APPENDIX – USERS’ COMMENTS ON THE DRAFT WBG'S FRAMEWORK FOR ENGAGEMENT IN THE PALM OIL SECTOR The following

is the complete and unedited transcript of the users’ comments submitted during the e-consultation on the World Bank Group’s Draft Framework for Engagement in the Palm Oil Sector 2010. Username Anthony Ikpi Alejandra Rueda Andres Espinosa-Fenwarth Beth Gingold Boladale Abiola Adebowale Emilie Béland Eric Palola Fernando Lukauskis Francisco Tramontin Gilles Cliche Gloria Ofori-Boadu Guadalupe Rodríguez Henry Barlow Jim Roberts Joao Stacishin de Queiroz Johan Verbug John McCarthy Jorge Román K.G. Ofosu-Budu Lars Gerard Hein Luke Marriott Manuel Chiriboga Marcus Colchester Marian Bradley Mark Kofi Cobblah Mohammed Bun Bida Norman Jiwan Patrick Anderson Pekka Tuovinen R. Goodland Reynier Funke Rhett Butler Richard Aitken Rolando Dy Rosediana Suharto Soedjai Kartasasmita Sylvain Augoyard Thompson Ayodele Tim Wilson Tobi Ogunbayo Virginia Ifeadiro Yu-Leng Khor Postings 1 posting 1 posting 1 posting 2 postings 1 posting 1 posting 1 posting 1 posting 1 posting 5 postings 1 posting 1 posting 1 posting 1 posting 1 posting 2 postings 1 posting 1 posting 1 posting 1 posting 1 posting 11 postings 1 posting 1 posting 2 postings 1 posting 3 postings 1 posting 1 posting 1 posting 2 postings 1 posting 4 postings 1 posting 4 postings 1 posting 1 posting 1 posting 1 posting 1 posting 1 posting 1 posting

USERS’ COMMENTS ON THE DRAFT SYNTHESIS REPORT Username Richard Aitken Eva Benita Tuzon Beth Gingold Luke Marriott Mogana S. Flomo Tobi Ogunbayo Francesco Tramontin Mishka Zaman Reynier Funke Johan Verbug Faizal Parish Postings 1 posting 1 posting 1 posting 1 posting 1 posting 1 posting 1 posting 1 posting 1 posting 1 posting 1 posting

LEAD DISCUSSANTS’ REPORTS Rhett Butler M.R. Chandran Andres Espinosa Fenwarth Juan C. Espinosa Norman Jiwan Scott Poynton Irene Ssekyana Fred Stolle Rosediana Suharto

ANTHONY IKPI Draft WBG Framework for Engagement in the Palm Oil Sector Dear All, Thank you for sending this Draft Framework which I consider well thought out and well-written. I will, however, like to point out to the Authors at this stage of its finalization that there is nothing like "Palm Oil" Sector in any economy!!! The correct title is "OIL PALM" Sector. I find that in more than 90% of the authors' reference to the sector in this document, they mistakenly use the term "Palm Oil" Sector. Palm oil is only one of several products we get from the oil palm sector, and I feel that for a document of this importance, this little but significant mistake should be corrected before we proceed any further. Sincere regards, A. Ikpi posted 28 July 2010 by Anthony Ipki from email

MARK KOFI COBBLAH RE: Draft WBG Framework for Engagement in the Palm Oil Sector Dear Ikpi, This is a very good observation. Thanks for educating us all. Mark Kofi Cobblah Ghana posted 09 August 2010 by Mark Kofi Cobblah from email RE: Welcome message from the moderator Thanks for the information presented. It seems the main reference document present the facts on the sector as it is. The market for the Palm Oil sector will need to be well categorized and developed as many small enterprises will not be able to benefit a great deal from the sector if not well managed. Thanks Mark Kofi Cobblah Ghana posted 09 August 2010 by Mark Kofi Cobblah from web

ROLANDO DY Palm Oil Comments The report is a major contribution to the global discussion of a major agribusiness product.

The comments so far are interesting. I was expecting more treatment of market growth. The report indicated that demand for vegetable oil since 1980 grew by 6 percent annually. 1. How much of the growth came from palm oil? 2. Within palm, oil, which demand segments -cooking oil, soap and detergents, oleochemicals, biodiesel, etc - contributed most to the growth? Also, over the two to three decades, how much private investments went into oil palm? How much investments were spent for every direct job created in the farm sector? Rolando Dy posted 10 August 2010 by Rolando Dy from email

RHETT BUTLER RE: Summary August 9 and new questions Brazil's Program for Sustainable Production of Palm Oil (O Programa de Produção Sustentável de Óleo de Palma), announced earlier this year, will provide some $60 million to promote cultivation of oil palm in "abandoned" and "degraded" agricultural areas in the Brazilian Amazon. Brazil says it will strictly limit development to less than 5 million hectares. The program specifically prohibits expansion at the expense of native forests. posted 11 August 2010 by Rhett Butler from web

GLORIA OFORI-BOADU RE: Summary August 9 and new questions Hi, I am interested in how women in parts of West Africa who continue to perform their small business role of extracting palm oil, palm-kernel oil and different types of cooking oil and other by-products from the Oil palm tree can continue to do so without been pushed out the market. How about traditional palm-wine tapping which is boosting eco-tourism in certain communities? Gloria Ofori-Boadu Women Assistance & Business Association, Ghana. posted 11 August 2010 by Gloria Ofori-Boadu from email

RICHARD AITKEN Richard Aitken on WBG Framework Palm Oil Sector

Although the CAO (Compliance Advisor Ombudsman)’s report on IFC’s four (4) investments in the Wilmar Group, was completed on June 19, 2009, it was not made available to the general public until the following August; precisely one year ago from this week. Despite the serious nature of the conclusions made in the report, it initially drew very little attention from either the development community or civil society. One reason for the lack of attention was the time of year that the report was released. August is not traditionally a time of year that people tend to huddle around their computers to learn about, or try to and tackle issues of environmental and social sustainability in the palm oil sector. But aside from the fact that many otherwise interested parties might have been on vacation or out playing golf or badminton rather than standing by their fax machines waiting for a summertime WBG press release to arrive, there was very little coverage of the CAO report’s release in the media. In fact there was no coverage in the main stream media, until August 19th when the online edition of the New York Times published a story produced by E&E Publishing entitled: “How the World Bank Let ‘Deal Making’ Torch the Rain Forests”. In no uncertain terms, the article laid out the bare bones of the CAO’s conclusions; particularly those pertaining to the absence of a comprehensive WBG strategy for the palm oil sector; and the fact that commercial pressures had been permitted to prevail and overly influence the categorization, scope and scale of IFC’s environmental and social due diligence for each of its investments in the Wilmar Group. In the weeks that followed, thanks largely to social media, the NYT story and the content of the CAO report gained a larger audience, particularly among more powerful and influential stakeholders. With the September 9th, 2009 release of information pertaining to World Bank President Robert Zoellick’s decision to place a moratorium on IFC investment in the Palm Oil sector, various stakeholders involved in the debate on sustainable palm oil development became more outspoken. The moratorium, which would in November, 2009 be extended to IBRD investment in the public sector, has been praised as well as criticized. My own opinion is that we are dealing with finite resources and that the detriment of curtailing sector growth over the short- and medium- term will be balanced by a more sustainable industry over the long-term. Provided that 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. I believe that the process through which this ongoing strategic development process has proceeded has been of critical importance. I am very pleased to see that such a broad range of stakeholders have had the opportunity to express and share their opinions and ideas in an open forum, which has received the attention of the WBG as well as other key players responsible for Palm Oil sector development. I was particularly impressed with the input tabled by participants at the Pontianak and Amsterdam stakeholder consultations. I think the ideas and opinions expressed by the other lead discussants are highly appropriate for a well rounded discussion during the current phase of strategy development. Below, I have provided some of my own opinions on the strengths, weaknesses and gaps of the current WBG Framework for Engagement in the Palm Oil Sector. We must: 1.Ensure critical terms are clearly defined; 2. Maintain stated motives and intentions which are free of ambiguity; and 3. Eliminate bias in the text of the strategy wherever possible. The several preliminary observations, which follow are by no means exhaustive, and I have attempted to avoid overlap with some of the areas already sited by other lead discussants. Strengths: I believe that Annex 1 of the current document appropriately covers the broad range of social and environmental issues, which are faced by the Palm Oil sector. Some of the other lead discussants have expressed that more details be provided, and I think it is possible to accommodate those

requests. It is very important that these issues be included in the framework, however, I question the degree to which it is necessary to relegate all of this information to an Appendix. Not to state that Appendix 1 should be removed, but rather that it is possible that more of this information could be included in the main body of the document, particularly in areas where Appendix 1 is directly referred to. I believe that the selected four themes that will frame WBG future engagement in the Palm Oil Sector are appropriate. Weaknesses: Page 3 below “Rational for a New Framework”; It needs to be stated that is was the outcome of the CAO audit report and not the CSO complaints to the CAO, which served to catalyze the current process to develop a strategic framework. More information should be provided on what the conclusions of the CAO audit report were. Of course one of the key observations of the CAO report was the need to develop a comprehensive strategic approach to the Palm Oil sector, which I think is adequately conveyed in the first draft. There are, however, other observations in the CAO report, which have received scant attention. Among these was the failure of IFC to adhere to its own proscribed environmental and social performance standards. The CAO audit report clearly indicates that commercial pressures led IFC investments to be inappropriately categorized, thus compromising the level of required environmental and social due diligence. As with the current process to develop a strategic framework for WBG engagement in the palm oil sector, the process to develop environmental and social performance standards also required considerable resources. It was previously believed that these standards would be adequate to preserve the integrity of IFC’s mandate to reduce poverty and improve lives. The circumstances, which permitted commercial interests to override development objectives is an area, which needs to be addressed by the ongoing WBG efforts to reform. There needs to be some form of impartial oversight, which is capable of ensuring that the strategy (of which the 2009 updated ESRP standards are intrinsic) is implemented independently of commercial interests. The driving motivator for implementation of the strategy must remain the reduction of poverty in a socially and environmentally responsible manner, which adheres WBG objectives and in particular to IFC’s principle of Additionality. I believe that is not entirely appropriate to state that events, which were recent in 2009 “raised concerns about sustainability issues”. There has been a long history of sustainability issues regarding the WBG’s involvement in the Palm Oil sector, so we need to be more forthcoming about the Bank’s knowledge of that history. It might be stated that the corrective actions taken to date proved to be inadequate or outmoded. Additionally for the Indonesian context, we might emphasize the urgency to resolve the current approach given the exponential growth, which the industry has experienced since the implementation of the IMF’s austerity package in the wake of the Asian Financial crisis that opened the sector to private foreign investment. This growth is expected to continue and even increase in the coming decade; therefore the need for a comprehensive strategy has never been so urgent. Furthermore some indication of the projected scale of WBG investment in the palm oil sector should be indicated in USD dollar terms both for IBRD lending as well as IFC financing (debt & equity). It is critical that the following two statements be clarified: (Page 16) “Ultimate determination of a set of activities to be implemented will be driven by the host country’s or client’s interest in engaging with the WBG, either at the country or project level.” (Page 17) “Depending on private sector interest and opportunities, the IFC will, through its investments and advisory services products, support private sector development and promote environmentally and socially sustainable palm oil production.”} At the vary base level “interest in engaging with the WBG” should be defined as the willingness to seek out and receive finances for the purpose of Palm Oil sector development. Now at the country level, it may be understandable that there would be a higher degree of dependence on the interest of the loan recipient. Sovereign nations must have the right to determine how the money they borrow is used. It’s a complex issue which is perhaps beyond the scope of what can be commented on here. But, I think that the intention is for the

World Bank to use its convening power and reputation as a trusted partner for development to advocate for the use of those loans toward constructive use (i.e. institutionalization of appropriate sustainable regulatory environment, investment in key infrastructure). For the private sector, however, I believe that IFC has considerably more leverage to attach conditions to the finances, which it makes available. The actual release of debt or equity finance to private sector parties should, to some degree, be made contingent to a willingness to engage activities from the proposed menu of interventions. The details of these interventions should be included in the Summary of Proposed Investment (SPI) which the IFC routinely posts to the internet for public viewing prior to advancing projects through the investment cycle toward review and approval. Regarding certification schemes for Sustainable Palm Oil Production, one of the stated commitments for IFC is to “strengthen the RSPO’s capacity and assist clients to achieve RSPO or equivalent certification.” This approach should concurrently foster greater transparency of RSPO as well as of any other certifying bodies. All stakeholders including consumers in the general public need to know exactly what it is about ‘sustainable palm oil’ which makes it sustainable. They need to know what is involved in the certification process, and how it is monitored. If monitoring is to be self-assessed then an explanation of what that means needs to be provided. Furthermore, as the process of developing standards for sustainable palm oil is ongoing, reports (or minutes) of key meetings including the Annual General Meeting (AGM) of the RSPO need to be published. At present the primary source of information on RSPO is their website. Much of the information on this site is out of date or is cluttered with ancient data, irrelevant to answering the basic question of what it is about the current RSPO certification that provides for sustainability. Full transparency regarding this process needs to be implemented. Anything short of full transparency has the potential to render the certification process as little more than “Greenwash”. It might be appropriate if a CSO or a consortium of CSOs were to take charge of the administration of the RSPO secretariat. In terms of Monitoring and Evaluation, the current indicators seem to be inadequate. JC Espinosa of WWF Columbia has commented on the lack of specific environmental indicators. Additionally both Stolle et. al. of WRI as well as by Irene Ssekyana on behalf of Green Watch have provided valuable input toward developing credible indicators. Regarding the current indicators, I would state that they are far too general. For example under theme 2 – “Mobilization of Sustainable Private Sector Investment” – the outcome indicators are for industry wide statistics rather than projects, which IFC is specifically involved, and the output indicator is a USD figure. This really does not provide any indication to the sustainability of what is being financed. This might be the area where we would consider introducing specific environmental indicators. One last comment on Monitoring and Evaluation is with regards to accountability. The strategy should use benchmarks and set targets for acceptable performance. Additionally, some type of planning for what to do in the event that targets are not met should be introduced. This will of course have different meanings for public sector engagement then it does for private sector engagement. In the case of the latter however it should have a direct bearing on whether or not the IFC continues to finance the client. Gaps: I believe that more information could be given on the manner in which the activities of IFC’s Investment Services and its Advisory Services are to be integrated. Will team members from the Advisory Services participate in the decision panel when considering new investments in the Palm Oil sector? What will their role be in judging and ensuring the Additionality of pipeline investments? posted 11 August 2010 by Richard Aitken from email Open Message from Richard Aitken to JC Espinosa of WWF – Columbia Dear Mr. Espinosa,

Your lead discussant post notes the absence of 'specific environmental indicators' from the Monitoring and Evaluation section of the draft “WBG framework for Engagement in the Palm Oil Sector”. I believe the inclusion of such indicators, both for 'outputs' and 'outcomes' - for page 19 M&E, under theme 2 “Mobilization of Sustainable Private Sector Investment” – is appropriate; that is to say, specific environmental indicators for IFC private sector client projects. Could you please provide a list of suggestions for: a) Specific environmental indicators for 'Outcomes' of IFC financed private sector projects; and b) Specific environmental indicators for the associated 'Outputs' of IFC financed private sector projects All participants in this on-line forum, particularly those with scientific knowledge of the environmental impacts of palm oil cultivation (soil erosion, water contamination, green-house gas emission (etc.) are encouraged to contribute suggestions for this exercise. Thanks all for your contributions to this thread. Sincerely, Richard Aitken posted 12 August 2010 by Richard Aitken from email RE: Comments by Scott Poynton To luke@goldtreeholdings.com Yes, it is going to change! As a result of this open consultative process on developing a strategic framework for the WBG engagement in the Palm Oil sector; IFC will henceforth take a leading role in building RSPO capacity while fostering enhanced transparency not only for the RSPO secretariate but also among all RSPO members. As a direct result of IFC's proactive engagement as a leading member of the RSPO, all stakeholders, including the general public will achieve a clear understanding of what it is about 'Sustainable Palm Oil' that makes it sustainable. Furthermore all minutes of RSPO AGMs will be published for stakeholder review and consideration. IFC will support RSPO by ensuring that RSPO standards for environmental and social sustainability more closely reflect IFC's own performance standards. These standards will of course be rigorously enforced. Concurrently the WBG will engage host governments on a country by country basis 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 framework strategy for WBG engagement in the Palm Oil sector promises to open a bold new era in which all leading Palm Oil companies will have the opportunity to safeguard the environmental and social sustainability of the planet by appropriately adopting best practices, posted 18 August 2010 by Richard Aitken from web Implementation Approach, M&E, Commitments Section In response to the moderator’s request to move to the final stage of discussion - Implementation Approach, Monitoring and Evaluation (and related indicators), and the WBG/IFC Implementation Commitments (Section III, pages 16-20) I would begin by commenting that the global stakeholder consultations provided the WBG with an extraordinary opportunity to harvest valuable suggestions form a very diverse group of

stakeholders, often with conflicting views on how best to proceed. Given the complexity of the environmental, social and economic issues facing the Palm Oil industry, we must concede that it was entirely unlikely that the first draft document “WBG Framework for Engagement in the Palm Oil Sector” would prove satisfactory. Indeed much of the commentary which has proceeded during the current e-consultation has effectively identified serious gaps and deficiencies in the present text. In many cases these shortcomings have resulted from a failure on the part of the WBG to fully utilize the full breadth and depth of the comments made during the stakeholders consultations. Still in other instances the ongoing e-consultation provided opportunities for stakeholders to advance entirely new points of view and considerations, which had not previously been fully articulated. I think that everyone who has directly participated in the e-consultation recognizes the importance of this document, however it must be said that the general expectation is, that it needs to be a whole lot more comprehensive then it is right now. It would seem, at this point, that the extensive revisions required for the framework strategy to fully address all of the concerns (including those of nd social and environmental sustainability) would mandate an extensive rewrite. Therefore, the 2 draft should subsequently be subject to further stakeholder review via e-consultation prior to finalization. The ongoing moratorium on WBG financing to the Palm Oil sector should not be lifted until a comprehensive draft has been finalized through this further consultative process. This is not simply a matter of lobbying for a prolonged moratorium. The finalization of a comprehensive document, which effectively lays the foundation for WBG engagement in the Palm Oil sector can and must occur – the sooner the better. The comprehensive document created through this process will open the ‘bold new era' required for all parties to mutually benefit from genuinely sustainable palm oil development. IMPLEMENTATION In terms of Implementation I would reiterate the statements I made in my initial post to this discussion: "It is critical that the following two statements be clarified: (Page 16) “Ultimate determination of a set of activities to be implemented will be driven by the host country's or client's interest in engaging with the WBG, either at the country or project level. (Page 17) “Depending on private sector interest and opportunities, the IFC will, through its investments and advisory services products, support private sector development and promote environmentally and socially sustainable palm oil production.” At the vary base level interest in engaging with the WBG should be defined as the willingness to seek out and receive finances for the purpose of Palm Oil sector development.... ...For the private sector, I believe that IFC has considerably leverage to attach conditions to the finances, which it makes available. The actual release of debt or equity finance to private sector parties should, be made contingent to a willingness to engage activities from the proposed menu of interventions. The details of these interventions should be included in the Summary of Proposed Investment (SPI) which the IFC routinely posts to the Internet for public viewing prior to advancing projects through the investment cycle toward review and approval." MONITORING & EVALUATION - TABLE 3 (P. 19) - WE NEED A LIST OF INDICATORS PLEASE BE VERY EXPLICIT For final PHASE III of the first e-consultation, I would encourage all contributors to consider which indicators would be required under a robust Monitoring and Evaluation framework, to ensure that the required amendments they have individually advocated for, are effectively benchmarked, targeted, tracked and used as standards for performance and accountability. There are two key benefits to explicitly providing indicators at this stage: 1. Participants ensure that what they believe to be the most important aspects of a comprehensive strategy are included as items to be Monitored and Evaluated and used to assess the sustainability of ongoing projects.

2. Participants provide the WBG team responsible for preparing the final draft with the key markers (milestones, cornerstones) around which the entire strategy needs to be built. For example: I have consistently commented on theme 4: Sustainable Codes of Practice. I therefore am providing the following suggestions: Theme 4: Sustainable Codes of Practice WBG Inputs/Activities -Promoting the production, market acceptance and consumption of Sustainable Palm Oil. Outcome: 1. Certification body (RSPO) maintains a functional secretariat 2. RSPO certification of stakeholders engaged in Palm Oil cultivation 3. Effective mechanisms in place to monitor adherence to Sustainable Palm Oil criteria among producers. 4. Sufficient Ratio of Funding to IFC Advisory Services, for the purpose of advancing sustainable Codes of Practice relative to the amount of financing (debt & equity) provided by IFC Investment Services to private sector clients. Output: (Each group of indicators is associated with the 1. a) Basic Information on criteria for what makes “sustainable palm oil” sustainable made available to the public through a well maintained and updated RSPO website. b) Minutes of latest RSPO meetings posted to the website c) Robust coverage of RSPO events including any modifications to rules governing sustainable palm oil production covered in the media. d) Effective marketing campaign to promote awareness of Sustainable Palm Oil among consumers (amount of money spent on such campaigns) e) Volume of certified sustainable palm oil produced.(By the Client/By the Industry) f) Volume of certified sustainable palm oil consumed.(Client/Industry) g) Ratios of the above to non-certified palm oil (Client/Industry) 2. a) Number of IFC corporate clients certified or in process of certification b) Number of Smallholders linked in to the corporate client supply chain who are certified or undergoing the certification process. 3. a) Number of people/trainers trained in environmental and social assessment b) Training capacity (number of institutions providing training in environmental and social assessment for the palm oil industry; Number of Graduates per year) c) Number of full time jobs created for the purpose of assessing the environmental and social sustainability of the palm oil sector. 4. a) Amount of funding to IFC Advisory Programs for the purpose of promoting sustainable codes of practice b) Number of IFC advisory staff actively working in the Palm Oil Sector to promote sustainable codes of practice c) Number of staff of organizations directly or indirectly outsourced by IFC Advisory Services working in the palm oil sector to promote sustainable codes of practice.

If any one else has any ideas on how to expand or improve this please submit your list of indicators. It will make the job of the WBG drafting eam much easier. Here are some Outcome Indicators for Theme 2: Mobilization of Sustainable Private Sector Investment Outcome: 1. Due diligence rigorously executed in accordance with IFC's 2010 revised social and environmental standards. 2. Client commitments to substantive IFC interventions 3. Increased yield per hector of cultivated land for IFC clients. 4. Substantive investment in infrastructure facilities. 5. Water pollution minimized through the development of closed water system on client plantation, consideration for downstream communities. 6. Soil Erosion minimized through implementation of best practices for palm oil cultivation 7. Use of pesticides minimized 8. Green House Gas emissions reduced or sequestered. 9. HCV forests preserved; 10. Comprehensive Spacial Planning executed prior to development 11. Evidence that no new development has proceeded without full adherence to the principles of FPIC 12. Improved access to critical markets for small holders. 13. Improved access to and lower cost of finance for small holders. 14. Investment in social infrastructure for farmers (health care, education) 15. Integrate efforts to diversify local economies. 16. CSR Programs to provide opportunities for young adults in local communities. 17. Food Security for local communities 18. Poverty Reduction – MDGs. The above list is by no means exhaustive, and is open to further suggestions. Most of the items have been taken from statements made by other participants in the ongoing e-consultation process. Each of these items still requires associated output indicators which other participants are encouraged to provide. Otherwise, we leave it to the WBG team responsible for preparing the 2nd draft and comment again during the next round of e-consultations. The more recommendations which can be made as to M&E indicators at this time, the easier will it be for the WBG team to capture the full breadth of all parties' concerns in their coming draft, which will also include a revised commitments section in line with the expanded list of indicators under the M&E section. Thanks, Richard Aitken posted 19 August 2010 by Richard Aitken from email

K.G. OFOSU-BUDU Palm oil processing waste management I am interested in how the waste generated in the processing of palm oil, such as the palm Oil Mill effluent (POME) is treated and disposed off. Since this liquid is a pollutant, we have to examine efficient ways of recycling this liquid, before disposing to the environment. With the anticipated increase in palm oil processing by small and medium scale oil mills in developing countries, education on how these liquid waste can be properly managed before disposal to the

environment would be very important. Currently, POME is not treated but released to the environment (streams) by the small scale palm oil processors, thus polluting these water bodies in most developing countries in West Africa posted 11 August 2010 by K.G. Ofosu-Budu from email

FRANCESCO TRAMONTIN Palm oil consultation Below some very general remarks on the first suggested topic: The global context and diagnostic of the Palm Oil Sector. a) Is the context analysis a balances perspective on the Palm Oil sector, weighing enough economic, social, environmental, cultural and policy concerns? Yes b) Are critical issues well defined and established on solid information and analysis? The analysis is well done and covers in general key sustainability concerns relating to palm oil production. A number of specific issues are omitted or treated lightly. They are all at the very core of the debate around palm oil and of concern of both industry and environmental organizations: Acceptance of RSPO standards and in particular the debate around GHG criteria Options and opportunities for implementation of a moratorium on further deforestation in Indonesia Certification: What is the end game? Cost of segregation in the supply chain? Realistic scenarios? Role of RSPO: standard setting and/or governance body?

c) Are key aspects of the palm oil sector missing? Key general aspects seem to be covered d) Are the stakeholder perspectives on the Palm Oil sector considered adequately In general yes but some key specific challenges put forward by some stakeholders are not explicitly addressed (see b) posted 11 August 2010 by Francesco Tramontin from email

BOLADALE ABIOLA ADEBOWALE WBG's Framework for Engagement in the Oil Palm Sector Dear All, I have followed the discussions closely and will not want to re invent the wheels. The document has been well put together in addition to all the robust inputs we have had thus far. Here are a few comments and questions to add to the on-going discussions. 1. Southeast Asia and Africa have experienced such definite divergence in development paths and performance in the last 50 years in the Oil Palm industry. Are there lessons to be learnt

from the rapid progress made by these countries given the fact that oil palm is indigenous to Africa? For instance, the government of Malaysia had used policy as a coordination mechanism to force all the actors to work together for a common goal. Hence, we can begin to think of more targeted policies that are integrated into the national economic policy of each concerned country. 2. What are the nature and characteristics of the sectoral systems of innovation that support the development of the sector? 3. Private investment implantation development in Nigeria started in the 1920s, when the first estate was developed. Plantation estates were developed by the UAC in the late 1920s through the 1950s along with the development corporations of regional governments. The production of oil palm and products for both exportation and domestic consumption in Nigeria in the 1950s and early 1960s largely depended on the exploitation of the wild groves which represent 90 percent of total production. And today, majority of the sector is still small scale, not organized with 60 percent of production still generated from the wild groves. The absence of significant private sector investment has also proven to be a key missing link in the development of oil palm in Nigeria. Although the presidential initiative of 2003 has encouraged the participation of the private sector, the issue of physical infrastructural support amongst other factors has hindered the sector’s performance aside from the notion that the initiative favoured the cassava production system. How can the private sectors be engaged in a developing economy like Nigeria? Can incentive schemes be built into the policies that specifically affect the Oil Palm sector? 4. To ensure a vibrant performance in this sector, there is need to foster interactive linkage between all the actors and stakeholders thereby integrating the whole value chain process. Can we use the systems of innovation as a concept to achieve this? 5. Finally, what specific role does new technologies, in particular biotechnology plays? Thanks Boladale Abiola Adebowale posted 12 August 2010 by Boladale Abiola Adebowale from email

ROSEDIANA SUHARTO RE: WBG's Framework for Engagement in the Oil Palm Sector 1. Indonesia start to plan oil palm since the Dutch Colonial time , however since 1980 oil palm grow very fast it begins from WB assistant ,later government support , such as bank rate subsidy and many other incentives . Indonesia government use this moment to transmigrate poor people from the most crowded island of Jawa to Sumatera and Kalimantan. We have coordinated oil palm policy that supports the planting of oil palm. 2. Better planting material, good agricultural practices less implementation of pesticides, increase productivity and the development of new products.

