HSBC has reportedly come under fire from activists over its alleged support of companies suspected of unsustainable logging and other environmental transgressions in Sarawak.
According to an article in The Economist today, an international campaigning group Global Witness has released a report that puts the bank in the spotlight for doing business with a number of companies that have allegedly failed to meet the bank’s green policies.
“An upcoming report points to a blot on HSBC’s copybook: its financial support of unsustainable logging in Sarawak...
“The bank maintains commercial ties with some of the most active logging and plantation firms there, despite their failure to meet HSBC’s sustainability policies,” said The Economist in an article on deforestation in Sarawak.
It detailed how Global Witness has analysed the publicly available financial records of seven of Sarawak’s largest logging and plantation companies and produced an investigative report (left).
“It identified loans and other financial services from HSBC that it estimates have generated at least USD116 million in interest payments and USD 13.6 million in fees for the bank since 1977.
“Although lending has declined over the past decade, HSBC continues to list Sarawak loggers among its clients, in apparent violation of its own Forest Land and Forest Products Sector Policy,” read the article.
The article outlined how HSBC has embraced a number of initiatives on social and environmental standards for its businesses but asked if it was doing enough.
“On paper HSBC’s forest policy gets high marks, including from BankTrack, a network of NGOs that monitors lenders.
“When it was drawn up in 2004, the policy required clients to have 70 percent of their activities certified by the Forest Stewardship Council (FSC), or equivalent, by 2009, with evidence that the remainder was legal.
“Not only did the seven firms analysed fail to meet that deadline, but none has any FSC-certified operations today,” said The Economist.
Business ties persist
The report said Global Witness has identified six HSBC loans totalling $25m to non-compliant Sarawak loggers, made since the bank introduced its forest policy.
The bank reportedly announced in 2004 that it would not do business with companies who do not make “reasonable efforts” to comply by 2009.
However, said The Economist, one client Ta Ann Holdings listed HSBC as a “principal banker” in its 2011 annual report although the company reportedly does not have FSC certification.
And even if HSBC has walked the talk on its green policies, for example in ending its business relationship with logging giant Samling Global, and appears to be lending less to companies in question, Global Watch said it was still supporting those companies in other ways.
“..As principal banker HSBC is likely to be offering other services (apart from loans), 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,” said The Economist.
Global Witness has made their report available online for download.