in R&D, for different reasons: improve competitiveness through yield increase; phytosanitary issues; genetic resources, and; environmental concerns.

Better define the strategy which the WBG will support the development of a competitive palm oil sector.

Results. ISSUE 8. Research and development

The recommendations of the Draft Framework should be further articulated to reflect specific research issues related to smallholders, linked to partnership arrangements with WB-IDA for financing smallholder development of oil palm.

Up-to-date scientific data on forest cover is essential in the debate on oil palm, for planning and policy making.

Conclusion

The spirit and expectation that prevailed during the e-consultation that if an “..appropriate strategy can be developed and that the ongoing reforms at the WBG continue; the steps taken to suspend lending will prove invaluable to the process of placing the industry on a more sustainable trajectory toward further growth and development that is more responsible from an environmental, social and economic vantage point.”

Some process suggestions

Participants requested that the WBG provide clear objectives for consultations held and information on how the input will be used.

Participants requested a longer and more iterative consultative process, to address new and important issues

The participants hoped that a more visual framework be produced once the process is finished.

Some process suggestions

The participants have expressed the hope to see a document similar to WB´s Forest Strategy or The World Commission on Dams or The Extractive Industries Review.