3. Nigeria should offer incentives and clear land to be use with no confilcts ,establish the industry to need for Nigerian , involvement of smallholders from local people is also a good security surrounding 4. Right, the concept can be industrial cluster or Industrial area should be develop with incentive such as long tenure and cheap rate , better facilities (electricity , water, waste management etc) security. 5. Biotechnology was use to create better seed to increase productivity, short trees and use of all biomass for running the industry by their own electric power. posted 12 August 2010 by Rosediana Suharto from web RE: Oilpalm Development - Ecological considerations and mitigation options The RSPo HCV criteria is clear enough , and there a Team in Indonesia that study HCV and propose a clear criteria to use to identify HCV. In Indonesia most of the lowland forest was cut during 1967 for economic use , oil palm plantations are planted mostly on overlogged forest. If all of the lowland forest is catagorized as HCV so where can we develop our plantations. Some have also take a look of the cause of logged forest which mostly done by logging . Indonesia is a country at the beginning have quite big area of forest the forest are change not only for plantations but housing , airport school, infrastructure etc. The national parks is designed, where the most populated wild animal is close to it or in that area, like Tesso Nilo for elephants, Gunung Leuser for orangutan etc. It is not true if size of forest decreased than the amount of orangutan become less, now there are more than 55.000 orangutan exist in Aceh and Central Kalimantan. We agree to support the biodiversity that why we keep more than 21 millions ha land to be use for national parks. The loss of forest also due the poverty , the farmer need to live and to have a stabile earning, palm oil has prove that it can give better live. A developing country like Indonesia has about 32 million people who live under poverty line, so our priority is giving better life for our people, although we also take care of the wild life. Proposal on only plantations who conserve biodiversity can be support by IFC does not promote the main objectives of the World Bank Group which poverty alleviation. posted 19 August 2010 by Rosediana Suharto from web RE: Palm Oil Comments 1. How much of the growth came from palm oil? This can be seen from the world disappearance of 17 oils &fats which is in 2009 palm oil had absorbed by the world market about 45.2 million ton while in 2000 it only absorbed about 21,7 million ton. Compared to soya bean oil in 2009 the dissapearance is about 35.7 million ton while in 2000 is 25.1 million ton. This conclude that the demand of soyabean oil recently has been replaced by palm oil and its derivatives. 2. Within palm, oil, which demand segments -cooking oil, soap and detergents, oleochemicals, biodiesel, etc - contributed most to the growth? From Indonesia's point of view the demand segments which would contributed most to the economy growth would be from cooking oil (domestically Indonesia used 4-5 million tons of CPO). Also, over the two to three decades, how much private investments went into oil palm? Private investments or private plantations can be calculated from the land occupied by them which is half of the total oil palm plantation in Indonesia (3.8 million ha out of 7.5 million ha).

How much investments were spent for every direct job created in the farm sector? The average man hour needed for oil palm plantation are: - Land clearing and new planting : 112.64 man hour - First year : 95.32 man hour - Second year : 99.12 man hour - Third year : 97.62 man hour - Total man hour until 25 y.o : 2552.3 man hour Average : 102.1 man hour/ year The person working for oil palm plantation would have a salary based on Provincial Minimum Wage (Upah Minimum Propinsi/UMP) for instance the UMP for Riau Province would be IDR 1,016,000 in 2010. While UMP in West Kalimantan would be IDR 741,000 in 2010. posted 13 August 2010 by Rosediana Suharto from web RE: August 12 main points Dear Manuel, In relation to the points that you put forward during the discussions and response from many from some people, I also would like to give some information to what happened in the field, we the Indonesian Palm Oil Commission and World Agroforestry Center (ICRAF) are in the middle doing our research on Carbon Foot Print of Oil Palm Plantations and Social Economic of Oil Palm plantations in 13 provinces in Indonesia. Some of our finding, is smallholders in Indonesia is divided in 4 different mechanisms on how they organized, first plasma smallholders NES) together with rubber ( ex WB projects , this is very small in number which is about 400.000 ha and PIR trans about 360.000 ha), smallholders under KKPA ( cooperatives manage by big plantation under one roof ) ,smallholders under cooperative manage by themselves the total is about 527.000 ha and independent smallholders ( the area is quite large) . The Indonesian government has launched assistance for smallholders to a revitalization programme which include intensification, replanting with high productivity seeds and small area of expansion. About less than 2 million ha are independent smallholders. Independent smallholders can sell their fruit to any middlemen or mills who wants to buy it but most of them has their own buyers, while plasma smallholders can sell their fruits to the big plantations they have to pay their debt, if they already paid their debt they can sell anywhere they like. Many independent smallholders do not sell their fruit to local mills but through middlemen, because of the distance and transport cost. If there are smallholders which only sell to one mill that is not general case but case by case only. One of the main result of research that we found, palm oil can be a development agent and it is reduce poverty, by looking that most of the children can go to school some graduated from University, better house own transport and they also save money in the bank. But of course this money is not enough for replanting; WB and IFC should assist smallholders to an access of financial/bank, as micro credit. The biggest challenge face smallholders that they most of them do not have legal documents to show that land belong to them, this normally where dispute start. A clear definition who is local community and indigenous people must be discussed because in Indonesia every body is Indonesian citizen (with no different classes), I could not find any word classifying them as indigenous people in our law but related to customary rights. These smallholders need training on agronomy and later Good Agricultural Practices , since mostly they plant not only oil palm but rubber , cassava and some cocoa also the training should include the 4 crops. posted 16 August 2010 by Rosediana Suharto from web

HENRY BARLOW

Notes on Juan C. Espinosa’s comments I refer to Juan C. Espinosa’s thoughtful comments: 1. The implications of large scale monocrops are agreed. The only way in which this can be effectively addressed is by detailed regional planning exercises before land is made available for oil palm cultivation. This would also identify areas in the region which were for reasons of soil, climate or terrain unsuitable for OP, and would recommend control measures to ensure that the problems we have seen in Kalimantan, and appear also to be occurring in Colombia do not recur. IFC could certainly help with this and offer to assist national or regional governments to undertake such exercises. 2. Social control of sustainability standards. This is in theory highly desirable, but we must ensure that in the final decisions on what are likely to be contentious issues, adequate representation is given to people who understand the practical problems of running estates or smallholder schemes. On a slightly different point, I believe there is a serious omission in the paper, in terms of risk management of what has developed into a massive monoculture in SE Asia. We have so far been lucky (as we were with rubber in avoiding South American Leaf Blight) in that no lethal plant pathogens have appeared (although in some areas Ganoderma is regarded as a serious risk. )If such a pathogen were to appear in SE Asia and decimate oil palm stands, the social implications in SE Asia, not to mention world food supply problems would be enormous. There are a number of other oil bearing palms, chiefly from S. America which have not been properly assessed for their suitability as commercial oil producing crops. Serious thought should be given to making collections of these palms, to be planted out experimentally on small plots both in S. America and elsewhere where oil palms are grown, to assess their suitability as possible replacement crops in the event of a disaster as outlined above. The trials should investigate growth patterns, yield, suitable harvesting and extraction techniques and biochemical analysis of the oils produced for comparison with palm oil. The industry would thus be well placed to diversify if an emergency arose. Regards, Henry Barlow posted 12 August 2010 by Henry Barlow from email

JOHAN VERBUG RE: Objective and Themes in The Framework Thank you for the invitation to respond to the objectives and themes in the framework. STRONG points include: The key role for land use planning policies and regulations and the importance of an overall sufficiently strong governance context; The focus on generating benefits for smallholders especially through the financing of replanting with new seedlings and gap for increased productivity; Support for a participatory multi-stakeholder approach by private sector investors at the field level including local civil society (including free, prior and informed consent, which is explicitly embraced by rspo but as yet only hinted at here by wbg/ifc), and through multi-stakeholder codes such as the rspo at the international level (in pratice the 2nd and 4th theme may be partly overlapping!)

WEAK points: The "framework" is not the strong "strategy" anticipated. Although it contains an objective and 4 focus areas, it does not clearly set of from a strong vision on the sector and its mix of potential positives and negatives wrt sustainability and sustainable development. the poverty reduction mission of WBG seems to be strictly interpreted as generating jobs and income, not about protecting and developing poor people's assets e.g. land; The focus is largely on macro-economic development plus the role of oil palm smallholders, not on local sustainable development, at which level palm oil development - needed for global food security - may be competing for limited resources such as land, water and forest with other livelihood and subsistence activities - needed for local food security - of the wider local community beyond their role as export market oil palm smallholders; The policy framework leaves too many openings for escape into business as usual, too many "ifs". Should these be upgraded to "only if", then the policy would set clearer preconditions for investments and thereby better guarantees for sustainability safeguards and compliance with WBG mission, standards and (sector)policies.

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MISSING points in my view include: An analysis of the wider global context and WBG/IFC role in these, including climate change, greenhouse gases, biofuel markets, carbon finance, emerging markets for veg oils (China, India, Pakistan, Indonesia!); The role of FDI - e.g. Malaysian and Chinese - investors in Indonesia, Africa and Latin America; More specific attention for safeguarding and providing benefits to some vulnarable groups including labour, migrant labour, indigenous peoples, women, children and gender aspects of agricultural development in general.

I hope this helps for now, more later, Johan Verburg posted 16 August 2010 by Johan Verburg from web RE: Implementation approach, M&E, commitments section As Beth Gingold has already affirmed in this discussion topic yesterday, implementation approach and M&E largely depend on having clear objectives and strategy. And as I and others have argued in previous comments on objectives and themes, this is not yet a full-fledged strategy but rather a menu of options. In the consultation debate in Amsterdam I have used the picture of a seriously ill patient, judging from all the sector's symptoms presented to us in Teoh Cheng Hai's excellent paper. I have argued then that this patient needs a serious treatment plan (read: strategy), not a few tranquilizers (read: moratorium) and some plastic surgeory (read: business-as-usual in a new presentation only). And I argued it needed a diverse well-coordinated medical team (read: IFC, WB, private sector, local authorities, civil society, RSPO). The suggested menu of actions, therefore, needs a consistent multi-facetted implementation approach. I am providing two analyses and suggestions here, first on IFC-WB coordination and, second, on country specific action. A strengthened M&E framework can only follow later (it seems the authors of the framework document have been working in a similar pressure cooker environment as we currently seem to have in this e-consultation!). 1. IFC-WB coordination

The context analyses have shown that the challenge is to apply a consistent approach at company or field implementation level - by IFC - as well as national government policy level - by WB - while at the same time acknowledging that the issues we are trying to address here is at a third, intermediary level: the impact of the expanding palm oil sector is felt through externalities (deforestation, land conflicts) at the landscape level, i.e. larger than the company level, smaller than the national level. Only if the WB approach from the national level and the IFC approach from the company field level jointly work to achieve positive impact at that landscape level, the strategy is going to make a meaningful contribution to improvement. Otherwise it is partial treatment, giving the "patient" false hope. 2. Country tailored approaches The context analysis and various contributions to this consultation have highlighted the need to take a country-specific approach (by the way: some of few commonalities worldwide are the involvement of Malaysian and Chinese investors), weighing the enabling policy environment, sustainable development potential and private sector commitment to contribute to such responsible growth, civil society stakeholders' consent to oil palm development etc. N.B. For some of these conditions we would need to look at a province or region level (e.g. kabupaten level in Indonesia), not national. WB and IFC money would be best spent in locations that rank best on a number of such conditions. I am challenging WBG to conduct a ranking exercise that lists various countries and provinces or regions and develop investment plans for only the -say- top 10%. This would encourage the frontrunner responsible bupatis in Indonesia or responsible goverments in Latin American or African countries, while setting the benchmark for and challenging the those following or lagging behind. The same could be done with a ranking list of companies. And building on my previous point, obviously the best combination of company and location wins the sustainability award! The "patient" will thrive in the healthiest environment. Johan Verburg posted 19 August 2010 by Johan Verburg from web

BETH GINGOLD RE: Objective and Themes in The Framework Thank you for providing an opportunity to discuss in more detail the World Bank Group (WBG) framework’s objective and themes, building on the insightful comments from other participants. Previous comments (Stolle et al) noted the lack of clarity of the purpose and intended use of the document. The following changes in Section III p.11-14 would help address this weakness: Clarify the relationship between the proposed “framework” and a “comprehensive strategy.” The following comments are based on 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. See also comments by J. Verburg.

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Use the WBG’s mission (reducing poverty) as the overall objective of the WBG’s engagement in the sector. From this overall objective more specific “sub”-objectives can be specified and for each “sub”-objective the rationale and possible action can be clarified. Clarify the purpose of the framework by including an objective statement that explains how it will be used by the WBG. For example, “to enable the WBG to develop country-specific palm oil sector engagement strategies consistent with the WBG’s mission.” Include in the text the objective of the consultations that were held and how the results are/will be used. It is not clear if the objective of the consultations that were held were to “capture the views of a broad range of stakeholders” (p.12) about the palm oil sector in general or specifically to help the WBG develop a “comprehensive approach to palm oil investments” (p.3). Many commentators have already provided a wealth of information that would be critical for developing country- and sector- specific sector strategies in different regions (e.g. R. Suharto, J. Roman, B.A. Abiola, and others), although it remains unclear how the WBG intends to use this information in the context of developing this framework. Clarify the different roles the WBG can play in “engaging” in the sector, including by avoiding the term “invest” in the objective statement. A significant point of confusion during the stakeholder consultation resulted from lack of consistency in distinguishing between “investment” by the IFC and “engagement” by the World Bank. Aim for “Benefit Maximizing” for smallholders and communities, rather than “Benefit Sharing.” Maximizing benefits would take into account the fact that smallholders and communities experience both the benefits and the costs (economic, environmental, and social) generated by the sector (see comments from N. Jiwan). This framework divides activities that focus on economic “benefit sharing” into theme 3, and activities that address “social and environmental problems”—which also translate into economic costs, especially for vulnerable groups—into theme 1. This separate treatment could lead to developing strategies that overall increase (rather than reduce) poverty. posted 16 August 2010 by Beth Gingold from web

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RE: Implementation approach, M&E, commitments section Any “Implementation Approach” should be assessed according to whether it is consistent with clearly defined objectives. Given the lack of clarity regarding the objectives and intended use of this document (see my previous comments and Stolle et al), this section cannot be appropriately assessed until a revised document is provided by the World Bank Group (WBG) addressing these issues. In the meantime, some suggestions on this section (p.16-20) that could improve the ability of participants to meaningfully contribute in further discussions: • Clarify how the framework will be used, including by explaining what is meant by “implementation” and “commitments.” Since this document provides a framework (menu of possible options from which to choose), not a strategy (specific set of actions which can be implemented), it remains unclear what it would mean to “implement” the framework or what specific commitments are being made, particularly if engagement is client- rather than strategydriven. • Provide more details on the decision-making processes that will determine how the WBG will use the framework to develop specific strategies and ensure that these strategies are implemented appropriately by WBG staff. According to the document specific actions will be client-driven and based on where the WBG can have measurable development impacts. In order

for participants to assess whether such an approach would be consistent with the WBG’s mission, we need more information the Country Assistance Strategies and on how development impacts are measured, and instructions on where relevant information can be found (e.g. more information on the IFC’s Development Effectiveness Framework can be found here: http://www.ifc.org/ifcext/devresultsinvestments.nsf/Content/Evaluation_Framework). There is no information on how the WBG will ensure accountability once a strategy is developed. • Clarify the process of developing specific monitoring and evaluation (M&E) frameworks consistent with stated objectives. As also noted by other participants (e.g. J.C. Espinosa, R Aitken) appropriate M&E indicators need to be developed. It is unclear from the information provided in this document whether “current practices” are participatory, inclusive and transparent, and include public consultations or appropriate analysis (p.18). After objectives are clarified, this process should draw on ongoing research on micro-level impacts related to poverty reduction and social and environmental sustainability (e.g. CIFOR’s recent report on the socioeconomic impacts of palm oil (http://www.cifor.cgiar.org/Headlines/palm-oil-a-path-prosperity-poor-indonesians.htm) and private sector initiatives to design sustainability indicators for the sector (e.g. CIRAD, a research organization mentioned earlier, is working with industry on various projects to develop agricultural indicators for sustainable palm oil). Beth Gingold posted 18 August 2010 by Beth Gingold from web

JORGE ROMÁN Señores (Industria de Palma en Ecuador) Señores, La palma en Ecuador esta en manos de una gran cantidad de pequeños productores que tienen poca tecnología y que muchos de ellos sembraron semillas de baja calidad por falta de conocimiento o por haber sido engañados por personas inescrupulosas que les vendieron material ilegitimo. En esta época, los pequeños productores ya están concientes de la importancia de sembrar palmas de buena calidad y productivas, también están concientes de la necesidad de manejar eficientemente sus propiedades y de la necesidad de producir a los mismos niveles de las compañías grandes que usan buenas practicas agrícolas. Aquí se requiere establecer un programa de investigación en sanidad vegetal, en nutrición mineral y fertilización, en mejoramiento genético para obtener plantas resistentes a enfermedades. Se requiere promover la siembra de palma con pequeños productores en fincas deforestadas, especialmente aquellas que tengan potreros para mejorar el medio ambiente, sembrar palma es sembrar árboles que contribuyen eficientemente a la captura de CO2. Estas siembras deben ir acompañadas de un sólido programa de asistencia técnica al pequeño productor para asegurarle altos niveles de producción. Para lograr este objetivo se requiere un programa de financiación a largo plazo, con suficientes años de gracias para capital e intereses con el objeto de lograr un impacto positivo en el mejoramiento del nivel de vida pequeño productor y su familia. La palma es la oleaginosa mas eficiente en la producción de aceite por hectárea, si en un futuro se piensa en la producción de biocombustibles se debe pensar en sembrar palma ya que se obtiene la mayor producción de aceite por hectárea y se necesita menos cantidad de tierra sembrada que en cualquier otra oleaginosa. Por otro lado es muy importante considerar el uso de palma Hibrida proveniente de cruces entre Elais Guineensis y Elais Oleífera. Se requiere contar con material más resistente a plagas y

enfermedades. Se requiere hacer investigación que permita mayor eficiencia en el programa de manejo de estos híbridos que requieren condiciones especiales como es el caso de la polinización. La estrategia del Banco Mundial debe dar énfasis a estos puntos, los mismos que son muy importantes para el desarrollo del cultivo. Jorge Román posted 12 August 2010 by Jorge Roman from email

VIRGINIA IFEADIRO Dear All, I am Virginia from Nigeria. Many thanks for your constructive contributions. Issues from Nigeria are: Palm oil demand has increased as regards to supply. Improved waste management technology should be used. The communities/ beneficiaries should be well sensitized and consultated during the project design and also the CSOs working in the area. Market oppurtunities should be explored and improved seedling used. I hope that this counts, Regards posted 14 August 2010 by Virginia Ifeadiro from email

MARIAN BRADLEY RE: August 10 main points Manuel, thank you for your experiences and insights. The recommendations of the IFC strategy should be further articulated to reflect the potential development areas that you have identified which should probably include some sort of partnership arrangement with WB-IDA for financing smallholder development of oil palm. Regards, Marian posted 13 August 2010 by Marian Bradley from email

NORMAN JIWAN RE: August 10 main points Dear Manuel,

Thanks for sharing the 10 points. I would like to share and propose the discussions on migrant workers, women and child labour. Vulnerable Groups: Women, bonded labour and children. According to the Indonesian Ministry of Women’s Empowerment, the impact of oil palm plantations on rural women can include: (1) an increase in time and effort to carry out domestic chores through the loss of access to clean and adequate water and fuel wood and an increase in medical costs due to loss of access to medicinal plants obtained from gardens and forests; (2) loss of food and income from home gardens and cropping areas; (3) loss of indigenous knowledge and socio-cultural systems; and (4) an increase in domestic violence against women and children due to increased social and economic stresses. 1. There are a number of particularly vulnerable groups associated with the oil palm sector: It is estimated that there are between 40,000 and 50,000 stateless children of migrant workers in the plantations of Sarawak and Sabah. 2 Wives and children of plantation workers help their husbands and fathers to reach production targets or fulfil production obligations arising from sanctions, however their labours are not recognised and they have no workers benefits or insurance. There are cases of human trafficking of women forced to work in prostitution and sexual exploitation associated with oil palm plantations. Poverty and criminalisation is also associated with the oil palm sector in cases where individuals who lost access to land and livelihoods are criminalised for taking fallen fruit from plantations. The Strategy of the WBG and its investments in the old palm sector must include affirmative action to support these vulnerable groups. 1. Powerpoint presentation to a National Meeting on the Macro Effects of Biofuels by Dr. Ir. Hertomo Heroe of the Indonesian Ministry for Woman’s Empowerment, 12 August 2009, Jakarta. 2. http://www.necf.org.my/newsmaster.cfm?&menuid=45&parentid=144&action=view&retrieveid=9 78; Sabah’s migrant population has been estimated to be anywhere from 600,000 to 1.7 million (Nov 2007). Political expediency and the state’s historical ties have created longstanding illegal immigrant problem. Having no proper documentation and no access to educational opportunity, the stateless children of the migrants are facing bleak futures. Many of them were born locally and become street children once their parents are deported. posted 14 August 2010 by Norman Jiwan from email RE: August 12 main points Dear Manuel, Thanks for sharing your reactions. Indeed your interview with APKASINDO gave information from smallholder perspective (government-private sector-led association). You need to interview alternative realities and onthe-ground affeceted communities. Allow me to share additional stories and issues of concern from affected peoples and NGOs concerned with smallholders issues.

Problems facing smallholders: National oil palm development policies have typically favoured the establishment of large plantations and, even where policies are in theory scale neutral, economies of scale typically favour domination of the sector by large scale estates and mills. Even where smallholdings have been promoted as part of palm oil development plans, they are often disadvantaged in relation to mills and large estates. Moreover, the fact that oil palm fruits have to be processed within 48 hours of ripening to achieve a good yield severely limits the independent marketing options of smallholders. The WBG Strategy must adopt a clear approach that favours smallholders instead of large-scale enterprises and which ensures (1) crop choice, (2) farmer control of land and capital, (3) the provision of unbiased extension support, (4) adequate marketing support, (5) transparent and fair credit and pricing, and (6) freedom to organise. The situation of smallholders in Indonesia has been shown to be especially problematic. According to several field surveys as well as the testimony of farmers at numerous RSPO meetings, smallholders in Indonesia suffer from (1) monopsonistic relations with local mills, (2) unfair allocation of smallholdings, (3) untransparent processes of land titling, (4) high and manipulated debts, (5) unfair pricing, and (6) debt peonage. Recent studies show growing disparities between rich and poor in smallholder areas especially in Sumatra. A radical overhaul of Indonesia’s smallholder sector is required before a secure framework is in place that can ensure good development outcomes for smallholders. 1 http://news.bbc.co.uk/2/hi/asia-pacific/8534031.stm Best regards Norman Jiwan posted 14 August 2010 by Norman Jiwan from email Comments from Indigenous Peoples, Smallholders and NGOs - Norman Jiwan Note: we are sending this posting from Norman Jiwan which appears to have suffered from a problem in its distribution.

Comments from Indigenous Peoples, Smallholders and NGOs on the consultation draft ‘The World Bank Group’s Framework for Engagement in the Palm Oil Sector’ * Introduction It is some measure of the progress achieved so far by this review process about the World Bank’s engagement in the palm oil sector that the draft Framework document currently states that: The World Bank Group is aware of the sector’s negative environmental and social impacts, including deforestation, biodiversity loss, greenhouse gas emissions, land use conflicts and questions over land tenure and human rights.[1]

We note however that this awareness was not apparent when we began making complaints to the World Bank Group (WBG) about its involvement in the sector in the early 2000s, when despite our expressions of concern WBG persisted in providing financial support to companies acting contrary to both national laws and the IFC’s standards. Nor was it apparent when, even after our complaints had been taken up by the IFC’s own Compliance Advisory Ombudsman (CAO), the Executive Directors of the IFC continued to approve further such investments to the same companies also in violation of IFC procedures and Performance Standards. Indeed so absent was this awareness that the CAO concluded in 2009 that IFC’s engagement in the palm oil sector was being carried out in a way; Inconsistent with IFC’s asserted role, mandate in reducing poverty and improving lives, and a commitment to sustainable development.[2] Real awareness within the WBG of the problems with the sector only became apparent in August 2009, when, in response to the CAO’s highly critical audit and further appeals by NGOs, World Bank President Robert Zoellick wrote to us agreeing to freeze WBG funding to the palm oil sector pending ‘development of a comprehensive strategy to guide its involvement in the sector.’ He noted: It is clear that we must have higher levels of due diligence and clearer guidance to staff. That is why the action plan includes steps to ensure that similar projects are handled differently in the future. So, the main question that now needs to be answered is: given this late surge of awareness in WBG of the problematic nature of the palm oil sector and the admission of the need for a new approach, does the draft Framework provide adequate guidance to WBG staff to address these serious problems diligently? We appreciate that this second round of public consultations on the development of a World Bank’s policy toward oil palm is a response to our request for a more iterative engagement in the process.[3] In revising its review process, the WBG has: extended the time line for consultations; agreed to share its draft ‘Framework’ and receive comments on it via an email consultation process; has planned a further two-day consultation on the draft to be held in Frankfurt on 31st August to 1st September and; has set up both an External Advisory Group and a Discussants Panel to ensure diverse views are heard in the consultation process.[4] We also note that although the email consultation is being held in English and the final meeting is being held in Frankfurt, rather than in a palm oil producing country, at least the draft Framework document has been translated into Bahasa Indonesia. We also note that in response to our expressed concern, the draft framework does now seek to embrace the full World Bank Group (or at least the IDA/IBRD and the IFC). The fact that the WBG has proven responsive to some of our concerns encourages us to make this further submission. However it is our view that the current document as it stands fails to address substantively the issues that have been raised by us as complainants and concerned NGOs. Likewise it fails to address the concerns raised in the CAO audit which was carried out in response to our complaint. Finally, it fails to address the issues raised by us in the first round of consultations in our detailed Joint Statement which was supported by over 160 other organisations worldwide. It is our view that the weaknesses and omissions of the current draft are so great that it must be substantially revised to address these matters in detail and to develop a comprehensive strategy to guide WBG involvement in the palm oil sector. There will then need to be further consultations

to ascertain if the revised draft is adequate. In the meantime, the moratorium on WBG funding of the sector should be retained. We substantiate these points below.[5]** * General concerns: Process: Although the revised process has taken some steps to be more inclusive and iterative, the consultation process has nevertheless been very one-sided and hasty. It compares poorly with other World Bank Group policy review processes such as the Forest Policy Implementation Review and Strategy, the World Commission on Dams or the Extractive Industries Review. In summarising the outcome of the first round of consultations the draft framework claims there were ‘strong calls from stakeholders, urging the World Bank Group to re-engage and tackle some of the challenges facing the sector’. This may be true of some stakeholders, but a more balanced summary would also note that many other stakeholders, including ourselves,explicitly cautioned the Bank not to re-engage in financing the sector without strong measures to ensure compliance with safeguards and before first working with governments, stakeholders and rights holders to reform the inappropriate national legal, institutional and policy frameworks, which are causing all these problems. * A new strategy? Although the document does note some of the key problems in the palm oil sector and reaffirms the Bank’s overall commitments regarding poverty alleviation, good governance and respect for the environment, the proposed ‘framework’ does little more than restate the WBG’s existing policies and structure. It affirms the WBG’s current Agriculture Action Plan, restates the WBG’s normal procedures for developing national development strategies (CAS) and asserts that safeguards will be adhered to. None of this is more than business as usual. Indeed, the ‘framework’ as presented is not a ‘Strategy’ in the sense that the World Bank normally uses this term, which is what World Bank President Zoellick promised and indeed is what IFC staff promised Executive Directors that they would develop back in 2001.[6] Involving the whole World Bank Group Likewise, while accepting that the ‘framework’ does apply to the whole World Bank Group and summarising the potential complementarity between IDA/IBRD and IFC, the framework provides no clarity about how the two arms of the Bank will coordinate in practice. With respect to the IFC, the draft only restates that the Performance Standards will apply and that certification will be required (and see more below). However the document does not address how financial assistance to entities further down the supply chain will ensure that the palm oil being traded or used comes from acceptable or certified sources, given the challenges with reliably tracing the source of internationally traded palm oil.[7] It is left completely unclear what criteria the World Bank will use to develop Country Assistance Strategies (CAS), the main tool offered to address problems such as weak governance, corruption and inappropriate land tenure systems. In addition there is no clarification given about how the Operational Policies of the IDA/IBRD will be applied or assessed.[8] It is also unclear

how framework reforms will be achieved if countries choose not to ask for CAS or choose not to follow through on the recommendations made in the CAS. * Specific concerns * Developing national approaches Currently some 85% of globally traded palm oil comes from just two countries – Malaysia and Indonesia (and the main country where oil palm is expanding most rapidly is Indonesia) - yet the draft Framework provides no real guidance on how the WBG will address the serious legal, governance and human rights problems related to the palm oil sector in both these countries. The Framework barely mentions the problems in Malaysia nor does it clarify how the WBG will deal with the systemic issues in Indonesia identified by the submissions of the complainants and substantiated by CAO. Yet the World Bank President in his letter of August 2009 promised us that: * Development of the strategy will also provide an opportunity to analyze the broader issues you mention regarding the sector in Indonesia. There is no evidence that WBG has carried out any such analysis, much less is there any guidance in this document for WBG staff on what steps they should undertake to address such matters. Instead the draft Framework just says that: In major oil palm producing countries, the World Bank will, if requested by governments, engage in policy dialogue relevant to the palm oil sector as part of the design of the Country Assistance Strategy. The development of CAS is a routine part of WBG investment strategy. Yet clearly, to date, this has not prevented the WBG supporting the wrong kinds of investments. The document does not make clear how CAS processes will be different in the future nor does it provide clear guidance for WBG staff on the criteria that must be addressed in CAS for effective development of the sector. IFC may go it alone Indeed far from offering assurances that the WBG will pursue a phased approach – as we have suggested - to ensure that frameworks are reformed * before *new investments are made the draft document states that: IFC may invest in oil palm plantation operations and other palm oil sector companies even if the public sector legal/regulatory enabling environment is less than ideal, if IFC is convinced that the project will have strong and measurable development impacts and that any risks can be mitigated through other governmental or non-governmental programs, including other World Bank Group operations, if present (emphasis added). This is a formula for a repeat of the errors of the past. Restitution for past damages The audit by the CAO noted the long record of failure of the WBG’s involvement in the palm oil sector, especially in Indonesia. Since 1965, according to the draft document (page 30) the WBG has invested over US$2 billion in the oil palm sector, half of which was in Indonesia and Malaysia

the two countries where there are still the biggest problems with oil palm development notably in terms of dispossessed indigenous peoples and land conflicts. However, instead of focusing on addressing these problems, as we have recommended, the draft document instead proposes means for expanding areas under oil palm. However indigenous peoples and smallholders insist that the WBG should be addressing their existing problems caused by oil palm rather than creating further problems. Categorisation In his letter to NGOs on 28 August 2009, World Bank President Robert Zoellick noted: I share your views about the needs to revise categorization procedures… In recognition of the shortcomings of the previous [categorization] system, we are making this change, effective as of August 14,2009, to provide more precise guidance to staff. It is likely to result in categorizing these projects as an "A" or "B," depending on identified risks. This was a point we also emphasised in our own submission to the first round of consultations, recommending that as a matter of course investments related to palm oil should be categorised as ‘A’ so that due care is taken to ensure that the WBG safeguards (Operational Policies and Performance Standards) are adhered to scrupulously. The main part of the document however fails to address the issue of categorization while in the Annexes on page 44, the draft only notes that: All World Bank projects are categorized on the basis of the environmental and social risks associated with the project. Depending on the assessment of environmental and social. impacts and risks, projects may require Environmental Assessments and/or Environmental Management Plans to be prepared and implemented. Again, this is just business as usual and it seems WBG staff drafting the document have overlooked the guarantees given by the World Bank President assuring us of a new approach, at least with regards to palm oil. Triggering of safeguards In our own submission to the first round of consultations we recommended that the draft strategy should provide clear guidance on how safeguards should be ‘triggered’ to ensure due diligence and development effectiveness. Specifically we recommended that: Any palm oil investment should thus trigger all or most of the IFC Performance Standards and World Bank Operational Policies…. In particular in accordance with the IFC PS/ IBRD OPs requirements, clients must: • comply with applicable national laws, including host country obligations under international law; • carry out and implement comprehensive social and environmental impact assessments; • avoid any forced resettlement; • acquire land through due process and through negotiated agreements; • avoid land conflicts and resolve outstanding ones; • respect indigenous peoples’ rights;

• foster good faith negotiations with them and ensure free, prior and informed consultations; and develop an indigenous peoples’ development plan; • pay special attention to threatened habitats, species and ecosystems and avoid conversion of critical habitats. However, beyond restating existing WBG policies, these issues are not addressed substantively in the draft ‘framework’ document. Accountability of staff for non-compliance The CAO’s audit had shown that staff had allowed financial considerations to override social and environmental concerns, implying that staff feel they are under greater pressure to move money than carry out due diligence. Accordingly in our own submission we recommended that the new strategy should provide means by which WBG staff are: held accountable for any failures to adhere to the IFC’s Performance Standards and World Bank Operational Policies or relevant national laws and regulations The draft Framework makes no proposals about how staff incentives will be changed to ensure greater diligence in following WBG procedures. * Uphold RSPO standard We appreciate that the draft Framework includes commitments to upholding the standard of the Roundtable on Sustainable Palm Oil. However, in our own submission to the first round of consultations, we had noted that the IFC Performance Standards and WB Operational Policies differ from the RSPO’s Principles and Criteria in a number of respects, most notably with respect to recognition of customary rights and recognition of the right to Free, Prior and Informed Consent. We recommended the setting up of a multi-stakeholder Working Group to assess the compatibility between IFC PS and WB OP on the one hand and RSPO P&C on the other. The framework document fails to address this issue We note that the document does assert that IFC will only make direct investment in oil palm plantations if: The client’s operations are certified for sustainable palm oil production according to an internationally-recognized certification scheme, or have a time bound action plan to achieve such certification.[9] However, (unlike the WBG strategy and policies on forests which also relies on certification to assure sound timber production), this draft framework on palm oil does not then go on to spell out what criteria staff should use to decide if a certification scheme is acceptable or not. We are also very concerned that the weak requirement for having a ‘time-bound action plan’ is wide open to abuse and / or mis-interpretation by both staff and clients. Making Free, Prior and Informed Consent mandatory In our earlier submissions we recommended that, pending a revision of WBG policies in line with international laws, at least with respect to the palm oil sector and consistent with standard of the RSPO, the strategy should require that no lands are used for oil palm plantations without communities’ Free, Prior and Informed Consent.

The draft framework, however, avoids addressing this issue even though in the summary of the consultations (Annexes page 23) the document does note that Full adherence to the concept of Free Prior Informed Consent by investors in the palm oil sector was seen as essential by many of the stakeholders. Absent standards There are a series of further serious omissions in the document, all of which were raised by the complaint, the audit and/ or in the first round of consultations. Critical issues which were raised in the consultations but on which the draft document fails to give useful guidance to WBG staff include: The need to involve local people in land use planning (not addressed) No forced resettlement to make way for palm oil (not addressed) In line with the recommendations on the UN Committee on the Elimination of Racial Discrimination, not invest where lands are taken by invoking the State’s power of eminent domain (not addressed) Ensure special measures to secure the rights of indigenous peoples (not addressed) Resolve existing land use conflicts (not addressed) Provide measures to protect the rights of women, bonded labour and stateless children (not addressed). Protecting the interests of smallholders It is indeed the case that small scale palm oil development can under the right circumstances provide incomes to smallholders and thus help lift people out of poverty. On the other hand there is extensive documentation that shows that under the wrong circumstances communities can be seriously affected by oil palm development, for example by losing their lands and alternative livelihoods, and by being encumbered with debts, thereby becoming immiserated. As we have noted, serious human rights violations result and land conflicts are widespread: some of these problems are noted on page 9 of the document. The draft framework does emphasise the importance of improved benefit sharing and smallholder development as a goal of future WBG engagement in the sector (page 13) and it summarises some of the issues that could be addressed to attain better outcomes (page 15), such as provision of advisory services and improved project design (page 17). However it is our view that this approach is inadequate to address the existing problems of smallholders many of whom currently face very difficult situations which need to be addressed by changing national laws and policies and resolving conflicts over land. These issues need to be addressed first, before WBG considers further investment in the sector. * Securing High Conservation Values The draft framework does note that the WBG supports measures to ensure that planting will gradually shift away from forested areas with high conservation values,[10] and also notes that the IFC will engage ‘earlier in plantation planning …(for) ensuring that Critical Habitat/High Conservation Value habitat is protected’.[11] However, in our own submission to the first round of comments we noted that the current legal framework in Indonesia does not provide legal means to protect HCVs in areas permitted for plantations so companies seeking to follow the RSPO standard are finding that government agencies are taking these unplanted areas off them and handing them to less scrupulous companies to develop.

The draft framework does not explain how it will address such issues and offers no guidance for staff on how the concept of High Conservation Values should be addressed in applying the Operational Policies and Performance Standards (which do not use this concept but instead use the as yet undefined concept of ‘critical habitat’). This is despite the fact that in the Annexes the document does note that the ‘lack of clarity about what constitutes high-value conservation forest was raised as an important issue for resolution’ (page 22). Climate responsibility It is a fact that forest and peatland clearance for oil palm plantations is a major cause of the extremely high green house gas emissions from SE Asia, notably Sarawak and Indonesia. In our own submission to the first round of consultations we noted that The WBG Strategy should proscribe any expansion of oil palm in areas classed as forests and should prohibit any planting on peat. A credible and effective procedure needs to be developed to screen national land use policies, ensure carbon audits and avert ‘leakage’. * However, the draft framework, beyond acknowledging the problem of green house gas emissions from clearance (pages 3 and 9), provides no guidance whatsoever to WBG staff on how they should address this challenge.[12] This seems to us to be the height of irresponsibility. At a time when the WBG is seeking to take a lead on measures to reduce emissions from deforestation and forest degradation through its Forest Carbon Partnership Facility and Forest Investment Program, it is simultaneously developing an approach to assist further land use change for palm oil without taking the climate issue into account in any meaningful way. Participatory M&E One of the clearest conclusions that comes from reading the CAO’s audit is that for a new approach to be effective the WBG needs to make a commitment to first develop country specific data about the sector which could provide a baseline against which development impact, and the success of the new "strategy", could be monitored and evaluated. In our own submission to the first round of consultations we noted that: Any WBG Strategy for re-engagement in the palm oil sector must be designed to achieve demonstrable gains for poor people and threatened environments and must ensure that investments prioritise the needs and rights of local communities. The Strategy must therefore: • Establish these (as underlined) as clear and measurable objectives; • Clarify standards, baselines and indicators against which achievement of these objectives can be assessed; • Include country strategies (at least for the main palm oil producing countries) which address the specific obstacles identified in the complaint and audit and through the consultations; • Set out a process by which progress will be monitored in an inclusive manner involving all relevant stakeholders. In our view the draft Framework almost entirely lacks these basic requirements nor is there any mention of any plan of the WBG to follow through with a more inclusive approach. Indeed some of the indicators noted in Table 3 (page 19) seem extraordinarily superficial. The WBG would

measure improvements in the regulatory and policy environment by noting "the number of stakeholder dialogues", and "the number of countries who have undertaken agreed activities such as E&S assessments". Conclusion The draft document is indeed not a strategy for WBG engagement in the palm oil sector but only provides a very weak framework for such a strategy. It is clear that neither the IFC not the World Bank have yet been able to seriously address the issues raised by the complainants, the CAO audit and the first round of consultations. Accordingly, we request that such a strategy is indeed developed, with further engagement with stakeholders, but in the meantime the moratorium on WBG investment in the sector must be retained. Signed: Forest Peoples Programme, UK Sawit Watch, Indonesia SETARA Jambi Community Alliance for Pulp and Paper Advocacy (CAPPA) Lembaga GEMAWAN, Pontianak, Kalimantan Barat Serikat Petani Kelapa Sawit Kalimantan Barat (SPKS Kalbar, Sanggau) Jaringan Kerja Pemetaan Partisipatif, Bogor Down to Earth (DTE), UK HuMA, Jakarta Scale Up, Riau Mitra LH Kalimantan Tengah CC. Executive Directors of the World Bank Group.

[1] Draft framework page 3. [2] CAO 2010:2. [3] Joint http://www.forestpeoples.org/documents/ifiigo/ifcwbgngopalmoilmay2010_eng.pdf Statement.

[4] We note that we still harbour uncertainties about how the EAG and Discussant groups were selected by the WBG. We are also very unclear why the final consultation is being held in Europe meaning there will be limited participation by palm oil affected parties from Malaysia and Indonesia.

[5] These comments were developed by pooling our concerns through an email consultation and then at one day meeting, held in Bogor on 12th August 2010, of many of the lead signatories of the original complaint. [6] CAO audit report: pages 24 and 27. [7] Page 14 of the draft Framework notes the problem of traceability but the framework offers no solution nor does it suggest any criteria which staff should use to avoid investing in risky supply chains except that they must satisfy themselves that the client is knowledgeable of the risks and seeking to secure palm oil from certified sources (page 17). [8] The document only says ‘For the World Bank, the final selection of indicators will follow as activities are selected (page 18), which we take to mean that World Bank staff have not yet given time to thinking through seriously how they are going to address the problems confronting the sector. [9] Draft document page 17. [10] Draft document Page 3. [11] Repeated on page 5 and 17. [12] This is especially important as the current RSPO standard does not address GHG emissions adequately and an RSPO GHG working group has so failed to agree standards. posted 20 August 2010 by Palm Oil Administrator from web

R. GOODLAND Comments on WBG's draft Palm Oil Framework Comments for the consultation by R. Goodland (RbtGoodland@gmail.org) respectfully submitted on:13 August 2010 [Note: Pagination refers to the page numbers in the 46-page WBG Framework. The text of the Framework has been placed between ( ), followed by my comments.] (P.3: The World Bank Group, with its primary mission of poverty reduction, sees the palm oil sector as an important contributor to furthering economic development in many developing countries.) The Framework needs to make the case that palm oil projects reduce poverty more than a similar investment elsewhere. That case has not yet been made convincingly in the current draft. (P.3: The World Bank Group is aware of the sector’s negative environmental and social impacts, including deforestation, biodiversity loss, greenhouse gas emissions, land use conflicts, and questions over land tenure and human rights.) Such awareness must be very recent as IFC denied the sector’s negative impacts by categorizing the Wilmar, Bertin industrial cattle ranching, monoculture Maggi soy and other damaging projects as ESA Category “B” until brought to book by CAO and others. (P.3: Recent civil society organization complaints to the Office of the Compliance Advisor/Ombudsman in relation to IFC’s handling of four downstream investments (in a palm oil

trader and a refinery), as well as a complaint to the Inspection Panel regarding a World Bank smallholder oil palm program have raised concerns about sustainability issues. The World Bank Group recognized the legitimacy of these concerns and in response temporarily suspended any new investments in the palm oil sector.) It should not need CAO reports, massive outcries and complaints for the WBG to ‘recognize the legitimacy of these concerns’. The Knowledge Bank should be aware of such basic facts in advance, especially if it is to offer advisory services. These negative impacts are all too well known worldwide, and have been known inside the WBG at least since US Congress (led by Rep. Henry Reuss) pressured WBG President Robert McNamara on Malaysia’s massive Jengka Triangle oil palm projects in the 1970s. (P.4: A Common Approach... In particular, IFC will only invest in plantation operations that are certified for sustainable palm oil production according to an internationally-recognized certification scheme, or have a time-bound action plan to achieve such certification.) This is too risky. It is well known that development agencies have highest leverage up to and just before Board approval. Once approved, such pari passu leverage and interest wanes fast. Timebound action plans to achieve certain standards usually fail in such cases. Only part of the action plan is divulged. How the client is progressing to meet action plans is never divulged by IFC. (P.5: World Bank Group Commitments Key actions could include: working with governments to implement land registration systems, build capacity for environmental and social impact assessment and regulation, strengthen forest and land governance and administration and increase productivity.) Commitments and key actions could include a lot of good stuff. That is inadequate at this stage. IFC has been caught violating its own policies. The time has come to clarify what specifics IFC will firmly commit to in order to prevent such social and environmental damage and violations in the future. (P.6: Concerns about sustainability-related issues in the sector were highlighted by the IFC’s Office of the Compliance Advisor, the World Bank’s inspection panel, and civil society organizations and prompted a temporary moratorium in November 2009 on new World Bank Group investments in the palm oil sector pending development of a more strategic approach to engagement in the sector.) [a] Is this “Framework” document supposed to be the strategic approach mandated by President Zoellick, and fostered by the unprecedented moratorium? The document is entitled Framework, but in places a strategy is hinted at. The e-mail address for comments on the Framework is “Strategy”. Clearly a strategy or even a policy is required if the recent massive impacts of IFCs investments leading to the moratorium are to be prevented in the future. [b] IFC’s Compliance Adviser’s evaluation of IFC’s oil palm investments was kept secret for months before they were only partially released. CAO convincingly showed that corporate pressures had repeatedly trumped social and environmental concerns, starting with what is commonly IFCs weakest point, miscategorization for the Environmental and Social Assessment (ESA). Categorization as the ESA Category “B” of any project a priori likely to impact fairly intact tropical forest, likely to impact Indigenous Peoples, likely to emit significant GHG from forest removal, burning or peats, involuntary displacement—all should be systematically categorized as “A”. IFC’s AMaggi soy monoculture investment in the Amazon forest region, IFC’s Bertin industrial cattle ranching in Amazon forest region, and most, if not all oil palm projects, should routinely be classified as “A”. IFC categorized them all as “B” and refused to categorize them prudently without prolonged pressures, complaints, CAO investigations etc. All branches of the WBG should be enhancing prudentiary measures, rather than struggling to lower the standards.

[c] In addition, the CAO’s reports, the Inspection Panels reports and the complaints need to be included in full in the new oil palm Framework as annexes, or at least with easy-to-use links. [d] CAOs findings -- that IFC systematically violated its own standards and policies -- need to rectified and stringently prevented in the future. Therefore, this Framework needs to specify precisely how the CAO-identified policy violations will be prevented in future. (P.6: The World Bank Group’s engagement in the palm oil sector is consistent with its mission to fight poverty without compromising economic, environmental and social sustainability.) Clearly not, or not yet. This claim is worrying. The Framework seeks to make WBG’s engagement consistent etc., but it’s a long way from achieving that as yet. The moratorium was commendably imposed on IFC precisely because IFC was refusing to follow its own standards and normal precautions. The CAO, IP and other evaluations showed that IFCs projects were exacerbating poverty and wreaking much environmental damage. (P.15: Table 1: A Summary of Possible World Bank Group Interventions under the Four Themes and Their Relation to Feedback from Consultations.) A menu of possible options is not what is needed at this stage. This Framework has been drafted precisely because IFC has been caught violating its own policies and standards. At this stage, firm commitments are needed, not “possible interventions.” (P.18: IFC may invest in oil palm plantation operations and other palm oil sector companies even if the public sector legal/regulatory enabling environment is less than ideal, if IFC is convinced that the project will have strong and measurable development impacts and that any risks can be mitigated through other governmental or non-governmental programs, including other World Bank Group operations, if present.) This has been tried by IFC and has failed. Post-approval leverage to foster compliance with pari passu action plans is weak at best. IFC needs to ensure that the design of projects it supports is as prudent as possible in advance, and that it has reduced all possible risks to a low or acceptable state. See comment on P.4 (above) on the risks of resorting to such pari passu aspirations. (P. 18: …any risks can be mitigated through other governmental or non-governmental programs, including other World Bank Group operations, if present.) Up until now this statement is false. IFC has failed to mitigate risks such as destruction of forest, impacts in Indigenous and other poor people, harming GHG sequestration and forest fires etc, that’s why the moratorium was imposed on IFC. The moratorium is IBRD/IDA’s way of stopping IFC from creating more damage until their procedures are upgraded, fully agreed upon and conscientiously implemented by IFC, preferably with independent third party verification. The Framework as currently drafted could reduce risks further, but that would be insufficient. At this stage, in view of IFCs violations and irreversible damage as exposed by the CAO and others, the new strategy must ensure that: (a) no more forest is destroyed; (b) no more Indigenous People or poor re harmed; (c) no more GHG sequestration is impaired; (d) no more water is polluted. Clarifications and emphases on these basic priorities must be added to the next draft. (P.18: Last para: For the World Bank, the final selection of indicators will follow as activities are selected.) Despite all the Framework’s rhetoric about enhanced coordination between IFC and the rest of the WBG, this para suggests IFC prepared this Framework mainly on their own, but hopes IBRD/IDA will come in later.

(P.23: Issue regarding how companies and government agencies obtained consent for land use changes was a strong theme. …Full adherence to the concept of Free Prior Informed Consent by investors in the palm oil sector was seen as essential by many of the stakeholders.) If FPIC is considered essential, where is IFC’s response? As FPIC is so important to RSPO and many other stakeholders, does the WBG propose to follow the United Nations Declaration (UNDRIP) and accept FPIC, or will it persist in debasing the UN Declaration into FPIConsultation? IFC is supposed to be a member of RSPO in good standing. As IFC apparently does not accept FPIC, it is violating RSPO’s membership criteria of accepting FPIC. (P.31 & 32: These projects are not discussed in the review because at the time of the research, the projects were missing from the Bank’s information depository (Business Warehouse) due to a problem with the internal sector coding system.) I respectfully suggest the missing projects be found and their lessons learned be integrated into this Framework while still in draft. I suspect the comment on P.3 (above) refers to these or similar projects. (P.44: All World Bank projects are categorized on the basis of the environmental and social risks associated with the project. Depending on the assessment of environmental and social. impacts and risks, projects may require Environmental Assessments and/or Environmental Management Plans to be prepared and implemented.) In fact, as already mentioned, IFC rarely finds a project worthy of an ESA Category “A”. IFC classifies practically all of its forest-, Indigenous Peoples- and GHG emitting projects as Category “B” at least until the CAO or others show how imprudent IFCs classification is. If IFC wants to promote sustainability and prudence, while reducing risks to environment or humans, it will classify any proposed project as a Category “A” that may impact or otherwise affect Indigenous Peoples, forest or GHG sequestration capacity, or any projects needing involuntary resettlement. Conclusion: Three Gaps in the Draft Framework 1. Definition of ‘degraded’ sites: The Strategy or Framework should emphasize clearly that the WBG will decline to finance (or otherwise encourage) destruction of tropical, high conservation value, critical natural habitat, old-growth forest, secondary forest, hi-graded or selectively logged forest or other ecosystems, and impacts on Indigenous People. Further, that human displacement will be avoided or minimized, and that GHG emissions will be fully accounted beforehand, compensated for, and minimized. The sites on which oil palm, soy or other projects may be located must be scrupulously defined. Brazil’s commendable policy is to select ‘abandoned’ or ‘degraded’ sites only. That’s a good first step. In the WBG’s case how a proposed site was found to be suitably abandoned or sufficiently degraded needs to be explicitly described. There have been far too many cases in which nomadic ethnic groups have hidden from development officials or are in another part of their customary ambits during a visit. Similarly, some officials may opine that a forest from which some mature trees of one species have been removed – selective logging -- is sufficiently altered to be called ‘degraded’. The basic premise, now that climate risks have intensified, is that most forest still standing is providing GHG sequestration services which are more valuable than more oil palm. 2. Use of Vegetable Oils: This is a tricky one akin to claiming: “guns don’t kill people.” On the one hand, IFC will garner much support if they can show that oil palm investments directly reduce poverty; create jobs for the poor etc, while not causing environmental and social damage. On the other hand, if the main benefit of oil palm production is to fuel vehicles, IFC won’t get much support. Between these two extremes, if oil palm production makes corporations more profitable and a fraction of this profit eventually trickles down to the poor, support for IFC also is likely to be weak (except from multinationals). If oil palm based industries are created in-country, thus

diversifying products and expanding refining and processing benefits to the producing country, that would be a benefit. IFC should encourage domestic processing and value-added to the fullest extent possible. Indonesia rejected WBG advice a few years ago by thoughtfully imposing a ban on the export of crude undressed logs. As a result, Indonesia now has a thriving plywood, veneer, particle-board and finished wood products industry, along with massive wood processing jobs. As an ecologist, I haven’t a ready solution, but the problems are real and should be tackled. 3. Water Use and Pollution: Now that fresh water has become scarcer than at any time in history, its conservation has risen in priority. It may have been understandable in the 1950s and 1960s for palm oil producers to dispose of their extremely high BOD oil palm wastewater into the nearest creek. That era has long gone. Now even untreated sewage outfalls from coastal cities into the ocean are increasingly being banned. The time has come for IFC to lead palm oil producers into closed-cycle water management. This would conserve the supplies of water, while preventing the pollution of waterways below the oil palm factory. In addition, it would create secondary industries in recycling and use of waste products regained form wastewaters. posted 13 August 2010 by rbtgoodland@gmail.com from email

LARS GERARD HEIN Oilpalm Development - Ecological considerations and mitigation options Dear all, Following up on a number of previously discussed items, below are some ecological considerations regarding potential future IFC investments in oilpalm. The starting point for these considerations is that oilpalm offers great commerical potential, but that ensuring adequate environmental safeguards in a potential IFC investment program is neccessary to (i) protect interests of local people depending on ecosystem services; (ii) avoid very high CO2 emisisons related to peatland development; and (iii) preserve key high conservation value areas. Pls find below some first thoughts in this respect. WIth kind regards, Lars Hein THE NEED TO MORE EFFECTIVELY ENSURE EXCLUSION OF HIGH CONSERVATION VALUE FORESTS FROM PLANTATION DEVELOPMENT The problem. One of the key factors that, in my opinion, currently constrains the effectiveness of the RSPO criteria for mitigating impacts on biodiversity is that the criteria for high conservation value area are not sufficiently clear, and therefore their interpretation is prone to bias depending on the stakeholder assessing the conservation status of the forest. The distinction between primary and secondary forest is, in this regard, not helpful. In reality, almost all tropical lowland rainforest potentially suitable for palmoil is secondary rather than primary forest, and most of the secondary forest also contains important biodiversity and could be appointed as high conservation value forest. However, there are large variations in the ecological value of the secondary forest, as a function of for example the density of old growth trees, the degree of disturbance of flora and fauna, species composition, presence of highly threatened or conservation flagship species, etc. There is a need to ensure that the most biodiverse part of this secondary forest is not converted into palm oil plantations because much of the biodiversity of

tropical forests is not contained in national parks (for instance, around 75% of orang utan are believed to live outside national parks). The current RSPO criteria do not provide sufficient guidance for distinguishing the most important parts of the forest for biodiversity conservation. In addition, the conservation of key species such as the orangutan requires continuous habitat of adequate size. For example, in order to have a genetically resilient and viable population, orangutan populations should count at least some 2000 individuals. Typically, a lowland forest can support at most around 2 individuals per km2, hence conserving a population of orang utan requires at least some 1000 km2, or 100,000 ha. Therefore, it is important that area of high conservation value of adequate size are protected. There is a risk that, if conservation values are examined on a plot-by-plot basis (as with the current RSPO criteria), there is insufficient consideration for the importance of an area as part of the overall habitat of threatened species. For example, it may very well be that a forest that has by itself a low conservation value, but that links two areas of high conservation value, is critical for the preservation of a species - even though that would not show up in an assessment of the conservation value of the plot on itself. Potential response Below are two suggestions for approaches that could assist in ensuring that potential continuation of IFC support to the palm oil sector would not lead to a rapid loss of biodiversity and renewed debate on the external impacts of IFC programmes in this regard. - Further clarify and specify the criteria for high conservation value forest, in order to allow business to better comprehend, prior to making an investment decision on the purchase of acreage, the conservation value of an area. - To examine if the lowland forest areas that are of highest importance to nature conservation can be *demarcated*, and to inform businesses that no IFC support can be made available for any plantation development in these areas. Proposals for plantation development in such demarcated high conservation value areas should then not be considered for IFC support. Demarcation should follow the lines of reasonably trying to align the interests of businesses and nature conservationists, making sure upfront to businesses which areas would be off limit for IFC support, and which areas could potentially be supported for plantation development provided that all other cirteriua are met. Size of an area should also be a criteria, in view of the need to maintain habitats of minimal size for specific species. This would be a potentially effective way of mitigating impacts on biodiversity, while at the same time support business in their purchase of land, since there would be increased clarity upfront on the potential biodiversity value. Note that these zones would not necessarily be protected areas, as access from local people to these zones would not be restricted by appointing it as a zone where plantation development would not be supported. In my opinion, it is crucial to examine if the criteria for high conservation value forest can be made more concrete, and if off-limit areas could be demarcated, *before *the moratorium is lifted, both in the interest of effectively protecting biodiversity and in the interest of providing companies a level playing field and sufficient information to guide their business decisions. THE NEED FOR BETTER MONITORING OF FOREST TRENDS AND STATUS The problem. - There is still insufficient information on the development of the forest cover in a range of countries, including for example Indonesia and Congo, in order to monitor both the progress of investment in palmoil, and the effectiveness of conservation measures. Objective, up-to-date scientific data on forest cover is essential in the debate on oilpalm, for planning and policy making, and to generate a level playing field for businesses in which violations of land use plans and permits are being noticed. .

Potential response - A range of national and international (e.g. EU-ISPRA, FAO) research organisations have fragmented information on forest cover. There is a need to combine datasets, continue monitoring efforts over time, and make results available in-country. This may require a new program or institute, with long-term funding. The forest monitoring systems that have been put in place by the Brazilian government for the Amazon may serve as an example. Again, monitoring should be ensured before IFC investments can be continued, also in view of the need for IFC to record and explain the impacts of its activities. IFC SUPPORT TO BIODIVERSITY OFFSET PROGRAMS In addition to the above, there is a major opportunity to combine the lifting of the moratorium, once all safeguards have been put in place, with stimulating the development of market conform biodiversity offset programs. If IFC would commit to *finance oilpalm plantations only in case impacts on biodiversity are off-set* by the purchase of biodiversity credits in forest ecosystems, this would mean that a major step towards sustainable development could be made, supporting at the same time new business development, and the conservation of the most important forest areas. Clearly, biodiversity offsets do not reduce the need for applying other safeguards, but it would in principle be a very effective manner of mitigating biodiversity impacts. Biodiversityoffsets should be generated in areas with a relatively high conservation value and be implemented in collaboration with local people, i.e. involving support for sustainable forest management by forest dwellers or local users. This mechanism would be highly timely. For example, a wetland offset program has existed for several years in the US (conversion of wetlands requires the development of new ones - a mechanism that is of course not possible with forests that take a long time to grow and develop) There are currently also a number of initiatives offering biodiversity credits in tropical forests, possibly the most developed being the Malua Biobank in Malaysia. ( http://www.maluabank.com/ , 34,000 ha) . Further land has been available for developing biodiversity offsets, provided that the demand can be generated. The amount of compensation required would need to be examined (it can probably be less than 1 ha of credits for 1 ha of plantation because of a higher biodiversity in the areas developed for biodiversity credits), but in principle this mechanism can be developed in the very short term, since: (i) there are companies offering forest biodiversity credits; (ii) the principles underlying the offset program may be acceptable for businesses ; (iii) this scheme would create a level-playing field, for all companies supported through IFC, and (iv) this scheme is potentially highly effective because the areas of highest importance for biodiversity would yield most credits and be protected first. ON OILPALM IN AFRICA As oilpalm is native to West Africa and there is long experience with the local cultivation of this crop in the region, it is clear that environmental and social risks here can not be compared to the rapid development of large scale, new plantations in other parts of the world. However, this does not hold for Central Africa, where the oilpalm is not native, and where only recently large areas are being converted to oilpalm with unclear impacts on local people and biodiversity. Given the lack of national control mechanisms for avoiding and mitigating environmental and social impacts in most Central African countries, there is a major risk that comparable or worse problems will arise as have occurred in South-East Asia. Hence, there is a need to *distinguish between West and Central Africa* in designing strategies for dealing with environmental and social issues. posted 16 August 2010 by Lars Gerard Hein from email

LUKE MARRIOTT RE: Comments by Scott Poynton Until it is made clear whether the IFC supports RSPO and all their standards or not the situation remains confused. At the moment the IFC performance standards are not the same as RSPO – is this going to change? posted 16 August 2010 by Luke Marriott from email

MARCUS COLCHESTER Initial submission Dear WBG, Thank you for inviting my comments on the draft ‘framework’ on palm oil. I have the following short, interim contribution to make. A longer document justifying and amplifying these remarks is in preparation. I am using the format requested of strengths, weaknesses and omissions. Strengths - Does mention that WBG now aware of (some of) the problems in the sector - Does include whole WBG (but not really clear how IFC and WB will interact) - The consultation process has become more inclusive and has been extended (but now needs to be further extended – see below) - The draft document has been translated into Bahasa Indonesia Weaknesses - Exaggerates the consensus among stakeholders recommending WBG should re-engage in the sector. Some (many) of us urged a conditioned, cautious and phased approach. - The draft document is not a ‘strategy’ in the sense WBG uses the term - and as promised to Executive Directors back in 2001 - Criteria for CAS are not made clear - Does not suggest how WBG will address the well documented problems in Malaysia and Indonesia where 85% of palm oil is produced and most expansion in going on - Suggests that IFC may go it alone without adequate conditions - Is unclear about how future investments will be categorised - Is unclear about how safeguards will be triggered and unclear on what issues staff should be especially attentive - Is unclear about how IFC PS and WB OPs will be reconciled with RSPO P&C - Is unclear how land conflicts will be resolved - Puffs intention of WBG to support smallholders but says nothing about how their existing problems of debt bondage, land loss and immiseration will be addressed - Fails to clarify how HCVs will be protected where laws do not favour this - Does not resolve or even address difference between PS/OP measures re ‘critical habitats’ and RSPO language about ‘HCVs’ - Sets unclear targets, has no means of establishing baselines and includes only weak or ambiguous criteria for assessments, so meaningful M&E is not possible Omissions - Does not address issue of restitution for past damages - Does not suggest how staff will be held accountable for future procedural failures - Fails to respond to many issues raised in first round of consultations

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Does not make FPIC mandatory Does not suggest means of recognising customary rights in land (OPs and PS are not enough as we know) Does not proscribe land grabbing using eminent domain Does not proscribe forced resettlement Does not address specific concerns of women, bonded labour or stateless children Does not suggest how WBG should ensure participatory land use planning Completely omits meaningful discussion of climate responsibility Does not propose participatory M&E

Conclusion - A proper strategy is needed not just an unclear ‘Framework’ - The draft strategy would then need further discussion with stakeholders Regards Dr Marcus Colchester posted 17 August 2010 by Marcus Colchester from email

GUADALUPE RODRÍGUEZ RE: Initial submission Note: This posting from Salva la Selva contains 2 letters issued to the WB on 14 May 2010 and signed by 108 organizations, asking the WB to not finance palm oil plantations. ================================= http://www.salvalaselva.org Señores del Banco Mundial: ¡¡¡NO financien más plantaciones de palma!!! 14.05.2010 ¡Por favor, no más de esto! El aceite de palma, que se obtiene de los frutos de la palma africana (Elaeis guineensis), se ha convertido en un producto de importancia global para la producción de productos alimentarios, cosméticos, químicos y recientemente como materia prima para la producción de agrocombustible. La palma aceitera se cultiva en países con clima húmedo tropical y generalmente en forma de grandes plantaciones industriales o monocultivos insostenibles. Ya en febrero de 2009, el Movimiento Mundial por los Bosques y Salva la Selva apoyaron los reclamos de comunidades de la provincia Oro en Papua Nueva Guinea, que pedían al Banco Mundial que revisara las condiciones de un préstamo otorgado a ese país para que se promovieran alternativas a la palma aceitera, o bien que se cancelara dicho préstamo. La financiación de proyectos de palma aceitera estaba perjudicando incluso a pequeños productores de este cultivo, que se veían cada vez más entrampados en círculos viciosos de deudas cada vez mayores con grandes empresas. También los campesinos no relacionados con el sector de la palma resultaron enormemente perjudicados al ver cómo la intervención del Banco Mundial contribuía a replicar los problemas socioeconómicos existentes, con mayores impactos negativos. Este caso está siendo revisado por el Banco Mundial debido a las críticas surgidas.

Haciéndose eco de las crecientes críticas relativas a la insostenibilidad de las plantaciones de palma – no solo en Papua Nueva Guinea, sino también en Indonesia, Malasia, Laos, Uganda, Colombia, México, Guatemala, Ecuador, Perú por citar algunos países – el Banco Mundial tomó la decisión de congelar el financiamiento al sector palmicultor y ordenó una auditoría al Ombudsman de la IFC. Antes de continuar con la financiación de proyectos de palma, el BM ha iniciado una ronda de consultas con partes implicadas. El 17 y 18 de mayo de 2010 tendrá lugar una reunión en Costa Rica como parte de la elaboración de la estrategia del BM con respecto a la producción de aceite de palma. Pero en todo el mundo, organizaciones campesinas y de pueblos indígenas, movimientos sociales y grupos de la sociedad civil están ampliamente de acuerdo en que las plantaciones de aceite de palma no son ni serán nunca sostenibles (ver http://www.wrm.org.uy/plantaciones/Carta_RSPO.html), y que su proceso de certificación constituye “maquillaje verde” (ver http://www.wrm.org.uy/temas/Agrocombustibles/Declaracion_Internacional_RSPO.html). Lo que realmente se necesita es detener ya la expansión de los monocultivos de palma aceitera. ================================= Banco Mundial: ¡¡¡ NO financien más plantaciones de palma !!! Esta carta también ha sido firmada por 108 organizaciones (ver http://www.salvalaselva.org/protestaktion.php?id=580&zusatz=1) y 16 463 personas particulares de todo el mundo. De: Salva la Selva Guadalupe Rodríguez, Campaña de bosques y de energía A Coruña, Galicia, España guadalupe@salvalaselva.org www.salvalaselva.org Para: Banco Mundial / Corporación Financiera Internacional 2121 Pennsylvania Ave., NW, MSN 8P 807 Washington DC, 20433, USA Tel. + 1 202 458 0430 Fax: + 1 202 974 4338 palmoilstrategy@ifc.org

Berlin, 14 del mayo del 2010

Sras. y Sres. del Grupo del Banco Mundial: Con motivo de la reunión del Grupo del Banco Mundial en San José, Costa Rica, el 17 y 18 de mayo de 2010, en el marco del proceso de consultas para elaborar una estrategia con respecto a la producción de aceite de palma, esta institución manifiesta interés en recoger las preocupaciones de los afectados.

La expansión de las plantaciones de palma aceitera con destino a la producción de aceite comestible o para uso industrial, y últimamente para su conversión a agrocombutibles, tiene graves repercusiones ambientales y sociales para los pueblos, que incluyen deforestación masiva de selvas tropicales primarias, contaminación de la tierra y las aguas, condenables violaciones a los derechos humanos como desplazamiento de comunidades muchas veces de manera forzosa o engañosa o acaparamiento de tierras por parte de empresas transnacionales o terratenientes locales. Pruebas de ello pueden encontrarse exhaustivamente documentadas en Indonesia, Malasia, Papua Nueva Guinea, Laos, Uganda, Colombia,México, Guatemala, Ecuador, Perú por citar algunos países. En cierta medida el Grupo del Banco Mundial se hizo eco de las fuertes denuncias planteadas por organizaciones de la sociedad civil con relación al financiamiento de la IFC a la empresa palmicultora Wilmar Trading/Wilmar Internacional. El Banco tomó la decisión de congelar todo nuevo financiamiento al sector palmicultor y ordenó una auditoría al Ombudsman de la IFC. Pero ahora resulta preocupante que la presente ronda de consultas a partes involucradas tiene como finalidad elaborar una estrategia para continuar la participación del Banco Mundial en el sector de la palma aceitera. La necesidad real, fundamentada en el análisis y la comprobación del sufrimiento ecológico y social que provocan las plantaciones industriales de palma aceitera, hace necesario insistir en que están insertas en un modo de producción a gran escala, extractivista y con destino a la exportación, que es intrínsecamente insustentable –en el sentido genuino del término- y que no hay mejora que haga posible que cambie esa condición. Se trata, además, de un modo de producción y comercialización que, además de generar injusticias y devastación, requiere un uso intensivo de energía tanto para el manejo como para el traslado. En momentos en que el modelo de desarrollo predominante en el planeta lo ha empujado al desastre del cambio climático, los principales actores deben asumir la responsabilidad de cambiar este trágico curso. El Banco Mundial no puede seguir financiando proyectos social, ecológica y climáticamente inaceptables como el de la palma aceitera. Es hora de cambiar el rumbo. Las organizaciones campesinas y de pueblos indígenas, los movimientos sociales y los grupos de la sociedad civil están ampliamente de acuerdo en que las plantaciones de aceite de palma no son ni serán nunca sostenibles (ver http://www.wrm.org.uy/plantaciones/Carta_RSPO.html y http://www.wrm.org.uy/temas/Agrocombustibles/Declaracion_Internacional_RSPO.html). Por eso, lo que realmente se necesita es detener ya la expansión de los monocultivos de palma aceitera. Banco Mundial: ¡¡¡NO financien más plantaciones de palma!!! Atentamente, 1.Acción Ecológica, Ecuador 2.Acción por la Biodiversidad, Argentina 3.AMA Asociacion Indigena del Peru, Peru 4.Amazon Watch, USA 5.Amigos de la Tierra Europa, Friends of the Earth Europe 6.Amigos de la Tierra Buenos Aires, Argentina 7.Artemisa Comunicación Audiovisual, España

8.Asia-Pacific Campaign, Australian Conservation Foundation, Australia 9.Asociacion ANDES Cusco, Peru 10.Asociación Catalana de Ingeniería Sin Fronteras, España 11.Asociación Civil Amigate con tu Espacio La Plata, Argentina 12.Asociación Conservacionista Yiski, Costa Rica 13.Asociacion Consultora Psicologica Viva – PSIVIVA, Peru 14.Asociacion de Pequeños y Medianos Agricultores Organicos de Selva Baja, Peru 15.Asociación de Solidaridad con Colombia “Asoc Katio”, España 16.Asociación para el Desarrollo Agroecológico Regional, Nicaragua 17.Associação de Favelas de São Jose dos Campos, Brasil 18.ATTAC, España 19.Bharat Jan Vigyan Jatha, India 20.Biofuelwatch, Reino Unido 21.Bismarck Ramu Group BRG, Papua New Guinea 22.The Borneo Project, USA 23.Canadians for Action on Climate Change, Canadá 24.CENSAT Agua Viva – Amigos de la Tierra, Colombia 25.Center for Encounter and active Non-Violence, Austria 26.Centre for Environmental Law and Community Rights (CELCOR) Inc- FOEPNG, Papua Nueva Guinea 27.Centre for Orangutan Protection, Indonesia 28.Ciudadanos Autoconvocados contra las Represas de Posadas Misiones, Argentina 29.Coalición Mundial por los Bosques 30.Coecoceiba Amigos de la Tierra, Costa Rica 31.COICA Coordinadora de Organizaciones Indígenas de la Cuenca Amazónica 32.Colectivo Direccion Nacional ANUC_UR Colombia 33.Comité Cerezo, México 34.Comite Nacional pro Defensa de la Fauna y Flora, CODEFF, Amigos de la Tierra Chile 35.Comité Oscar Romero de Vigo, España 36.Comité Oscar Romero de Madrid, España 37.Comunidades Cristianas Populares del Estado Español, España 38.Consejo Civico de Organizaciones Populares e Indigenas de Honduras COPINH, Honduras 39.Consejo de Mujeres Nahua de Rivas, Nicaragua 40.Consejo Indígena Popular de Oaxaca “Ricardo Flores Magón”, CIPO-RFM, México 41.Consejos indigenas Nahuatl y Chorotegas, Nicaragua 42.Consumers’ Association of Penang (CAP), Malasia 43.Convergencia de Movimientos de los Pueblos de las Américas (COMPA) 44.Coordinador Nacional Agrario CNA, Colombia 45.The Corner House, UK 46.Corporación Ecológica “ECOQUILPUÉ”, Chile 47.CTC – Grito de los Excluidos, Venezuela 48.De Gaarde Foundation, Países Bajos 49.Ecological Internet, U.S.A. 50.ECOMUNIDADES, Red Ecologista Autónoma de la Cuenca de México 51.Ecoportal.net, Argentina 52.Ecositio, Argentina 53.Ecological Society of the Philippines 54.Ecologistas en Acción, España 55.The Entomological Society of Latia, Riga, Latvia 56.FEDICAMP, Nicaragua 57.Freunde der Naturvölker e.V./FdN (fPcN Germany)/ Friends of Peoples close to Nature” (fPcN interCultural), Alemania 58.Friends of the Earth, Japan 59.Fundación Ambiente Total FunAT Resistencia Chaco, Argentina

60.Fundacion Ecologica Tercer Mundo, Pedernales Manabi, Ecuador 61.Global Justice Ecology Project, USA 62.GRAIN, Internacional 63.Grupo de Trabajo Suiza Colombia /Arbeitsgruppe Schweiz Kolumbien ASK, Suiza 64.Grupo docente ECO´S – S.E.U. Universidad Nacional de Quilmes – Movimiento Agua y Juventud, Argentina 65.Grupo Semillas, Colombia 66.GrupoThunhupha, Bolivia 67.Indonesian Peasant Union, Indonesia 68.JKPP Bogor, Indonesia 69.Jubilee Australia 70.Maderas del Pueblo del Sureste, México 71.Magick River Community, Malaysia 72.Mangrove Action Project, USA/ Tailandia/ Indonesia 73.Marea Creciente, México 74.Movimiento Mundial Por los Bosques Tropicales /World Rainfores Movement, Internacional 75.New York Climate Action Network, USA 76.NOAH Friends of the Earth Denmark – Food and Agriculture Group, Denmark 77.OCEAN Community based Organizations in the Northern Province of Papua New Guinea CBOIs, Papua Nueva Guinea 78.Ong AFRICANDO, España 79.Ong-indigena Cocamas Cocamillas Luchando por el Desarrollo Sostenible, Perú 80.Organizacion Fraternal Negra Hondureña, OFRANEH, Honduras C.A. 81.Organización Indígena Mapuche LaKuTuN, Chile 82.Organizacion La Esperanza de las Mujeres Garifunas de Honduras, OLAMUGAH Honduras. C.A 83.Otros Mundos A.C./Amigos de la Tierra, México 84.Palm Oil Action Group, Australia 85.Plataforma de Solidaridad con Chiapas de Madrid, España 86.Plate-forme haïtienne de Plaidoyer pour un Développement Alternatif (PAPDA), Haiti 87.Proyecto Lemu de Epuyen-Chubut-Patagonia, Argentina 88.Programa Universitario México Nación Multicultural PUMC – UNAM 89.Rainforest Information Centre, Australia 90.RAPAL, Uruguay 91.Red Argentina por la Vida, Argentina 92.REDES- Amigos de la Tierra Uruguay 93.Red Jubileo Sur, México 94.Red Latinoamericana contra los Monocultivos de Arboles (RECOMA) 95.Rel-UITA Secretaría Regional Latinoamericana, Uruguay 96.Rettet den Regenwald, Alemania 97.Sahabat Alam Malaysia /Friends of the Earth Malaysia, Malasia 98.Salva la Selva, España 99.Sarawak Campaign Committee in Tokyo, Japan 100.Save My Future Foundation, Liberia 101.Society for Threatened Peoples, USA 102.South Asian Dialogues on Ecological Democracy, India 103.Southwest Workers Union, Estados Unidos 104.Terra Nossa Foundation, Holanda y Suiza 105.Tulele Peisa, Papua New Guinea 106.Unidad ecologia Salvadoreña UNES, El Salvador 107.Unión Argentina de Trabajadores Rurales y Estibadores, Argentina 108.Union Paysanne Québec, Canadá posted 17 August 2010 by Guadalupe Rodriguez from email

TOBI OGUNBAYO Nigeria oil palm production There is need for strong advocacy in the area of oil palm production in sub Saharan Africa precisely Nigeria as the farmers in the area of oil palm are reducing daily. Presently, the country imports oil palm and the demand is on the rise and with the increasing population at 2.8% per annum and estimated population of 150million people, the demand and market will be very huge. There is suitable soil and available demand. IFC should look into this. Tobi Ogunbayo posted 17 August 2010 by Tobi Ogunbayo from email

REUNIER FUNKE Comments on file 'Draft WBG Framework for Engagement in the Palm Oil Sector' As there are many contributions about a possible other model than the industrial estate, I like to draw attention to an almost 20 year old publication: “The environmental impact and sustainability of plantations in Sub-Saharan Africa: Ghana's experiences with oil-palm plantations” in the UN University Library by Edwin Gyasi. In particular the following section is relevant to the WBG discussion: http://www.unu.edu/unupress/unupbooks/80918e/80918E10.htm#Adverse environmental impacts and sustainability Best regards, Reynier Funke posted 17 August 2010 by Reynier Funke from email Spanish => German; an explanation in English to the "no" to plantations by 108 organisations The reference to the petition by 108 organizations against palm oil plantations was in Spanish but referred to a German website from Regenwald e.V. As we are based in Germany/Ghana, we know this organization well, and although we admire their persistence in protecting biodiversity etc., they are quite "one-sided" and do not really offer practical alternatives for wealth creation in the concerned countries (WWF does take a more realistic approach there). A well run hectare of palm oil can yield over USD 2000/yr (also with small holders), which even in Europe is for most farmers a very good income/hectare. The key point is "well run". In the past this was only possible with the economies of scale of large plantations, to which structures like international banks, but also IFC/WB are geared to (controllability/overhead per project). The task on hand is to develop alternative models that allow wealth creation in exisiting, non-plantation structures, where required, while still achieving doubling or tripling of yields. Its easier with a (small?) core plantation in the immediate "neighbourhood". Since 2007 QEW has tried very hard to improve yields etc. without such a core plantation, but financing this effort on a business basis has been virtually impossible. The development "aid" approach does not work either, because most programs do not run for more than a few years, and the oil palm business has to think in at least

15 years, i.e. there is not sufficient continuity. The exception to this rule has been the OPHIR project by KfW from 1980-2000 in Indonesia. A simple "NO" against plantations is not going to help anyone. Best regards, Reynier Funke posted 18 August 2010 by Reynier Funke from web

JOAO STACISHIN DE QUEIROZ Comments from Joao Stacishin de Queiroz Thank you for the invitation to participate in the review and construction of this extremely important and sensitive document. My comments follow: 1. Balance of contextual analysis: Based on my experience with oil palm in Ecuador in specific and South America in general I find the analysis to be rather unbalanced. There is much said about increasing income and job generation and economic growth; there is little said about lost livelihoods that are not necessarily related to "cash income." As my father used to say: "I am not poor, I just do not have any money." There is also no mention of cultural losses that when people that once derived their livelihoods from forests find themselves uncoupled from it and working for low wages in seasonal jobs under hardship conditions. There is also no mention made of the wealth-concentration impacts of a crop that is destined primarily for export and is often associated (in South America) with large corporations. The socio-and cultural ramifications are too numerous to name. Finally and fundamentally, the framework justifies investing in the oil palm sector primarily to foster economic growth and income generation. It would be more credible is instead of growth we focused in "economic development" as multifaceted. 2. Some critical - very critical - issues are not considered; chief among them negative effects in human health resulting not only from changes in eating habits and behavior, but environmental contamination by the use of agrochemicals. In No. Ecuador we have witnessed the virtual disappearance of a large number fish species and river shrimps that used to be an important source of protein to local people. Skin diseases, gastronomical disorders are now widespread. There has also been noticeable changes in diet - from natural to canned products. 3. The framework considers the African Palm production chain but pays little heed to all the other supply chains that are necessary for Oil Palm production. What about pesticide supply and production? 4. Also critical is that fact that African Palm produces better in wet areas - These happen to be high biodiversity areas - the framework does not consider the identification of absolute "no go areas." 5. Finally it is rather disappointing that the IFC will invest in countries with weak legal and regulatory frameworks. Indeed investment in those countries should be contingent the putting in place of these capacities and should serve as an incentive to the countries to do so. 6. With respect to the Indicator on mobilizing the private sector: There is not indicator of sustainability of the operation - neither social nor environmental.

Look forward to the discussions -Joao Stacishin de Queiroz, Ph.D posted 17 August 2010 by Joao de Queiroz from email

PEKKA TUOVINEN Comments to WB/IFC Palm Oil Consultation Neste Oil's comments on the draft for consultation: "The World Bank Group's Framework for Engagement in the Palm Oil Sector" The World Bank Group states in its draft report that "the palm oil sector has played a significant role advancing development and accelerating poverty reduction in the many tropical countries in which it is grown". The need for good governance, clear sustainability standards and policies are emphasized also in the report. The World Bank Group is looking after a sustainable approach to the palm oil sector through its international consultation process. Neste Oil has been a leader with environmentally cleaner traffic fuels since late 80's. Requirements for responsible production and clear standards of operation have been expanded to cover wider perspective of supply chain and during the last couple of years specific focus has been set on sustainability issues related to biofuel's feedstock production. We have been engaged with palm oil supply chain since 2005. In our experience World Bank Group has a very constructive and structured approach to tackle the complex issues and to reinforce positive impacts of palm oil industry on national economies and local peoples in producing countries. We would like to focus on the following areas in our comments: 1. Improving the productivity of smallholders: World Bank/IFC draft report for palm oil sector emphasizes that there is a huge yield gap between palm producers, with the best estates in Southeast Asia producing more than 7 t/ha and some smallholders producing less than half a ton. This gap exists at the production level due to deficiencies in crop and soil management and in the milling extraction rate. Smallholder yields tend to lag behind estates. Increasing the productivity of existing plantations has the potential to increase livelihood benefits for smallholders. Therefore, WB focuses in particular on broadening support for smallholders. Taking into account the importance of smallholders as the key contributor to the world palm oil production and main contributor in reducing poverty, Neste Oil welcomes this policy. 2. Smallholder financing and support for replanting There is an escalating need in the smallholder sector to focus on replanting palm over 25 years, or to replace low yielding palms. This will become more crucial in improving smallholder yields in the future. Neste Oil supports the co-operation of governments, IGOs and NGOs as well as financial institutions to facilitate the progress. Worldwide demand for vegetable oils is expected to increase by 36 percent from 2007 to 2017, with biofuels accounting for one-third of the increase. In parallel to that, international R&D efforts are developing alternative feedstock sources for renewable energy, such as ligno-cellulosic residual material from agriculture.

Concrete actions - with well coordinated multi-stakeholder approach - could include supporting the sustainability certification programmes successfully started for palm oil and now being implemented for soy production. We see the need for financial support and guidance for smallholders with replanting and good agricultural procedures. Need for replanting is increasing due to the late life cycle of smallholder palm trees. Equally important is to organise a multi partner programmes to ensure good agricultural practices for smallholders. 3. Supporting the RSPO Roundtable on Sustainable Palmoil (RSPO) is the only multi stakeholder approach in the palm oil industry with jointly agreed sustainability certification system. It forms also a platform for developing industry standards and resolving conflicts of interest of its stakeholders. We would like to highlight in this consultation three ways on how the RSPO can be further supported: a) Supporting RSPO to develop manageable certification schemes for smallholders, b) Strengthening RSPO's capacity to develop further a grievance procedure to resolve possible conflicts, especially regarding the land conflicts and c) Helping RSPO to increase auditing resources potentially in co operation with other institutional actors like national verification bodies in the end user countries. 4. Combining Palm Oil Framework with WB Energy Strategy The World Development Report on Agriculture (2008) notes that 75 percent of the world's poor live in rural areas and most of them are farmers. The report concludes that growth originating in agriculture has been three times more effective in raising the incomes of the poor than growth generated from other sectors. New, value added applications of agricultural products, such as liquid fuels and energy use, are able to speed up the desired process. Neste Oil would like to see that the potential of sustainable palm oil production is fully taken into account in the development of both the energy strategy and the framework for palm oil sector. In the latter, implementation plans with concrete, measurable targets for financing e.g. replanting (ha/year) would provide a transparent and clear indicator for the efficiency of the World Bank Group activities in the area. Pekka Tuovinen posted 18 August 2010 by Pekka Tuovinen from email

ANDRÉS ESPINOSA-FENWARTH RE: Tuesday 17 main issues Dear Manuel, You have put before us the following crucial query: There is a discussion on developing country responsibility and capacities linked to them. Let me just ask how to balance global concerns on the impact of palm oil on global public goods with the capacity of national government to make choices on what they feel right for their people. In reply to your question, it is worth recalling that a high level of investment is required to prepare, establish and maintain palm oil plantations and production infrastructure during the first three to

four unproductive years in developing producing countries. A general rule of thumb indicates that small scale palm producers do not have sufficient financial reserves or capital to invest in a risk atmosphere and wait for the first palm fruits to be harvested. Once this is done, palm fruits are sent to extraction plants for agro processing. The whole process is hence interdependent and linked where geographical closeness and transportation facilities are a key factor for final extraction yields. Based on the above, it is crystal clear that national governments in developing countries have a strong word and unique decision capabilities to drive this process towards a desired outcome for the right people, namely, small farmers. Public goods and infrastructure are closely connected to productivity and hence to financial success of the production model of small palm oil units. Government may steer the wheel in such way so as to promote areas of agricultural land apt or suitable especially for palm oil without deforesting, in which small scale farmers receive government incentives and financial support to join producers associations that are skillful in generating economies of scale. In return, these producer associations are encouraged to support local schools, medical facilities and housing for small farmers and their families. All in all, this small palm oil producer associative model is based heavily on social responsibility and sustainable producer practices amicable to our environment. Andrés Espinosa Fenwarth Colombia posted 18 August 2010 by Andrés Espinosa-Fenwarth from email

ALEJANDRA RUEDA Fedepalma comments on the draft for e- consultation “The World Bank Group's Framework for Engagement in the Oil Palm Sector Fedepalma comments on the draft for e- consultation “The World Bank Group's Framework for Engagement in the Oil Palm Sector” Fedepalma appreciates the effort the World Bank (WB) is doing with the Oil Palm Sector econsultation Process, to obtain the key elements which will define the future engagement of WB in this sector as well as the analysis, points of view and questions that the stakeholders have been posted. The approach of the WB covers general concerns related to Oil Palm industry and specific challenges faced in order to develop a sustainable industry. However, the way to tackle them is slightly cover in the document, specifically in aspects such as the transfer of technology, access to technical assistance and credit to smallholders, financial systems to support infrastructure development and replanting programs and finally, risk management or sanitary diseases, among others. It is important to clearly define the strategy through which the WB will support the development of oil palm sector even more knowing that palm oil is the vegetable oil with better yield and with less need for land. Fedepalma considers the World Bank Group’s objective in (re) engaging in the palm oil sector as a very important step and initiative to reduce poverty in some regions, specially where the WB resources has not been applied significantly to this sector. That is the case of Latin-America where very few projects were supported by WB, even though, Latin-America represents close to 6% of the world palm oil production.

In that order of ideas, we suggest developing a road map on how the IFC and the WB will implement the strategy and engage with governments and private sector in accordance to the characteristics of each country and their own challenges (since challenges in Malaysia and Indonesia are different than the Latin-American ones). On the other hand, it is important to clarify the scope of the WB and IFC with smallholders’ development and their communities, especially since the WB’s interest focuses on poverty reduction and “benefit sharing” based on certified plantations. In that specific matter, the WB’s must be aware of the complexity and high costs which means obtaining the certification for those small plantations. The definition of the four thematic areas is a first approximation of the issues the oil palm sector has to deal with. However, they don’t address the risk management, the transfer of technology or the R&D needed to face or to prevent, among others, lethal pathogen. Those are key elements which affect not only productivity but in general, the sustainable development of the Oil palm sector. On the other hand and related to some comments, we want to follow up on Mr. Andrés Espinosa remarks last week: Colombia has an important knowledge creating schemes where, mediumsized and large scale entrepreneurs develop strategic alliances with smallholders in order to reduce poverty, improve livelihoods and build synergies on behalf of progress. Despite the fact that in Colombia we use the alliance as a platform to deliver training, there is an increased need for technical knowledge. Consequently, it is essential the WB and IFC support to enhance the conditions of smallholder’s plantations and their communities as well as the inclusive models developed through the alliances. According to the notes posted by Mr. Juan Carlos Espinosa and Henry Barlow, it is important to clarify that in Colombia, the oil palm sector is developing, jointly with the Agriculture and Environmental Ministries and other private and governmental institutions, a map of suitable areas for the oil palm expansion in order to avoid land affectation and meet environmental regulations. In other words, the country is doing regional planning to ensure a sustainable agroindustry not only from the land use perspective but from many others. This work is close to its end, and we will obtain the results of it in a couple of months after two years of work. On the other hand, as Mr. Espinosa points out, the oil palm cultivation in Colombia has occurred “with no appreciable landuse change effects”. From the biodiversity perspective, it is important to note that Colombia is working on the adoption of biodiversity-friendly production systems in palm-growing farms. This project will contribute to protect and restore high value conservation areas in palm-growing regions, enhance their natural assets in the framework of regional conservation schemes, and improve local livelihoods with participation from social actors present in palm agro-ecosystems. Similarly, the Colombian oil palm agroindustry on its commitment with a sustainable development is implementing the CDM Sectorial Umbrella Project to capture methane and cogenerate, as a contribution to the global effort to protect the environment through the mitigation of GHG emissions within the framework of the Kyoto Protocol. From this perspective, we suggest the WB and IFC to include in its strategy financial support to carbon reduction initiatives that not only come from plantation itself but from the mills. Alejandra Rueda Zarate Fedepalma Colombia posted 18 August 2010 by Alejandra Rueda from email

FERNANDO LUKAUSKIS

RE: Fedepalma comments on the draft for e- consultation “The World Bank Group's Framework for Engagement in the Oil Palm Sector We would like to contribute with the World Bank consultation on oil palm with a prioritized regional demand. I want to inform you as well as to the people related to oil palm that in the last 3 years we have being building in Tropical America, an international platform for the oil palm sustainable development. This is FLIPA; the Latin American Fund for Oil Palm Innovation. Its current members are the National Associations of Colombia, Ecuador and Rep. Bolivariana de Venezuela; FLIPA has trough its partners a representation of more than 55% of the Latin American fresh fruit production. In this 3 years we have been taking into consideration many of the important issues you have been discussing in this consultation. we prioritized 4 important areas for working as a region. We will develop international projects in each one of them, as follows: 1- To improve competitiveness through the yield increase. "CFC/FLIPA project "Improving the Competitiveness of Small Scale Oil Palm Farmers in Latin America and the Caribbean - Bridging the Yield Gap" Starting project Jun 2010 - ending Jun 2014. Direct beneficiary countries are the small producers of three countries. Indirect beneficiaries: the tropical region. Supervisor entity: FAO. Administration by CIAT (CGIAR) 2- The oil palm crop development in some places of tropical America is at risk because of a disease. We have a world Phytosanitary problem (According to CABI U.K. institution) called "bud rot disease". Currently in FLIPA we are looking for world support to overcome this important problem and specifically we are proposing an international project with world participation. (economic and scientific resources needed) "Assessing options in managing the problems caused by bud rot diseases in the oil palm crop in Latin America" 3- In Genetic resources FLIPA has a proposal for a coordinated effort in the project "Prospecting of the Latin American oil palm Elaeis oleifera (Cortes) in the Amazon basin and northern South America." The project aims to search for, collect and identify different materials and their importance, differentiating characteristics to select and use the selected genetic material. Currently we are looking for international partners to support this initiative. 4- In FLIPA's national association members, we have the commitment to work according to RSPO principles in order to get an oil palm sustainable sector development. So we will support in a short time an initiative to promote the RSPO principles between the partners. I believe these initiatives converge totally with the World Bank Initiative for oil palm development. (Social, environmental and economic sustainable) so I would like to invite the World Bank initiative and the international oil palm community to join trough linkage points (projects) that could be lead by FLIPA, World Bank or others. We will be ready to respond to any collaborative initiative. Best Regards Fernando Lukauskis

posted 19 August 2010 by Fernando Lukauskis from email

MOHAMMED BUN BIDA RE: Fedepalma comments on the draft for e- consultation “The World Bank Group's Framework for Engagement in the Oil Palm Sector Dear one and all, Many thanks for all your comments i think it is very wonderful and useful comments you are making and will go a long way to help in building the industry. in Ghana we have a little to say as there is a little effforts by all stakeholder to Palm oil sector. keep it up. Bida Mohammed Bun Bida posted 19 August 2010 by mfcsashanti@gmail.com from email

ERIC PALOLA RE: Fedepalma comments on the draft for e- consultation “The World Bank Group's Framework for Engagement in the Oil Palm Sector August 18, 2010 Comments by the National Wildlife Federation on: “The World Bank Group’s Draft Framework for Engagement in the Palm Oil Sector” Eric Palola, Senior Director, Forests for Wildlife Barbara Bramble, Senior Advisor, International Affairs The National Wildlife Federation (NWF) is the largest membership supported conservation group in the U.S. with approximately four million members and supporters. NWF has been active in a variety of international conservation and development assistance programs since the inception of its international program in the 1980s. NWF has worked extensively on sector based reforms, certification systems, and sustainable development approaches for forest and agricultural based commodities and currently has leadership roles in the Roundtable on Sustainable Biofuels, the Forest Stewardship Council, and the Brazilian Working Group on Sustainable Livestock. We appreciate the efforts of the International Finance Corporation and the World Bank Group (WBG) to solicit input on the palm oil sector and its role in support of this sector. In fact, such level of consultation is by itself important and precedent setting and we hope this process will inform work by the WBG on other natural resource based sectors in the future. In brief, our comments fall into three categories: strong points, weak points, and areas for further consideration. In general we feel the WBG has laid out a very solid framework of analysis and program development, but that the proposed Commitments and Implementation Approach need to be reconsidered and re-worked in several important areas. Strong Areas in the Draft Framework Ø The Framework analysis and the advance discussion paper (by Cheng Hai Teoh) contain a coherent and realistic assessment of the challenges facing the palm oil sector. They show a high

level of responsiveness to concerns expressed during previous consultations. (Although colleague organizations inform us that the level of consensus on whether the WBG should get back into this sector at all was not high.) Ø We agree with the suggested four-part “thematic areas for sustainable development” as these represent very different kinds of institutional and financial capacities that need to be considered separately. Ø The document properly recognizes a key role for the private sector in delivering sustainable approaches, and mentions the value of including a commitment to certification as a precondition for new plantation establishment, and capacity building for the RSPO. Ø The Framework recognizes the need to protect High Conservation Value Forests and critical habitats as part of palm oil sector development, as well as the potential for accelerated expansion to created net greenhouse gas emissions. Weak Areas in the Draft Framework Ø Risk of Promises without Adequate Follow Through. The Framework strives to be realistic and holistic in identification of the challenges and a wide variety of potential solutions and scales of implementation from internal collaboration at the Bank to country and project level interventions. Yet in taking a very wide view of this sector, the WBG also runs the risk of appearing to promise that it can mitigate if not solve all the expected problems. As has happened in the past, it is all too easy to recognize what needs to be done without committing the resources to actually make a difference. The consequences of promoting expansion of this industry raise substantial risks to local populations and the environment (from land titling conflicts, to loss of primary forest and biological diversity and exacerbating climate change) which are well-known and forecasted by many experts. This sector should not be entered lightly, and any investments must be accompanied by a firm WBG commitment to insist on the key safeguards for communities and forests that must be part of any justification for a decision to go ahead. Inevitably the WBG will need to choose among those things it can do well relative to the myriad issues surrounding the palm oil sector and different country settings. This could be structured as a phased or stepwise approach at either the country or project level with clear and transparent contingencies for funding of future phases. As it currently stands, we find the proposed “commitments” simply too broad and frankly non-committal. Ø Bring the four strategic themes directly into the CAS process. Per the above, we recommend a distinct set of priority strategies and commitments be developed for each of the four major themes (policy, private sector, smallholders, and sustainable practices) as part of developing Country Assistance Strategies (CAS) for the palm sector. And similar to the development of this Framework, extensive stakeholder consultation should occur, especially beyond government and private sector elites. There are several useful models that the WBG can look to for how to accomplish this, in particular from Brazil, and given expected new pressures for oil palm expansion in Latin America. Two examples worth considering are: o A very thorough process of consultation and land use planning that preceded the paving of a highway through an area called Terra do Meio in the Amazon. This resulted in widely accepted demarcation of Indian reserves and forest protected areas – BEFORE the paving took place. This is the kind of process that can empower communities and district governments to make land use decisions before any lending in a region for this sector. o Another good model is the agri/economic/ecological zoning process that Acre state implemented in Brazil over the last few years. This has led to an almost total end of deforestation, for the time being, since landowners who are in areas designated as forest receive other benefits in compensation. In this process certain areas are designated for industrial production of crops (palm oil could be one of them) which will produce jobs in processing, not just growing the

plantations. The essential point is that for commodity expansion to succeed there first needs to be basic zoning and land use commitments in place; there would be little incentive to put these in place once project funds are flowing. Ø Focus on productivity rather than expansion. A significant literature exists on the weak performance in yield and productivity gains in the palm oil sector relative to other vegetable oils over the last twenty years. This is perhaps a consequence of palm oil’s naturally strong performance on a per hectare basis in comparison with other vegetable oils. But evidence suggests that palm is losing productivity relative to other oils (especially to soy) and that wide discrepancies in per hectare efficiency exist on different plantations. This represents a substantial opportunity for the WBG to solve several problems simultaneously: boost incomes, improve management techniques, increase utilization, and lessen pressure on land area, especially primary forests and other sensitive sites. Yet the draft framework, with respect to country level actions, makes no reference to the opportunity to push technical research and extension assistance to improve utilization on existing sites as a primary objective of the CAS. Rather it only hopefully suggests at the outset that “…it is expected planting will shift away from forested areas with high conservation value to existing agricultural land or areas designated as degraded.” (p.3) Ø A realistic role for REDD+ is needed. The framework should explicitly recognize the role of REDD+, both as a policy and land use driver in specific countries of interest (such as Indonesia and Brazil) as well as within the Bank itself as part of the Framework’s implementation goal of “Enhanced World Bank – IFC collaboration”. For example, the Bank-sponsored Forest Carbon Partnership Facility (FCPF) which strives to set the stage for REDD+ implementation is already working with 37 tropical forest countries through the FCPF’s “Readiness Fund” (http://www.forestcarbonpartnership.org/fcp/). Yet many of these countries are targets for palm oil expansion such as Indonesia, Colombia, and Papua New Guinea. The Framework needs a realistic evaluation of the role of REDD in the palm oil industry, given the wide disparity between the likely scale of future REDD payments (very low initially relative to palm oil) and the resulting opportunity costs of forest conservation and sequestering carbon stocks (very high over the long run). In addition, many of the country level REDD readiness assessments are directly relevant to the same kinds of information needed for WBG project level evaluations of potential palm oil investment. In particular, the FCPF recommends strategic environmental and social assessments (SESAs) using local working groups in order to anticipate and avoid negative impacts. Ø No apparent climate change strategy, despite acknowledging the problem. The draft Framework does a good job in the overview sections in recognizing the potential for palm oil expansion to exacerbate GHG emissions. Yet, similar to the REDD+ discussion above, there is no explicit strategy for ensuring that IFC investments in palm do not lead to new and potentially dramatic increases in GHG emissions, especially in areas where high carbon stocks such as peatlands are at risk of conversion. This is yet another reason for having a proactive strategy for targeting degraded lands and focusing on productivity gains. Ø Employ a tighter set of preconditions for Project Level investments. Difficult issues surrounding palm oil development should not simply be left to country or provincial governments to sort out. The IFC can proactively avoid and correct for well known previous mistakes in project design and financing. We recommend the following as essential preconditions to IFC investment: o Protection of Critical Habitat/High Conservation Value habitat. This is currently described in the draft Framework as only an element of “early engagement”. o Independent, reputable third party certification achieved or underway (see more below). o No further draining and conversion of new peatlands and high carbon stock sites that lead to substantial net increases of GHG emissions.

o Strict adherence to internationally accepted principals of Free Prior and Informed Consent (FPIC) with indigenous peoples and communities. o A similar focus on productivity and improving utilization on existing plantations (as at the country level assessment stage) o Targeting support for projects and future plantations on “degraded” lands. However, we acknowledge that there are challenges with this concept; challenges which the WBG, if it chooses, could productively contribute to resolving: a) First, the definition is unclear and controversial. (Conservation International and others are developing a useful approach to define “responsible cultivation areas” which should be consulted and the concept utilized.) b) Second, it often costs more to prepare such land, and using “degraded” land doesn’t produce the early revenue that selling the cleared timber would provide. Thus local producers, especially smallholders, need other financial solutions for start-up capital and early returns. The key is to provide incentives that steer expansion to “degraded” land. The IFC should consider equity investments for early capital to overcome this problem. There could also be international bonds and other sources of lower interest financing, covered notes and securitizations, conditional loan guarantees, bridge loans, etc., specifically available to producers who agree to only use “responsible cultivation areas” (as some experts are now calling the preferred lands). Ø Target investment in RSPO, but also related certification systems. We appreciate the emphasis and recognition of the role of the RSPO and of certification generally. However the RSPO enjoys a mixed reputation for effectiveness, owing to its early phase of organizational development, murky governance, and low capacity for oversight, monitoring, and enforcement of its rules. The WBG needs to be mindful that RSPO is still a tenuous organization in the eyes of many and that its effectiveness as a tool for sustainability is still questioned. Thus, investments in improving the legitimacy and capacity of the RSPO are very much needed. In particular, the MRV aspects of its certification system must come up to international standards (e.g. using ISEAL guidelines, and ASI services) and its governance must become more transparent and accessible to stakeholders. Currently the RSPO is significantly lopsided with over-representation in its membership and on its board by economic interests, although many member companies have yet to purchase certified palm oil. Similarly, while RSPO is the most likely focus for certification activity, the WBG should acknowledge (and invest in) other legitimate certification systems that have an important role to play with respect to palm oil in two distinct areas: o First, by helping the RSPO improve its own program through collaboration with other certification initiatives, such as the current project underway with FSC’s Accreditation Services International (ASI) to help the RSPO improve their certifier accreditation model and evaluate whether ASI can eventually “backstop” RSPO’s accreditation program; and o Second, to recognize that both forest and/or biofuels certification standards (e.g. FSC[1] or RSB[2]) may in fact be more appropriate in many project level circumstances, especially in: mixed use or community settings, or where biofuels production is a primary driver of palm oil investment, or where multi-stakeholder processes for determining appropriate definitions of forest conversion, degradation, or HCVF have already occurred. Areas for Further Consideration Ø What does a “stepwise” approach look like? The project level implementation strategy provides for a very significant and worrisome variance; through the following language: “IFC may invest in oil palm plantation operations and other palm oil sector companies even if the public sector legal/regulatory enabling environment is less than ideal, if IFC is convinced that the

project will have strong and measurable development impacts and that any impacts can be mitigated…” (p 18) At a normative level this suggests that a stepwise approach may be appropriate in some instances; yet these circumstances beg for more explicit criteria. Other certification systems such as the FSC have developed various kinds of stepwise mechanisms that may be useful models here. However, at a cynical level this looks very much like a loophole that could allow for inadequate or unprepared projects to be funded with the proper political pressure. Ø Need for a true “Strategy” While we understand that this document is meant only to be a Framework and not an implementation strategy per se, such a strategy is clearly needed before launching into the palm oil sector. The authors of the draft Framework are to be commended for recognizing the harm to local communities and the environment that have emerged in the past in the palm oil sector, but WBG planners must think through these well-documented problems, and develop clear contingencies to deal with them. For example, there are a variety of legal and political limitations that can restrict implementation of the WBG’s good intentions regarding customary rights to land and HCV land protections, which the framework does not address. Basically, this is not a document that sets out targets that can be measured or criteria for how to deal with expected land and other conflicts. Nor does it explain any methods to actually deliver assistance to smallholders. So before any major WBG decisions are made to enter this sector, there needs to be a clear strategy showing how the WBG can deliver on promises that are implied here. Ø Financing for food or fuels, or both? Since 2006 and with the initiation of biofuels targets in many countries, palm oil prices are increasingly dictated by their relationship to mineral oil prices rather than vegetable oil substitutes as has been the case historically. This has led to huge surges and swings in prices as palm oil followed the price of oil, leading to a surge in palm oil expansion, only to be followed by a huge price crash due to oversupply, the recession, and falling mineral oil and gas prices. Will the WBG be a party to future boom and bust cycles in the palm oil sector; ones that are driven primarily by the prices of fossil fuels? The market supply chain and ubiquitous nature of palm oil dictates that biofuels will be highly affected by fossil fuel prices. However, clear evidence suggests that the social welfare benefits of palm oil flow through local value adding supply chains related to its use as a vegetable oil rather than as a raw commodity (crude oil) export for fuel. The WBG should recognize and concentrate on this situation given its stated mission to reduce poverty. Strategies that protect people and lands from the unintentional effects of boom and bust commodity expansion cycles could become a particular expertise of IFC. [1] The Forest Stewardship Council (www.fsc.org<http://www.fsc.org>) has certified 125 million hectares in over 80 countries based on regionally developed multi-stakeholder certification standards that address timber and non-timber uses of forests. [2] The Roundtable on Sustainable Biofuels (see: www.rsb.org<http://www.rsb.org> ) is a global multi-stakeholder initiative, based in Switzerland, which has issued standards for voluntary certification of biofuels. posted 19 August 2010 by Eric Palola from email

JIM ROBERTS WBG/IFC Palm Oil Development Strategy Should Focus on Economic Freedom The new IFC/World Bank strategy for engagement and investment in the palm oil sector must promote economic freedom by encouraging economic openness, regulatory efficiency, and competitiveness. The strategy should be focused on the basic principles of economic freedom-

individual empowerment and job creation, equitable treatment, and the promotion of competition built on a foundation of rule of law and secure private property rights. It must promote free trade and open economies worldwide, providing for secure and clear market access for palm oil imports into the world's most developed economies. It also must promote private sector investment-needed to lead the continued expansion of the sector and minimize the role of the state-and labor freedom-giving workers and employers maximum access to new opportunities in the sector through flexible, balanced and prudent labor laws. Finally, the new strategy must minimize the creation of monopoly rents by national governments-a process that aggravates the opportunity for official corruption. See my Heritage Foundation "Backgrounder" on palm oil at this link: http://www.heritage.org/Research/Reports/2010/06/World-Banks-Palm-Oil-DevelopmentStrategy-Should-Focus-on-Economic-Freedom Also see my August 19, 2010 OpEd on the subject at this link: http://www.foxnews.com/opinion/2010/08/18/james-m-roberts-multinationals-dilemma-greensprotect-poor-greenpeace-nestle/

Below is the full text of my comments. Thank you, James M. Roberts Research Fellow for Economic Freedom and Growth Center for International Trade and Economics The Heritage Foundation ============================================== Consultation on Development of the World Bank Group Strategy for the Palm Oil Sector Q1. From your perspective, what are the 5 most important aspects that must be covered by IFC and the World Bank in their new strategy for engagement and investment in the palm oil sector? ANSWERS: The five most important aspects that must be covered by IFC and the World Bank in their new strategy for engagement and investment in the palm oil sector are as follows: 1. Does it promote economic freedom, as defined by the strategy's degree of economic openness, regulatory efficiency, and competitiveness? The strategy should be focused on the basic principles of economic freedom-individual empowerment and job creation, equitable treatment, and the promotion of competition built on a foundation of rule of law and secure private property rights. 2. Does it promote free trade and open economies worldwide? Specifically, does it provide for secure and clear market access for palm oil imports into the world's most developed economies? 3. Does it promote private sector investment-needed to lead the continued expansion of the sector and minimize the role of the state? 4. Does it promote labor freedom-giving workers and employers maximum access to new opportunities in the sector through flexible, balanced and prudent labor laws?

5. Does it minimize the creation of monopoly rents by national governments-a process that aggravates the opportunity for official corruption? Foreign direct investment in the palm oil industry has fueled the market-based economic growth and freedom has increased stability and prosperity in countries like Indonesia, Malaysia, Colombia, Liberia, and Ghana. Today, Indonesia and Malaysia account for as much as 85 percent of world production. Indonesia and Malaysia have maintained high production while protecting more than 25 percent and 50 percent of their forest cover respectively. Meanwhile, the palm oil industry is generating employment and sustainable jobs all over the world; it employs more than 570,000 Malaysians and over three million Indonesians. The industry in these countries accounted for almost U.S. $27.5 billion in sales in 2008. Palm oil is one of the leading engines of economic growth and employment creation in many countries, too. For example: Liberia: In 2010 there were 220,550 "smallholder" farmers producing palm oil. Colombia: As of 2007, 80,000 jobs had been created. Ghana: By 2004, there were 27,000 palm oil farmers in Ghana. This economic growth has accompanied gains in the ranks of these countries on the Heritage Foundation's Index of Economic Freedom, especially in the cases of Malaysia, Colombia, and Ghana (which have been among the leaders of the Index leaders in their regions in recent years). Groups seeking to restrict further development of the global palm oil sector and limit its access to OECD-country markets would block new opportunities to raise living standards and reduce poverty in the developing world, and potentially harm trade and investment partners, too. Therefore, the World Bank should adopt a balanced, pro-growth strategy that continues to support palm oil investment programs in developing countries. Q2. Should the World Bank Group continue to invest in the palm oil sector, or should it withdraw until the major environmental and social issues are resolved? If the World Bank Group continues to invest in the sector, what would be appropriate pre-conditions for an investment in a particular country? ANSWER: Yes, the World Bank Group should continue to invest in the palm oil sector. The economic growth and concomitant increase in governmental tax revenues will provide the resources and the incentives to adopt and maintain prudent and reasonable environmental and social safeguards. As the IFC's "Key Sustainability Issues" study indicates, improvements in yields, smallholder productivity, and the genetic make-up of the oil palm can be realized only through greater investments which, in turn, can only become available through continued expansion of the sector. Each palm oil-producing country has unique needs along with the shared challenges faced by all developing countries.

While the World Bank Group should work with host governments to identify particular issues that should be addressed in each country, no pre-conditions should be established which would block the immediate resumption of lending in the sector in any country. In recent years, the World Bank has devoted more of its resources to social and environmental causes than development or economic (in particular, agricultural) programs. This trend runs contrary to the organization's stated mission of alleviating poverty through enhancing development. It is distressing to see the World Bank/IFC trying to take another step towards the re-orientation of their development resources away from private-sector economic and agricultural development projects and towards more social engineering and environmental causes. The decision to suspend the IFC's palm oil program is symptomatic of this larger pattern. Additionally, the suspension of palm oil program support was obviously influenced by environmentally-driven NGOs that would prefer to cease the expansion plantation growth of any form anywhere in the world. This policy bias directly contradicts the World Bank/IFC's stated mission of "promoting open and competitive markets in developing countries" and "catalyzing and mobilizing other sources of finance for private enterprise development." Q3. How can the World Bank Group use its policy framework (sustainability policy, performance standards, safeguard policies) to influence the performance of major players in the palm oil supply chain, including financial institutions and banks, plantation companies, NGOs and RSPO or other palm oil organizations to ensure that investments, production and use of palm oil is done according to social and environmental sustainability principles? ANSWER: The World Bank Group should use the new policy framework that emerges from this strategy review to ensure that no group is permitted to block the continuing development and expansion of the palm oil sector using a pretext of social or environmental concern that is actually camouflage for protectionism by countries and groups that produce competitor vegetable oils. Over the past five decades the World Bank and the IFC together have invested nearly $1.3 billion in palm oil projects and are helping palm oil producing countries to take prudent steps to expand production while protecting the environment and wildlife. In response to NGO pressure groups, however, in September 2009 the IFC announced a suspension in approval of any new palm oil development investments pending completion of a review of its practices in the sector. According to the World Bank Group website, the IFC is in a "consultative phase of the Palm Oil Strategy development process to seek multiple stakeholders' input into developing a framework and a set of principles to guide the World Bank Group's future work in the palm oil sector." The IFC is now collecting consultation comments from the public. A number of environmental groups and other NGOs have formed an unholy alliance with the European Commission as well as protectionist European bio-fuel producers and their labor unions that seek to restrict palm oil imports. In fact, dozens of European NGOs (or their subsidiaries) that oppose palm oil are recipients of some of the millions of Euros in annual grants from EU environment ministries. Among the most vocal palm oil opponents, for example, Friends of the Earth Europe, receives more than 50 percent (more than 800,000 Euros) of its funding from the European Commission.

Q4. Given that development of palm oil will continue to expand to meet an ever-increasing global demand for food, fuel and fiber, and that such expansion is likely to spread to new areas in Africa and Latin America, what role should the World Bank Group, along with its partners and stakeholders, play to ensure that new developments are done in a sustainable manner and contribute to poverty reduction? ANSWER: The continuing focus of World Bank Group efforts should be to support the engagement of the private sector through diverse measures, including investment support, barrier removal, and competitive markets as sources of investment and solutions. The World Bank/IFC should partner with private investors to expand the palm oil sector in Africa and Latin America. Several Malaysian companies are already active in Brazil, and more investment there and elsewhere in Latin America can be expected in the coming years as the world economy continues to recover. Expansion of the sector in Brazil, in particular, will be an important contributor to the continued mitigation of the extreme income inequality in that country and concomitant poverty reduction. Partnerships should be designed so as to leverage the maximum level of commercial lending for private investment in the sector for each dollar of IFC funding by: increasing access to preinvestment and investment financing; introducing risk management and credit enhancement instruments; and providing training and risk mitigation instruments for local financial institutions in palm oil producing countries. The World Bank Group should also establish mechanisms for palm oil growers, workers, suppliers, buyers, and consumers to provide regular consultation to the World Bank and advise specific developments in poor countries that should receive World Bank support. Q5. Beyond financing investment projects in the palm oil sector, and in addition to risk mitigation and the use of World Bank Group policy frameworks (Q3), what accompanying activities would you consider important to help address the challenges identified in the Issues Paper, or in your own experience of the sector? ANSWER: The World Bank should launch an effort with the World Trade Organization to investigate non-tariff barriers to palm oil importation into WTO-member countries. In addition to their campaign against palm oil at the World Bank/IFC, anti-palm oil NGOs support the EU's "Renewable Energy Directive" which would restrict imports of bio-fuels by imposing higher and more onerous environmental standards on them than on bio-fuels produced in the EU (i.e. - rapeseed). This favoritism is prohibited under the non-discrimination and national treatment rules of the World Trade Organization. In addition, the Renewable Energy Directive mandates taxpayer subsidies to European producers of rapeseed, which further erodes the low cost advantage of palm oil and is also WTO-illegal. The EU's "Renewable Energy Directive" is a protectionist measure that harms economic growth and poverty alleviation in the developing world and stands in direct contradiction to the freemarket principles of the Index of Economic Freedom. EU-funded NGOs that are seeking to restrict further development of the global palm oil sector by stopping IFC palm oil project lending and limiting market access of palm oil to OECD-country markets are thereby blocking new opportunities to raise living standards and reduce poverty in the developing world, as well as potentially harming U.S. trade and investment partners.

Therefore, the World Bank Group should uphold its principles of alleviating poverty while encouraging economic growth and adopt a pro-growth strategy that continues to support palm oil investment programs in developing countries. Opposing non-tariff barriers against palm oil through coordinated action with the WTO would be an important step in this direction. In addition, the World Bank Group should ensure no new social and environmental rules are added that will only inhibit development are added to the Bank's palm oil strategy. posted 19 August 2010 by Jim Roberts from email

JOHN MCCARTHY Comments on The World Bank Group's Framework for Engagement in the Palm Oil Sector Thanks for the opportunity to contribute to the consultation. I acknowledge the many earlier postings pointing to the strong points of the document. I would just like to add a few brief comments supporting some of these comments. There are lots of statements of principle and I appreciate this is still a draft. However, I think the strategy would be much stronger if it was more precise and specific about how these principles might be implemented. For the sake of brevity, let me just take the key section on project level investment and advisory service interventions (p17-18). This could be much more explicit about the requirements for investment. For instance, some questions to be considered: What constitutes an acceptable action plan to achieve certification? What would be the indicators that a client is committed to meeting performance standards? Would these performance standards commensurate with RSPO P&C? What monitoring would be in place and what sanctions would a client face if they violate them? Would this include third party independent monitoring? How would that be set up and funded? What specifically would indicate that a client is knowledgeable of risks and taking steps to address them? How would risks be identified? Who would identify them? What methodology would they use? What are clear and measurable development impacts? How would these impacts be decided upon? How would they be evaluated? What would happen if they were inadequate? Are these impacts commensurate with the implementation of RSPO P&C? What measures would be in place to further smallholder inclusion? How would these measures deal with FPIC and other substantive issues raised elsewhere in the consultation? How to assess whether risks can be mitigated though other WBG activities? What criteria would be used to assess whether a country is working to address highlighted policy and regulatory issues? Which specific issues would be highlighted and how would this assessment occur? Who would carry it out? I look forward to seeing these any other questions raised in this discussion addressed in later versions of the document.

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Kind regards, John McCarthy posted 19 August 2010 by John McCarthy from email

PATRICK ANDERSON RE: Comments on The World Bank Group's Framework for Engagement in the Palm Oil Sector Apologies if my comments are out of sequence. Many good points have been made, and I only want to add a couple of additional points. The annex to the draft framework mentions that the WBG invested almost $2 billion dollars in the palm oil sector over the last forty five years, with half of that investment in Indonesia and Malaysia. However, little information is given on the impact of that investment. Indonesian and Malaysian groups that work on the social impacts of oil palm claim that many indigenous communities in Indonesia and Malaysia suffered loss of lands and livelihoods as a result of these World Bank funded projects, and in some cases are still suffering from the impacts of losing their lands and livelihoods, decades later. NGO's and community groups have called on the WBG to provide restitution for communities that suffered as a result of its investments in the palm oil sector. I think the WBG has a responsibility to learn from and address negative impacts from its previous investments in the sector but the framework makes no reference to reviewing and addressing past mistakes. I think the WBG strategy should include commissioning an independent review of the impact of its investments in the sector, looking particularly at the issue of land acquisition and forced appropriation of lands. During most of that investment period, communities in Indonesia suffered severe consequences if they attempted to resist government appropriation of their lands. This was common knowledge in development circles at the time, and the World Bank received detailed criticisms of its support for transmigration and oil palm plantations in Indonesia in the 1980's and subsequently. In this context, it is unacceptable for the WBG to wash its hands of the impacts of its earlier investments by claiming that the investments are closed and any impacts are solely the responsibility of the borrowing government. Although in Indonesia today there is much less state repression of community resistance to oil palm development, local and indigenous communities still lose out in the process of land acquisition. Under current Indonesian law, which derives from the basic agrarian law of 1960, the state can only issue permits (HGU) to develop lands for oil palm on lands which are not burdened with rights. To obtain a HGU permit, companies holding an in principle permit to develop oil palm for a certain area must first secure agreements with any communities in the area to forgo their customary rights to those lands. This is done through signed agreements with community leaders in which the community agrees to release control of its customary lands in return for a payment, typically between $20 and $50 per hectare. In numerous interviews of communities that gave up lands for oil palm development in Kalimantan and Sumatra, conducted over the last decade by Forest Peoples Programme and Sawit Watch, the community leaders did not realize that the contracts that they had signed relinquished all community control over their lands. Community leaders interviewed thought that they had signed a 25-year (or 30-year) lease agreement, and that at the end of this period the rights to the lands would revert to the community. Time and again, when informed that at the end of the HGU lease, the rights to the lands would revert to the state, community leaders and members said that they would never have signed the agreement if they knew that they were giving up all rights to their customary lands. In perhaps the majority of indigenous communities in Sumatra and Kalimantan, rights over most customary lands are held in common, it is forbidden under community law to sell or alienate those lands.

Without reform of Indonesia's land laws and regulations to recognize customary rights in land and the right of indigenous communities to lease lands to oil palm developers, the oil palm industry will continue to appropriate and alienate customary lands of indigenous peoples. RSPO members in particular are in a Catch-22 situation, as under the RSPO standard they must respect the rights of indigenous communities, including the right of communities to give or withhold their Free, Prior and Informed Consent to proposed developments on their customary lands, but companies can only obtain HGU permits from the Indonesian government to develop oil palm plantations when all land and use rights over the areas which they wish to develop have been removed. Indigenous communities in Malaysia also face huge struggles to have their rights to manage and control their customary lands respected. Given this contradiction, it is essential that the WBG set out the conditions under which it can and cannot invest in the oil palm sector, and make clear that investments cannot be considered and will not be provided where the right of indigenous peoples to own and manage their customary lands is not respected by the State and by the developer. Patrick Anderson posted 20 August 2010 by Patrick Anderson from email

TIM WILSON Submission to the World Bank Group's Framework for Engagement in the Palm Oil Sector To whom it may concern, I write to respond to the World Bank’s Framework for Engagement in the Palm Oil Sector and appreciate the opportunity to make a contribution. The World Bank Group clearly outlines that its objective is to fight poverty and help people help themselves and their environment. They are worthy goals and should be central to the development of the Framework, supported by evidence. For a number of years palm oil has been attacked by green groups and increasingly political interests who are using allegations against palm oil’s impact on the environment for political gain. The clear objective of the World Bank’s Framework should be to promote reforms and/or investment in palm oil with the objective of promoting sustainable economic development to cut poverty. As outlined in the draft Framework the palm oil sector is a major economic contributor to economic growth in developing countries, particularly Malaysia and Indonesia. And that is why palm oil matters. One of the core reasons that palm oil is grown in Indonesia is because the government is seen as “aware of the need to alleviate poverty and to provide food and employment on an economically sound and sustainable basis to an already large and rapidly increasing population”, and holds the belief that “labor and land remain plentiful”. Small holder palm oil farmers include some of the world’s poorest producers. In Malaysia small holders account for up to 40 per cent of the total area of planted oil palm. In Indonesia it is 45 per cent. And the industries in both countries support hundreds of thousands of workers.

Supporting poor farmers is not the only contribution of palm oil. Is also a dietary staple for millions of Indonesians and Malaysians, as well as the poor in other developing countries. Palm oil also has a high Vitamin A content, an essential dietary vitamin to boost the immune system. According to UNICEF an estimated one million young children die each year as a consequence of complications from Vitamin A deficiency. Yet despite its importance, palm oil has come under attack. The principle claim by anti-palm oil activists against the industry is that it causes deforestation in Malaysia and Indonesia, and especially the loss of habitat for orang-utans. But what activists miss is the core driver for the demand for increased agriculture land; it isn’t palm oil specifically, but the development of primary industries to help lift rural communities out of poverty. Without palm oil deforestation would still occur, it would just be for a different crop. But farmers have used palm oil because it is a high yield oil seed that delivers between three and four tonnes per hectare. By comparison competitor seeds such as rapeseed, sunflower and soybean oils yield less than 0.7 tonnes per hectare. Behind the claims that expanding plantations for palm oil is driving increased deforestation, and increased output from the industry, the reality is that recent growth in industry output has been a direct result of increased yields driven by industry improvements. Despite historically producing more palm oil than Indonesia, the Malaysian industry has a higher yield output than Indonesia because of “improved tree varieties, improved cultural practices, and perhaps the biological yield cycle” for production – not expanding land use. While deforestation is legitimately concerning, like in developed countries, not all land can be kept as forest. The European average is only 25 per cent, which is roughly the same as allocated in Indonesia, and less than half of Malaysia’s allocation at more than 55 per cent. As the Stern Review found less than 20 per cent of forest land cleared in Indonesia was to support the palm oil industry, and it is only 30 per cent in Malaysia. Measures should reasonably be taken to protect wildlife like orang-utans, such as the Malaysian government’s plan to ban planting palm oil near rivers to maintain wildlife habitats. But rather than heavy-handed regulation, more appropriate solutions are voluntary ones to increase consumer confidence about the sustainability of consumed palm oil. Enforcing regulatory standards through financing on developing world projects is an imposition of developed world standards and undermines sovereignty. Voluntary certification schemes do have a place in the marketplace, like the Roundtable for Sustainable Palm Oil certification for consumers who wish to send market signals through their consumption preferences. Certification marks that have consumer awareness, understanding and trust are a much stronger alternative to extensive government regulation that seeks to impose a one-size fits-all-model on food production. Private certification marks already exist to assist consumers in making informed decisions. And they are regularly innovated much earlier than government regulations because the marketplace is more responsive to consumer concerns.

These certification marks secure credibility by providing an overall concept of value to consumers that they understand, generally to achieve political objectives. The value held in these certification marks is also a result of the significant resources dedicated to their promotion and the voluntarily nature into which they are entered. And as a consequence significant value is afforded to their reliability and the trust that standards are enforced. But it is not acceptable to force these standards and they should not be a requirement for financing through the World Bank. Doing so limits the choice of consumers, and of developing world producers and adds costs to economic development. The World Bank’s Framework can be timely, to help assist in clearing deliberately muddy waters about palm oil and its environmental impact. But it will only do so if it respects the rights of the world’s poor to economically develop and not impose heavy-handed, compulsory regulations on the industry when seeking finance to impose developed world values onto developing countries. If there is a recognised expectation for developed world standards to apply to palm oil growers these can be achieved through voluntary certification for palm oil and products that use palm oil. But not through their forced application as a requirement for financing. If you have any questions about this submission please do not hesitate to contact me on +61 (0) 417 356 165 or by email at twilson@ipa.org.au. Yours sincerely, Tim Wilson posted 20 August 2010 by Tim Wilson from email

THOMPSON AYODELE African Case Study: Palm Oil and Economic Development Ghana;Recommendations for the World Bank’s 2010 Palm Oil Strategy in Nigeria and

Note: The message contains the full document in an attachment that is available in the Background Documents folder of the Library ========================== African Case Study: Palm Oil and Economic Development in Nigeria and Ghana; Recommendations for the World Bank’s 2010 Palm Oil Strategy Executive Summary Palm oil accounts for 34 percent of the world’s annual production of vegetable oil and 63 percent of the global exports of vegetable oils. It is produced in tropical climates and in 42 countries across the world. Palm fruit from which palm oil is extracted is of immense value.

90 per cent of global production of palm oil occurs in South-East Asia in Indonesia, Malaysia and Thailand. Several African nations are currently producing palm oil on a commercial scale. Uganda is currently developing oil palm plantations as tool to eradicate poverty. Nigeria is currently the third largest producer of palm oil in the world after Indonesia and Malaysia, however it remains a net importer. The Nigerian experience of palm oil development provides a clear example of how palm oil, as a result of its high yield and low production costs, is a highly effective means of alleviating poverty. The World Bank has a long historical involvement with poverty reduction efforts in Africa and the developing world. The World Bank’s proclaimed mission is “to overcome poverty, enhance growth with care for the environment, and create individual opportunity and hope.” Agriculture employs 65 per cent of the workforce in Sub-Saharan Africa. The continued expansion of productive and high yield agriculture is essential for the reduction of poverty in Africa. The World Bank has been highly instrumental in promoting and facilitating poverty reduction in developing nations. The Bank is now the largest single donor to the agriculture sector in SubSaharan Africa, providing $US1 billion in assistance in 2010. However, it has been noted that when World Bank policies for poverty reduction are tailored to serve other goals, such as environmental goals, poverty reduction efforts can suffer. The World Bank’s 1991 Strategy to reduce deforestation in developing nations failed to strike the right balance between poverty alleviation and environmental sustainability. The environmentally risk averse nature of the Bank’s criteria for investment stifled innovation and reduced developing nations’ engagement with the Bank. In particular, the Bank’s criteria for sustainable forest management being restricted to FSC standards was so rigid that instead of promoting environmentally sustainable practices, developing nations shied away from engagement with the Bank altogether. The result was that both environmental sustainability and poverty reduction efforts suffered. Conditions placed on developing nations’ access to finance which curtail their right to convert forest land to agricultural use are likely to undermine the Bank’s principal purpose of poverty alleviation. It is also likely to support efforts by developed nations to impede imports from developing nations through standards such as the EU Renewable Energy Directive. Policies guiding IFC investment should not encourage a welfare mentality by paying developing nations to cease land conversion and relinquish the associated economic development. Instead, the World Bank and IFC must be guided by building internal capacity to implement environmentally sustainable policies by focusing firstly on economic growth to support the implementation of environmentally sustainable practices. It is important to realize that enhancing economic growth will necessarily allow nations to embrace environmentally sustainable policies. However imposing environmental guidelines will not only hinder growth, but in the long term, will push developing nations towards less environmentally sustainable growth. The Nigerian palm oil industry provides an enlightening example of how the palm oil industry can reduce poverty and provide sustainable economic growth for African nations.

The following survey and analysis makes it clear that environmental sustainability is currently not the defining issue of concern for the development of oil palm plantations in Africa. Issues of greater concern for growth in African nations’ agriculture sectors for poor infrastructure, access to finance, property rights and low crop yields. This survey also makes it clear that palm oil is highly effective at achieving economic growth. Misguided attempts to impose environmental standards are likely to undermine that effectiveness and ignore the real problems facing the fledgling African palm oil industry. posted 20 August 2010 by Thompson Ayodele from web

SYLVAIN AUGOYARD Standard Setting Role of the WBG / IFC The World Bank and IFC have done a lot of work in assessing and presenting the sustainability issues associated with the palm oil sector. In the new framework, the two institutions clearly express the fact that they will support the development of this industry which is essential to fight against poverty (among many other things), while working to improve its sustainability practices. The framework document contains an "Implementation Approach" section, which details in particular the way the IFC will support private sector development (p17). This is a particularly important section, as it describes the way the issues previously identified will be addressed through a more sustainable development of the sector. It is positive to see that client operations would have to be certified, and have a time-bound plan to achieve certification. It is also stated that the client should meet IFC Performance Standards and that the project should have positive economic impacts. It is a step forward, that would push for a broader adoption of sustainability practices, but the IFC could do much more in that respect, by further strengthening this part of the framework (or ideally by issuing a standalone document that would be its policy for future investment in the palm oil sector). Such a policy would clearly detail how (i.e. based on which criteria) the IFC will identify the best/worst players in the industry, how it will engage (or not) with them, how it will ensure that unsustainable practices are no longer supported etc. The IFC, as a standard-setting financial institution, has a key role to play. In particular, it can influence the policies of commercial financial institutions, which do not necessarily have the same official mandate but that could also be willing to adopt a more responsible attitude in this sensitive sector. Therefore my main question would be, is the IFC considering the publication of a detailed policy for its future investments in the palm oil sector? Thank you for your attention Best regards, Sylvain Augoyard, CSR Analyst posted 20 August 2010 by Sylvain Augoyard from web

SOEDJAI KARTASASMITA Comment and suggestion on the smallholholder (by Soedjai Kartasasmita)

HOW THE WORLD BANK AND IFC CAN SUPPORT POLICIES TO IMPROVE PALM OIL SMALLHOLDER’S PERFORMANCE IN INDONESIA 1. Background During the last two decades oilpalm has become the major plantation crop in Indonesia. The expansion in terms of hectarage during that period is by any standard phenomenal, as can be seen from the figures below : Total Palm Oil Area in Indonesia (000 ha) Year 1990 2000 2007 2008 2009 Annual % change Smallholders 292 1.167 2.752 2.903 3.204 24,2 SOE 372 588 606 608 617 4,0 Private 463 2.403 3.409 3.409 3.501 13,7 National 1.227 4.158 6.767 7.008 7.322 11,8

The total area under smallholders oilpalm which was 292.000 hectares in 1990 moved up to a total of 3.204.00 hectares in 2009 (43,80% of the country’s total area under oil palm). Smallholders’ oilpalm plantations have much improved farmers’ living standards and as a result have made local communities more prosperous. Currently productivity levels in many parts of Sumatra and Kalimantan are declining as the palm trees have become older and therefore less productive. There is thus an urgent need for implementing replanting programmes with the support of Government and domestic banks either State or private. For this purpose the availability of extension services and training facilities must become top priority in Government programmes. In this context the World Bank should be able to play a crucial role e.g. by providing financial and technical support through Government channels. 2. Smallholders A distinction has to be made between : a. Plasma smallholders and b. Independent smallholders Plasma smallholders came into existence after the World Bank introduced NES (Nucleus Estate and Smallholders) programmes in the early 1970-s followed by similar projects launched by the Indonesian Government. In fact they were the pioneers of smallholders oilpalm development but ironically the total area currently in their possession covers only about 400.000 hectares, far out- numbered by the total hectarage owned by independent smallholders (2.800.000 Ha). These independent smallholders are beyond any doubt entrepreneurs in their own right.

Mostly driven by entrepreneurial instincts they were able to develop their own small plantations ranging in quality and size (between one and a few hundred hectares each) with or without financial support from banks. By their own choice the independent smallholders have become the major suppliers of fruit bunches to neighbouring palm oil mills, selling the fruit at a price determined periodically by local committees. 3. The Smallholders’ big dream During discussions with APKASINDO it became apparent that plasma and independent smallholders alike have a common dream viz having their own palm oil mills in the foreseeable future. By having their own mills smallholders would be in a better position to :  produce sustainable palm oil  have access to palm oil trading activities  have a better bargaining position vis a vis suppliers of fertilizers  convert waste into compost, biogas and electricity  introduce new technology in replanting programmes. 4. Independent Palm Oil Mills In Sumatra, more than 100 so called independent palm oil mills can be found in smallholders’ locations. As they do not have their own plantations these palm oil mills cannot operate without supplies of fruit from independent smallholders. In fact this contradicts Law no. 18/2004 which stipulates that a mill must be backed up by its own plantation to guarantee a constant supply of fruit bunches. In practice it is difficult to close down a mill because this could harm the interests of independent smallholders and may create social problems. Negotiations with the owners would give smallholders the opportunity to take over those mills. 5. How to translate the dream into reality As a start it is worth considering to create a few pilot projects, where smallholders’ cooperatives would have the chance to take over some independent palm oil mills. With financial assistance from banks and strong Government support these cooperatives will be able to acquire a few mills after an agreement has been reached with the owners. Near-by plantations in compliance with CSR regulations should provide managerial support besides technical assistance for running the mills. With the help of training institutes training programmes have to be launched and organized in such a way that within a certain time frame a number of people within the community would be competent enough to manage both the plantations and the mills . Extension services should be re introduced to support the smallholders in their operations. If proven to be successful similar projects can in the future be established in other locations. 6. Engagement of the World Bank and IFC

Both the World Bank and IFC could provide support for efforts to be made for the establishment of pilot projects; in the case of the World Bank through Government institutions or banks and in the case of IFC through local banks to the smallholder’s cooperatives. IFC is currently involved in the preparation of a feasibility study on converting palm oil waste into compost, biogas and electricity. posted 13 August 2010 by Palm Oil Administrator from web

YU-LENG KHOR Comments from Yu-Leng Khor Thank you for the opportunity to comment on the World Bank Group's Framework for Engagement in the Palm Oil Sector. I am a Malaysian, who has worked as a strategic research analyst and consultant to corporations in the agribusiness sector in Southeast Asia in recent years – focussing on the upstream oil palm and sugar cane sectors. The earlier part of my career was in the financial sector. I was trained in political-economy, development and industrial economics and my first on-the-job training was in financial analysis. My comments are: a) State policy is needed to protect common and public goods, such as the environment and social matters. If some NGOs find that state policy is somehow ‘lacking’, they should try to influence policy change. A change in state policy would have the biggest impact in altering individual and corporate behaviour. In this, the World Bank would be well placed to open a policy dialogue. Efforts to influence change via pressure on corporations can be effective to a degree, but would have its limits, unless accompanied by policy change. b) The IFC says it will only invest in plantations operations that are certified for sustainable production or have time-bound action plans to do so. So far, the only option available is the Roundtable for Sustainable Palm Oil (RSPO). However, it is a costly, difficult and constantly expanding certification standard. Changes to its Principles & Criteria are frequent (annual) and this makes it more difficult and costly to implement. Also, since there is frequent change, there seems to be only a short time period in which to assess the effectiveness and consequences of changes in standards? Corporations find such frequent change difficult to handle, and smallholders fear that it will be even more difficult for them to handle. c) Perhaps inadvertently, the RSPO seems to be evolving into an exclusive sphere for the biggest plantations that can afford its high standards (and which already have quite good practices). Midsized plantations and independent smallholders have been rather left out so far (although efforts are being made to assist them). As the World Bank Group’s remit is to promote socio-economic development, it needs to make sure that certification standards are non-discriminatory (in achieving market access), cost-effective and within the reach of smallholders and farmers (these groups being among the lower economic ranks in many places). Perhaps the World Bank Group could further promote standards (both within RSPO and without) that would make sustainable certification more inclusive. A multi-tier market may need to develop – say with Europe demanding and paying for the highest standard of sustainably produced palm oil, likely supplied by the biggest plantation companies, and with other markets demanding and paying for different sustainability standards that can be supplied by smallholders and farmers. d) While it is good for the World Bank Group to take sustainability as a criteria for its lending, market demand (volume and price) for sustainability should be assessed and not assumed. So far, the market take-up for RSPO certified palm oil has lagged and been a disappointment to palm oil growers who have been producing RSPO certified palm oil. The RSPO reports 60% take-up over the last 12 months (up from a lower level of 30% - I think measured from start to early 2010). If demand were strong, it should be 100%? However, with the reference price premium for RSPO

certified palm oil dropping to USD6/mt on Green Palm (from over USD10/mt last year and USD50/mt at the start), it is possible that market demand will perk up? This should be monitored? Should the scope (and therefore the cost) of certification be matched to the price that the market is willing to pay? Or should the cost of certification to be fully absorbed by all producers – from the largest corporation to the smallest farmer? If the latter, how should the cost be shared out? Should some of the costs be borne by other stakeholders and not just by the plantation corporation and the smallholders and the farmers? e) Palm oil has been heavily criticised for is negative environmental and social impacts. However, it has quite a few positive features compared to other edible oil crops (which could be grown on the same piece of land) – i) the highest yield of any edible oil, ii) it is a versatile oil that can be used in more applications (in food, soaps, and in pharmaceuticals), and iii) it offers some health benefits to consumers. Other things being equal, should palm oil be favoured over other edible oils? f) Other edible oil crops and ingredients have not been subject to similar stringent production hurdles. Would the World Bank Group support sustainability codes of practice for other ingredients too? Perhaps I raised more questions than my offering of comments. I wish the World Bank Group’s palm oil framework consultation continued successful deliberations, and I look forward hearing from the next stage of this process. Ms. KHOR Yu Leng, BA (Oxon), MSc (Econs) - research analyst & consultant e: khorreports@gmail.com posted 20 August 2010 by Yuleng Khor from web

MANUEL CHIRIBOGA SUMMARY AUGUST 9 AND NEW QUESTIONS Dear participants, Thanks to Mark Kofi Cobblah, A. Ikpi and Rolando Dy for their contributions on this first day of the conference. Comments were made on: - The need for the Palm Oil sector market to be well categorized and developed as many small enterprises will not be able to benefit a great deal from the sector if not well managed (M. Kofi Cobblah). - Terminology. There is nothing like "Palm Oil" Sector in any economy. The correct title is "OIL PALM" Sector. Palm oil is only one of several products we get from the oil palm sector, and for a document of this importance, this little but significant mistake should be corrected before we proceed any further (A. Ikpi). - More treatment on market growth was expected. The report indicated that demand for vegetable oil since 1980 grew by 6 percent annually. 1. How much of the growth came from palm oil?

2. Within palm, oil, which demand segments -cooking oil, soap and detergents, oleochemicals, biodiesel, etc - contributed most to the growth? Also, over the two to three decades, how much private investments went into oil palm? How much investments were spent for every direct job created in the farm sector? (Rolando Dy) Four lead discussants' reports were highlighted during the day for further comments from participants. The authors of these reports are: Rhett Butler, Mongabay.com, US Rosediana Suharto, Indonesian Palm Oil Commission, Indonesia Fred Stolle, World Resource Institute, USA Juan Carlos Espinosa, WWF Colombia, Colombia Let me just put forward a couple of new questions: 1. Where do you think palm oil plantations will grow mostly: will it continue to de Asia or will It move to Africa. Just a few weeks ago The Economist reported on massive land acquisitions by the Chinese in Congo for palm production. Is this a trend? Is there an expansion happening also in countries such as Colombia, Ecuador, Brazil? 2. In what type of lands is palm expansion happening: forest areas, degrades zones, agricultural lands? 3. What is the part if any in this expansion of small producers? Regards and have a nice day, Manuel Chiriboga and Emilie Beland E - consultation coordinator team posted 10 August 2010 by Manuel Chiriboga from email E-Consultation on the WBG's Draft Framework for Engagement in the Palm Oil Sector 2010, 9-20 August 2010 Interesting answers from lead discussant Andres Espinosa Fenwarth ============================= In reply to your questions, let me briefly say the following: 1. Where do you think palm oil plantations will grow mostly: will it continue to de Asia or will it move to Africa? Just a few weeks ago The Economist reported on massive land acquisitions by the Chinese in Congo for palm production. Is this a trend? Is there an expansion happening also in countries such as Colombia, Ecuador, Brazil? Global Industry Analysts, Inc. considers in their latest global report on palm oil markets that “the world market for palm oil is projected to exceed 100 million tons by the year 2015. The increasing standards of living in developing countries are driving the demand for palm oil. Indonesia and Malaysia alone meet, though not entirely, the largest part of the global demand for palm oil”. According to the same report, China dominates the world palm oil market in terms of

consumption. China does not produce palm oil and is completely dependent on imports to meet the domestic demand. In fact, China is the biggest worldwide importer of palm oil. The Oil World Annual 2008 report shows that China imports of palm oil were 5.499 thousand tons in 2007. The information about China involvement in Congo may though result in a new trend, given the size of the market. It is worth recalling that the document 2020 Vision in Colombia projects palm oil production to go from 360.537 hectares in 2009 to 743.000 hectares in 2020. We have no similar figures from either Brazil or Ecuador. However, we may foresee a similar trend in these countries with a rate of growth close to 8 per cent annually. 2. In what type of lands is palm expansion happening: forest areas, degrades zones, agricultural lands? In Colombia, palm oil expansion is taking place exclusively on agricultural lands. In fact, we have 3,5 million hectares of agricultural land that are apt for palm oil production. 3. What is the part if any in this expansion of small producers? In Colombia, almost half of the projected expansion in palm oil production corresponds to small and medium producers. Regards, Andrés Espinosa Fenwarth posted 11 August 2010 by Manuel Chiriboga from email SUMMARY TUESDAY 10 Dear participants, Thank you to Rhett Butler and Gloria Ofori-Boadu for their comments and the questions they pointed out: - Brazil's Program for Sustainable Production of Palm Oil (O Programa de Produção Sustentável de Óleo de Palma) will provide some $60 million to promote cultivation of oil palm in "abandoned" and "degraded" agricultural areas in the Brazilian Amazon, strictly limiting development to less than 5 million hectares and prohibiting expansion at the expense of native forests (Rhett Butler). - How women in parts of West Africa who continue to perform the small business role of extracting palm oil, palm-kernel oil and different types of cooking oil and other by-products from the Oil palm tree can continue to do so without been pushed out the market? How about traditional palm-wine tapping which is boosting eco-tourism in certain communities? (Gloria OforiBoadu). Regards, Manuel Chiriboga posted 11 August 2010 by Manuel Chiriboga from email AUGUST 12 MAIN POINTS Dear participants,

Thank you to Jorge Roman, Rosediana Suharto and Soedjai Kartasasmita for their contributions. Also, three lead discussants reports have been circulated: M.R. Chandran, Platinum Energy, Malaysia; Norman Jiwan, Sawit Watch, Indonesia; and Irene Ssekyana, Greenwatch Uganda, Uganda. The World Bank and IFC Strategy should support research on palm oil, done by governments, CGIAR and the private sector. It must emphasize the following issues, which are very important to the farming development: - A research program focused in plant health, mineral nutrition and fertilization, and genetic improvement resulting in plants resistant to sicknesses is required in the Ecuadorian context and probably in other parts of the world. - It is important to consider the use of a hybrid palm tree resulting from the cross of the Elais Guineensis y Elais Oleífera species. Further investigation is required to achieve a larger level of efficiency in the handling of hybrid species that could require special conditions to survive, such as controlled pollination (Jorge Roman). Palm oil market growth: - The demand of soybean oil recently has been replaced by palm oil and its derivatives. - If biodiesel production is considered, the palm tree is an ideal option due to its larger oil yield per hectare and palm oil production requires less amount of cultivated land than any other oil plant. - From Indonesia's point of view the demand segments which would contribute most to the economy growth would come from cooking oil (domestically Indonesia used 4-5 million tons of CPO). - Private investments or private plantations can be calculated from the land occupied by them which is half of the total oil palm plantation in Indonesia (3.8 million ha out of 7.5 million ha). - The average man hour needed for oil palm plantation are: 102.1 man hour/ year - Oil palm plantation workers would have a salary based on Provincial Minimum Wage (Upah Minimum Propinsi/UMP) (Rosediana Suharto). In Ecuador and in Indonesian smallholders comprise a significant segment of palm producers. WBG/IFC could strengthen the involvement of them by considering: - During the last two decades oil palm has become the major plantation crop in Indonesia. Smallholder’s oil palm plantations have much improved farmers’ living standards but currently productivity levels in many parts of Sumatra and Kalimantan are declining. In this context the WB should play a crucial role e.g. by providing financial and technical support through Government channels. - Independent smallholders are entrepreneurs of their own right. Mostly driven by entrepreneurial instincts, they were able to develop their own small plantations ranging in quality and size with or without support from banks. Independent smallholders have become the major suppliers of fruit bunches to neighboring palm oil mills. During discussions with APKASINDO it became apparent that plasma and independent smallholders alike have a common dream viz having their own palm oil mills in the foreseeable future. - In Sumatra, more than 100 so called independent palm oil mills can be found in smallholders’ locations. As they do not have their own plantations these palm oil mills cannot operate without

supplies of fruit from independent smallholders. In practice it is difficult to close down a mill because this could harm the interests of independent smallholders and may create social problems. - To translate the smallholders’ dream into reality, it is worth considering creating a few pilot projects where smallholders’ cooperatives would have the chance to take over some independent palm oil mills. This would require financial assistance from banks and strong Government support, managerial support, help from training institutes, introduction of extension services. - In Ecuador it is necessary to stimulate palm farming through the insertion of small producers in deforested country states, especially in places counting with farms to improve the environment. Planting palms contribute to an efficient CO2 capture. These sowings must be supported by a solid technical assistance program aimed at granting high levels of production to the small producer. A long-term financing program is required to achieve this goal. - WBG could provide support through Government institutions or banks and in the case of IFC through local banks to the smallholder’s cooperatives as in Indonesia (Soedjai Kartasasmita) but also in other parts of the world. Regards and have a nice day, Manuel Chiriboga posted 13 August 2010 by Manuel Chiriboga from email Contributions made between friday the 13 and Sunday 15 Dear participants, Thank you to Virginia, Norman Jiwan, R. Goodland, Marian Bradley and Rosediana Suharto for their very rich contributions during the weekend Insights on palm oil sector in Nigeria: While palm oil demand has increased as regards to supply there are a number of issues to be considered: - Improved waste management technology should be used. - The communities/ beneficiaries should be well sensitized and consulted during the project design and also the CSOs working in the area. - Market opportunities should be explored and improved seedling used (Victoria). This has become a recurrent theme The recommendations of the IFC strategy should be further articulated to reflect the potential development areas identified in the August 13 synthesis such as research and specific issues related to smallholders - which should probably include some sort of partnership arrangement with WB-IDA for financing smallholder development of oil palm (Marian Bradley). In Indonesia, the impacts on specific vulnerable groups such as women, migrant workers, and children should be well established: National oil palm development policies have typically favoured the establishment of large plantations and, even where policies are in theory scale neutral, economies of scale typically favour domination of the sector by large scale estates and mills. According to field surveys as well as the testimony of farmers at numerous RSPO meetings, smallholders in Indonesia suffer from

(1) monopsonistic relations with local mills, (2) unfair allocation of smallholdings, (3) untransparent processes of land titling, (4) high and manipulated debts, (5) unfair pricing, and (6) debt peonage. According to the Indonesian Ministry of Women’s Empowerment, the impact of oil palm plantations on rural women can include: (1) an increase in time and effort to carry out domestic chores and an increase in medical costs due to loss of access to medicinal plants obtained from gardens and forests; (2) loss of food and income from home gardens and cropping areas; (3) loss of indigenous knowledge and socio-cultural systems; and (4) an increase in domestic violence against women and children due to increased social and economic stresses. It is estimated that there are between 40,000 and 50,000 stateless children of migrant workers in the plantations of Sarawak and Sabah. Wives and children of plantation workers are not recognised and they have no workers benefits or insurance. Cases of human trafficking of women forced to work in prostitution and sexual exploitation associated with oil palm plantations. Poverty and criminalisation are also associated with the oil palm sector in cases where individuals who lost access to land and livelihoods are criminalised for taking fallen fruit from plantations (Norman Jiwan). The Strategy of the WBG and its investments in the old palm sector must include affirmative action to support these vulnerable groups. Palm oil can be a development agent and contribute to reduce poverty by allowing children to go to school, improving living conditions and giving the opportunity to smallholders to start savings. But these savings are not enough for replanting, so WB and IFC should assist smallholders to an access of financial/bank, as micro credit. The WBG Strategy must adopt a clear approach that favours smallholders instead of large-scale enterprises and which ensures (1) crop choice, (2) farmer control of land and capital, (3) the provision of unbiased extension support, (4) adequate marketing support, (5) transparent and fair credit and pricing, and (6) freedom to organise. Support the government of Indonesia’s to overhaul the smallholder sector before a secure framework is in place that can ensure good development outcomes for smallholders. A clear definition of who are local communities and indigenous people must established in order to settle land disputes. The Indonesian government has launched an assistance programme for smallholders which include actions on intensification, replanting with high productivity seeds and small area of expansion. About less than 2 million ha are occupied by independent smallholders. Independent smallholders can sell their fruit to any middlemen or mills who want to buy it, while plasma smallholders can sell their fruits to the big plantations if they haven’t paid their debt. Many independent smallholders do not sell their fruit to local mills but through middlemen, because of distance and transportation cost. Smallholders need training on agronomy and Good Agricultural Practices Findings of research on carbon foot print of oil palm plantations and social economic impacts, especially for smallholders, of oil palm plantations in 13 provinces in Indonesia by the Indonesian Palm Oil Commission and the World Agroforestry Center (ICRAF) should be analyzed in and its finding used. (Rosediana Suharto). Has the framework the sufficient teeth?

The Framework needs to make the case that palm oil projects reduce poverty more than a similar investment elsewhere. IFC engagement to only invest in plantation operations that are certified, or have a time-bound action plan to achieve certification is too risky. Only part of the action plan is divulged. How the client is progressing to meet action plans is never divulged by IFC. Commitments and key actions by the WBG to work with governments to implement land registration systems, build capacity for environmental and social impact assessment and regulation, strengthen forest and land governance and administration and increase productivity are inadequate. Important to specify how IFC will commit to prevent social and environmental damage and violations of its own policies in the future, what would require a strategy or even a policy. IFC’s Compliance Adviser’s evaluation of IFC’s oil palm investments was kept secret for months before they were only partially released. CAO convincingly showed that corporate pressures had repeatedly trumped social and environmental concerns, starting with what is commonly IFCs weakest point, miscategorization for the Environmental and Social Assessment (ESA) and most, if not all oil palm projects, should routinely be classified as “A”. All branches of the WBG should be enhancing prudentiary measures, rather than struggling to lower the standards. The CAO’s reports, the Inspection Panels reports and the complaints need to be included in full in the new oil palm Framework as annexes, or at least with easy-to-use links. The Framework needs to specify precisely how the CAO-identified policy violations by IFC will be prevented in future; IFC needs to ensure that the design of projects it supports is as prudent as possible in advance, and that it has reduced all possible risks to a low or acceptable state. The new strategy must ensure that: (a) no more forest is destroyed; (b) no more Indigenous People or poor re harmed; (c) no more GHG sequestration is impaired; (d) no more water is polluted. Clarifications and emphasis on these basic priorities must be added to the next draft. Despite the entire Framework’s rhetoric about enhanced coordination between IFC and the rest of the WBG, this para suggests IFC prepared this Framework mainly on their own, but hopes IBRD/IDA will come in later. If FPIC is considered essential, where is IFC’s response? As FPIC is so important to RSPO and many other stakeholders, does the WBG propose to follow the United Nations Declaration (UNDRIP) and accept FPIC, or will it persist in debasing the UN Declaration into FPIC consultation? IFC is supposed to be a member of RSPO in good standing. As IFC apparently does not accept FPIC, it is violating one of RSPO’s membership criteria. Three main Gaps in the Draft Framework: 1. The Strategy or Framework should emphasize clearly that the WBG will decline to finance (or otherwise encourage) destruction of the environment and will minimize impacts on Indigenous People. Further, that human displacement will be avoided or minimized, and that GHG emissions will be fully accounted beforehand, compensated for, and minimized. The WBG need to explain clearly how a proposed site was found to be suitably abandoned or sufficiently degraded needs to be explicitly described. 2. Use of Vegetable Oils: IFC should encourage domestic processing of palm oil and the creation of value-added products to the fullest extent possible. Indonesia rejected WBG advice a few years ago by thoughtfully imposing a ban on the export of crude undressed logs. As a result, Indonesia now has a thriving plywood, veneer, particle-board and finished wood products

industry, along with massive wood processing jobs. As an ecologist, I haven’t a ready solution, but the problems are real and should be tackled. 3. Water Use and Pollution: Given water scarcity, the time has come for IFC to lead palm oil producers into closed-cycle water management. This would conserve the supplies of water, while preventing the pollution of waterways below the oil palm factory. In addition, it would create secondary industries in recycling and use of waste products regained form wastewaters (R. Goodland). posted 16 August 2010 by Manuel Chiriboga from email Tuesday 17 main issues Dear participants, Thank you to Marcus Colchester, Joao Stacishin de Queiroz, Guadalupe Rodriguez and Reynier Funke for their comments. In his comments on the Draft Framework, Marcus Colchester points that the document exaggerates the consensus among stakeholders recommending WBG should re-engage in the sector. He also mentions that the document is not a 'strategy' in the sense WBG uses the term and as promised to Executive Directors back in 2001. The draft strategy would then need further discussion with stakeholders. Marcus Colchester notes that the Draft Framework is unclear about how the WBG will consider the following questions: categorisation of future investments; resolution of land conflicts; how safeguards will be triggered and what issues staff should be especially attentive; reconciliation IFC PS and WB Ops with RSPO P&C; how HCVs will be protected where laws do not favour this and; the well documented problems in Malaysia and Indonesia where 85% of palm oil is produced and most expansion in going on. The draft needs to establish as well how the WBG will address smallholders issues like existing problems of debt bondage, land loss and immiseration. Marcus Colchester also finds problematic that the Draft suggest that IFC may go it alone without adequate conditions. Other weak points are that the document needs to establish clearer criteria for CAS, set clear targets in order to establish baselines for M&E and address difference between PS/OP measures re 'critical habitats' and RSPO language about 'HCVs. According to Stacishin de Queiroz, the framework should have a better balance in the contextual analysis. Much is said about increasing income and job generation and economic growth; but little about lost livelihoods that are not necessarily related to “cash income.” There is no mention of cultural losses that when people that once derived their livelihoods from forests find themselves uncoupled from it and working for low wages in seasonal jobs under hardship conditions. There is also no mention made of the wealth-concentration impacts of a crop that is destined primarily for export and is often associated (in South America) with large corporations. The socio-and cultural ramifications are too numerous to name. Finally and fundamentally, the framework justifies investing in the oil palm sector primarily to foster economic growth and income generation. It would be more credible is instead of growth we focused in “economic development” as multifaceted. Some critical – very critical – issues are not considered; chief among them negative effects in human health resulting not only from changes in eating habits and behavior, but environmental contamination by the use of agrochemicals. The framework pays little heed to supply chains (other than the African one) that are necessary for Oil Palm production, for example pesticide supply and production. African Palm produces better in wet areas – high biodiversity areas. The framework needs to consider the identification of absolute “no go areas.” Investment in countries

with weak legal and regulatory frameworks should be contingent to putting in place these capacities and should serve as an incentive to the countries to do so. With respect to the Indicator on mobilizing the private sector: The framework doesn’t establish indicators of sustainability to consider for private sector operations. Marcus Colchester also highlights a set of omissions in the Draft Framework, for example issues regarding Indigenous people and vulnerable groups like restitution for past damages, recognition of customary rights in land, proscription of forced resettlement and land grabbing using eminent domain, concerns of women, bonded labour or stateless children, how WBG should ensure participatory land use planning. Other omissions are related to WBG staff accountability, lack of response to many issues raised in first round of consultations, no proposition to make FPIC mandatory or to develop participatory M&E, total omission of a meaningful discussion on climate responsibility. For her part Guadalupe Rodriguez brings the attention to two letters issued on 14 May 2010 and signed by 108 organizations. The letter asks the WB to not finance palmoil plantations, and state that the expansion of such large scale monocrops should be detained. Reynier Funke invites participants interested in learning more on other models than the industrial estate to consult the publication “The environmental impact and sustainability of plantations in Sub-Saharan Africa: Ghana's experiences with oil-palm plantations” in the UN University Library by Edwin Gyasi. In particular the section “Adverse environmental impacts and sustainability” is relevant to the WBG discussion. http://www.unu.edu/unupress/unupbooks/80918e/80918E10.htm#Adverse The postings yesterday bring thus a series of questions on the framework: first, on the level of consensus that has been reached amongst stakeholders, second, the discussion between framework and strategy and third, the need to pay more attention to non economic impacts of Palm oil and of specific social groups such as women and children. Two more specific points that has been stressed is the need to have within the strategy a more precise set of indicators regarding different aspects of the strategy and the issues relating to stakeholder participation in monitoring implementation. Finally there is a discussion on developing country responsibility and capacities linked to them. Let me just ask how to balance global concerns on the impact of palm oil on global public goods with the capacity of national government to make choices on what they feel right for their people. Could you discuss this? Manuel Chiriboga V. posted 18 August 2010 by Manuel Chiriboga from email Summary August 18, 2010 Thanks to Reynier Funke, Richard Aitken, Pekka Tuovinen, Beth Gingold, Andrés EspinosaFenwarth and Alejandra Rueda Zarate for their comments and experiences. Oilpalm Sector and Poverty Reduction Commentators agreed that the oilpalm sector can contribute to achieve better development levels. For Reynier Funke and Pekka Tuovinen, the key is having different production models, where small producers can be a significant part. Funke mentioned that in the past good ratio income/hectare were possible to achieve in palm oil plantations only thanks to the economies of scale allowed by large plantations. The challenge today is to develop alternative models that

allow wealth creation in existing, non-plantation structures, where required, while still achieving doubling or tripling of yields. The actual development "aid" approach does not work in that case, because most programs do not run for more than a few years, and the oil palm business has to be developed using a long term approach (at least 15 years). Pekka Tuovinen also mentions the need to increase productivity of existing smallholders plantations, whose yields tend to lag behind estates. Increasing the productivity of existing plantations has the potential to increase livelihood benefits for smallholders. Therefore, WB should focus in particular on broadening support for smallholders. Echoing Andrés Espinosa remarks last week, Alejandra Rueda Zarate points that Colombia has an important knowledge creating system where, medium-sized and large scale entrepreneurs develop strategic alliances with smallholders in order to reduce poverty, improve livelihoods and build synergies on behalf of progress. It is essential the WB and IFC support to enhance the conditions of smallholder’s plantations and their communities as well as the inclusive models developed through the alliances. From the biodiversity perspective, it is important to note that Colombia is working on the adoption of biodiversity-friendly production systems in palm-growing farms that will, among others outcomes, improve local livelihoods with participation from social actors present in palm agro-ecosystems. Commenting on the how to balance global concerns on the impact of palm oil on global public goods with the capacity of national government to make choices on what they feel right for their people, Andrés Espinosa-Fenwarth emphasizes that national governments in developing countries have a strong word and unique decision capabilities to drive this process towards a desired outcome for the right people, namely, small farmers. Public goods and infrastructure are closely connected to productivity and hence to financial success of the production model of small palm oil units. Government may steer the wheel in such way so as to promote areas of agricultural land apt or suitable especially for palm oil without deforesting, in which small scale farmers receive government incentives and financial support to join producers associations that are skillful in generating economies of scale. In return, these producer associations are encouraged to support local schools, medical facilities and housing for small farmers and their families. All in all, this small palm oil producer associative model is based heavily on social responsibility and sustainable producer practices amicable to our environment. Energy Pekka Tuovinen points that also important is the need for financial support and guidance for smallholders with replanting and good agricultural procedures, given that worldwide demand for vegetable oils is expected to increase by 36 percent from 2007 to 2017, with biofuels accounting for one-third of the increase. New, value added applications of agricultural products, such as liquid fuels and energy use, are able to speed up the growth originating in agriculture which, according to the World Development Report on Agriculture (2008) has been three times more effective in raising the incomes of the poor than growth generated from other sectors. Neste Oil would like to see that the potential of sustainable palm oil production is fully taken into account in the development of both the energy strategy and the framework for palm oil sector. Alejandra Rueda Zarate suggests the WB and IFC to include in its strategy financial support to carbon reduction initiatives that not only come from plantation itself but from the mills, such the CDM Sectorial Umbrella Project in Colombia to capture methane and cogenerate, as a contribution to the global effort to protect the environment through the mitigation of GHG emissions within the framework of the Kyoto Protocol. Implementation approach According to Beth Gingold, the lack of clarity regarding the objectives and intended use of the draft framework makes necessary a revision of the section on Implementation. She highlights some points for further discussion on the implementation scheme:

• Clarify how the framework will be used, including by explaining what is meant by “implementation” and “commitments.” Since this document provides a framework, not a strategy, it remains unclear what it would mean to “implement” the framework or what specific commitments are being made, particularly if engagement is client- rather than strategy- driven. • Provide more details on the decision-making processes that will determine how the WBG will use the framework to develop specific strategies and ensure that these strategies are implemented appropriately by WBG staff. More information is needed on the Country Assistance Strategies and on how development impacts are measured, and instructions on where relevant information can be found (e.g. more information on the IFC’s Development Effectiveness Framework can be found here: http://www.ifc.org/ifcext/devresultsinvestments.nsf/Content/Evaluation_Framework There is no information on how the WBG will ensure accountability once a strategy is developed. • Clarify the process of developing specific monitoring and evaluation (M&E) frameworks consistent with stated objectives. As also noted by other participants (e.g. J.C. Espinosa, R Aitken) appropriate M&E indicators need to be developed. It is unclear from the information provided in this document whether “current practices” are participatory, inclusive and transparent, and include public consultations or appropriate analysis (p.18). After objectives are clarified, this process should draw on ongoing research on micro-level impacts related to poverty reduction and social and environmental sustainability and private sector initiatives to design sustainability indicators for the sector. Commenting more specifically on the implementation of sustainability standards, Richard Aitken mentions that the framework strategy for WBG engagement in the Palm Oil sector promises to open a bold new era in which all leading Palm Oil companies will have the opportunity to safeguard the environmental and social sustainability of the planet by appropriately adopting best practices. This will be made possible by an enhanced involvement of IFC into RSPO development (build RSPO capacity, enhanced capacity, ensure that RSPO standards for environmental and social sustainability more closely reflect IFC's own performance standards). Concurrently the WBG will engage host governments on a country by country basis to advocate for regulatory reform. Alejandra Rueda Zarate mentions that the WB needs to be more specific on the way it will tackle specific challenges faced by the palm oil sector in order to develop a sustainable industry such as the transfer of technology, access to technical assistance and credit to smallholders, financial systems to support infrastructure development and replanting programs and finally, risk management or sanitary diseases, among others. The WB’s must be aware of the complexity and high costs of obtaining the certification for those small plantations. She suggests developing a road map on how the IFC and the WB will implement the strategy and engage with governments and private sector in accordance to the characteristics of each country and their own challenges. In Colombia, a map of suitable areas for the oil palm expansion in order to avoid land affectation and meet environmental regulations is under way. The results of it should be obtained very soon. As we near the end of the e-consultation let me ask you to send your comments and appreciations. Today we will continue to center our discussion on implementation and M&E. Tomorrow, the last day, comments on all aspects will be welcome. Best Regards Manuel posted 19 August 2010 by Manuel Chiriboga from email Summary August 18, 2010

Thanks to Reynier Funke, Richard Aitken, Pekka Tuovinen, Beth Gingold, Andrés EspinosaFenwarth and Alejandra Rueda Zarate for their comments and experiences. Oilpalm Sector and Poverty Reduction Commentators agreed that the oilpalm sector can contribute to achieve better development levels. For Reynier Funke and Pekka Tuovinen, the key is having different production models, where small producers can be a significant part. Funke mentioned that in the past good ratio income/hectare were possible to achieve in palm oil plantations only thanks to the economies of scale allowed by large plantations. The challenge today is to develop alternative models that allow wealth creation in existing, non-plantation structures, where required, while still achieving doubling or tripling of yields. The actual development "aid" approach does not work in that case, because most programs do not run for more than a few years, and the oil palm business has to be developed using a long term approach (at least 15 years). Pekka Tuovinen also mentions the need to increase productivity of existing smallholders plantations, whose yields tend to lag behind estates. Increasing the productivity of existing plantations has the potential to increase livelihood benefits for smallholders. Therefore, WB should focus in particular on broadening support for smallholders. Echoing Andrés Espinosa remarks last week, Alejandra Rueda Zarate points that Colombia has an important knowledge creating system where, medium-sized and large scale entrepreneurs develop strategic alliances with smallholders in order to reduce poverty, improve livelihoods and build synergies on behalf of progress. It is essential the WB and IFC support to enhance the conditions of smallholder’s plantations and their communities as well as the inclusive models developed through the alliances. From the biodiversity perspective, it is important to note that Colombia is working on the adoption of biodiversity-friendly production systems in palm-growing farms that will, among others outcomes, improve local livelihoods with participation from social actors present in palm agro-ecosystems. Commenting on the how to balance global concerns on the impact of palm oil on global public goods with the capacity of national government to make choices on what they feel right for their people, Andrés Espinosa-Fenwarth emphasizes that national governments in developing countries have a strong word and unique decision capabilities to drive this process towards a desired outcome for the right people, namely, small farmers. Public goods and infrastructure are closely connected to productivity and hence to financial success of the production model of small palm oil units. Government may steer the wheel in such way so as to promote areas of agricultural land apt or suitable especially for palm oil without deforesting, in which small scale farmers receive government incentives and financial support to join producers associations that are skillful in generating economies of scale. In return, these producer associations are encouraged to support local schools, medical facilities and housing for small farmers and their families. All in all, this small palm oil producer associative model is based heavily on social responsibility and sustainable producer practices amicable to our environment. Energy Pekka Tuovinen points that also important is the need for financial support and guidance for smallholders with replanting and good agricultural procedures, given that worldwide demand for vegetable oils is expected to increase by 36 percent from 2007 to 2017, with biofuels accounting for one-third of the increase. New, value added applications of agricultural products, such as liquid fuels and energy use, are able to speed up the growth originating in agriculture which, according to the World Development Report on Agriculture (2008) has been three times more effective in raising the incomes of the poor than growth generated from other sectors. Neste Oil

would like to see that the potential of sustainable palm oil production is fully taken into account in the development of both the energy strategy and the framework for palm oil sector. Alejandra Rueda Zarate suggests the WB and IFC to include in its strategy financial support to carbon reduction initiatives that not only come from plantation itself but from the mills, such the CDM Sectorial Umbrella Project in Colombia to capture methane and cogenerate, as a contribution to the global effort to protect the environment through the mitigation of GHG emissions within the framework of the Kyoto Protocol. Implementation approach According to Beth Gingold, the lack of clarity regarding the objectives and intended use of the draft framework makes necessary a revision of the section on Implementation. She highlights some points for further discussion on the implementation scheme: • Clarify how the framework will be used, including by explaining what is meant by “implementation” and “commitments.” Since this document provides a framework, not a strategy, it remains unclear what it would mean to “implement” the framework or what specific commitments are being made, particularly if engagement is client- rather than strategy- driven. • Provide more details on the decision-making processes that will determine how the WBG will use the framework to develop specific strategies and ensure that these strategies are implemented appropriately by WBG staff. More information is needed on the Country Assistance Strategies and on how development impacts are measured, and instructions on where relevant information can be found (e.g. more information on the IFC’s Development Effectiveness Framework can be found here: http://www.ifc.org/ifcext/devresultsinvestments.nsf/Content/Evaluation_Framework There is no information on how the WBG will ensure accountability once a strategy is developed. • Clarify the process of developing specific monitoring and evaluation (M&E) frameworks consistent with stated objectives. As also noted by other participants (e.g. J.C. Espinosa, R Aitken) appropriate M&E indicators need to be developed. It is unclear from the information provided in this document whether “current practices” are participatory, inclusive and transparent, and include public consultations or appropriate analysis (p.18). After objectives are clarified, this process should draw on ongoing research on micro-level impacts related to poverty reduction and social and environmental sustainability and private sector initiatives to design sustainability indicators for the sector. Commenting more specifically on the implementation of sustainability standards, Richard Aitken mentions that the framework strategy for WBG engagement in the Palm Oil sector promises to open a bold new era in which all leading Palm Oil companies will have the opportunity to safeguard the environmental and social sustainability of the planet by appropriately adopting best practices. This will be made possible by an enhanced involvement of IFC into RSPO development (build RSPO capacity, enhanced capacity, ensure that RSPO standards for environmental and social sustainability more closely reflect IFC's own performance standards). Concurrently the WBG will engage host governments on a country by country basis to advocate for regulatory reform. Alejandra Rueda Zarate mentions that the WB needs to be more specific on the way it will tackle specific challenges faced by the palm oil sector in order to develop a sustainable industry such as the transfer of technology, access to technical assistance and credit to smallholders, financial systems to support infrastructure development and replanting programs and finally, risk management or sanitary diseases, among others. The WB’s must be aware of the complexity and high costs of obtaining the certification for those small plantations. She suggests developing a road map on how the IFC and the WB will implement the strategy and engage with governments

and private sector in accordance to the characteristics of each country and their own challenges. In Colombia, a map of suitable areas for the oil palm expansion in order to avoid land affectation and meet environmental regulations is under way. The results of it should be obtained very soon. As we near the end of the e-consultation let me ask you to send your comments and appreciations. Today we will continue to center our discussion on implementation and M&E. Tomorrow, the last day, comments on all aspects will be welcome. Best Regards Manuel Chiriboga V. posted 19 August 2010 by Manuel Chiriboga from email Summary for August 19 Thank you to Mohammed Bun Bida , Fernando Lukauskis, Rosediana Suharto, Johan Verburg, Richard Aitken, John McCarthy, Jim Roberts and Eric Palola for the comments made on 19 August. Insights of National Contexts Mohammed Bun Bida thanks the participants for their thoughtful comments and mentions that in Ghana there is a little effort put in the palm oil sector by stakeholders. Fernando Lukauskis brings to the attention four important areas of intervention that the WB should consider when working in the region of Tropical America. These areas are: improve competitiveness through yield increase; phytosanitary issues ("bud rot disease"); genetic resources; and, RSPO certification schemes. Rosediana Suharto mentions that RSPO criteria for HCV are clear enough and that if all of the lowland forest in Indonesia is categorized as HCV there will be no more land left to develop plantations. In Indonesia, a developing country where about 32 million people live under the poverty line, the priority is given to increase life standards for the people. Wild life is also protected, for example with the delimitation of national parks areas. Rosediana Suharto also points to the fact that the size orang-utans population is not affected by the decrease of the size of the forest. Implementation Approach Coming back on Beth Gingold’s comments to the effect that implementation approach and M&E largely depend on having clear objectives and strategy, Johan Verburg outlines that a good implementation approach would require a better coordination between the WB (national level approach) and the IFC (company field level approach) to achieve positive impacts at the landscape level, where the impact of the expanding palm oil sector is felt through externalities (deforestation, land conflicts). That implies considering interventions at a third level, larger than the company level, smaller than the national one, a territorial or area perspective. In the same perspective and in response to the various contributions that have called for the need to take a country specific approach, Johan Verburg suggests that for IFC and WB could strengthen their work and coordination if they develop a subnational perspective, in between the national WB analysis and the IFC company assessment. This would help both organizations work to achieve positive impact at that landscape level, and make a meaningful contribution to improvement. In that line he suggests producing a ranking of areas and companies, using a set of indicators on, among others, policy environment and sustainable development potential. The same could be done with a ranking list of companies.

The strategy would also be much stronger if it was more precise and specific about how the principles it brings forward might be implemented, according to John McCarthy. For example, the key section on project level investment and advisory service interventions (p17-18) could be much more explicit about the requirements for investment. Some questions to be considered are: • What constitutes an acceptable action plan to achieve certification? • What would be the indicators that a client is committed to meeting performance standards? Would these performance standards commensurate with RSPO P&C? • What monitoring would be in place and what sanctions would a client face if they violate them? Would this include third party independent monitoring? How would that be set up and funded? • What specifically would indicate that a client is knowledgeable of risks and taking steps to address them? How would risks be identified? Who would identify them? What methodology would they use? • What are clear and measurable development impacts? How would these impacts be decided upon? How would they be evaluated? What would happen if they were inadequate? Are these impacts commensurate with the implementation of RSPO P&C? • What measures would be in place to further smallholder inclusion? How would these measures deal with FPIC and other substantive issues raised elsewhere in the consultation? • How to assess whether risks can be mitigated though other WBG activities? • What criteria would be used to assess whether a country is working to address highlighted policy and regulatory issues? Which specific issues would be highlighted and how would this assessment occur? Who would carry it out? In his comments, Richard Aitken mentions that much of the commentaries that were made during the e-consultation have identified serious gaps and deficiencies in the Draft Framework. The extensive revision required for the framework strategy to fully address all of the concerns would mandate an extensive rewrite. Therefore, the 2nd draft should subsequently be subject to further stakeholder review via e-consultation prior to finalization. Along with listing suggestions of indicators for theme 2: Mobilization of Sustainable Private Sector Investment and theme 4: Sustainable Codes of Practice, Richard Aitken encourage all contributors to consider which indicators would be required under a robust Monitoring and Evaluation framework, to ensure that the required amendments they have advocated for are effectively considered. General Approach Jim Roberts states that in recent years the WB has devoted more of its resources to social and environmental causes than development or economic (in particular, agricultural) programs, running contrary to its stated mission of alleviating poverty through enhancing development. Roberts suggests that the new IFC/WB strategy for engagement and investment in the palm oil sector must promote free trade and open economies worldwide, providing for secure and clear market access for palm oil imports into the world’s most developed economies. It must also promote private sector investment and minimize the role of the state-and labour freedom- giving workers and employers maximum access to new opportunities in the sector through flexible, balanced and prudent labour laws. Finally, the new strategy must minimize the creation of monopoly rents by national governments in order to fight against corruption.

Strengths and Weaknesses of the Framework Eric Palola (WWF) brings to the attention important areas of the draft that need to be reconsidered and re-worked. He emphasizes that given all the issues of concern related to the palm oil sector expansion, the sector should not be taken lightly and any investment must be accompanied by a firm WBG commitment to insist on the key safeguards for communities and forests that must be part of any justification for a decision to go ahead. A distinct set of priority strategies and commitments should be developed for each of the four major themes (policy, private sector, smallholders, and sustainable practices) as part of developing Country Assistance Strategies (CAS) for the palm sector. He also mentions that the IFC could proactively avoid and correct for well known previous mistakes in project design and financing. Commenting on certifications schemes, Eric Palola suggests that given well-known issues of organizational development, governance, monitoring and rules enforcement, the WBG needs to invest to improve the legitimacy and capacity of the RSPO. The framework should explicitly recognize the role of REDD+, both as a policy and land use driver in specific countries of interest (such as Indonesia and Brazil) as well as within the Bank itself as part of the Framework’s implementation goal of “Enhanced World Bank – IFC collaboration”. Also, there is no explicit strategy for ensuring that IFC investments in palm do not lead to new and potentially dramatic increases in GHG emissions, especially in areas where high carbon stocks such as peatlands are at risk of conversion. This is yet another reason for having a proactive strategy for targeting degraded lands and focusing on productivity gains. Given evidence suggesting that palm is losing productivity relative to other oils (especially to soy) and that wide discrepancies in per hectare efficiency exist on different plantations the WBG should take this opportunity to solve several problems simultaneously: boost incomes, improve management techniques, increase utilization, and lessen pressure on land area, especially primary forests and other sensitive sites by pushing technical research and extension assistance to improve utilization on existing sites as a primary objective of the CAS. Finally, Eric Palola suggests some areas for further considerations: Consider a “stepwise” approach; Define a clear strategy and; discuss if financing should go for food or fuels, or both? As we start our last day of consultation I would encourage all participants to come in and make their points on the framework or on points made by other participants. We will finish the consultation in about 12 hours, so make use please of this last opportunity. Best Regards Manuel Chiriboga V. posted 20 August 2010 by Manuel Chiriboga from email Correction Dear Participants, Please be aware that Mr. Eric Palola is associated with the National Wildlife Federation of the US and not WWF, as wrongfully mentioned in thesummary for August 19. Sorry for this mistake Regards Manuel

posted 20 August 2010 by Manuel Chiriboga from email Comments by Susanne Breitkopf of Greenpeace on the WBG draft framework for engagement in the Palm Oil Sector Thank you very much indeed for giving us the opportunity to comment on the draft framework. I would like to second the many important contributions already made, notably by Colchester, De Queiroz, Verburg, Mc Carthy, Anderson, Gingold, Jiwan. We also express our strong support for the statement submitted today by indigenous peoples, small holders and NGOs from Indonesia. It seems clear at this point that, while the draft framework could provide a useful starting point, what is needed is a clearly articulated and implementable strategy for the World Bank Group and its potential future involvement in the palm oil sector. The proposed framework does not provide such a strategy. Apart from the qualitative weaknesses of the document as a whole, there are important omissions in content and substance, as already mentioned by previous commentators (Colchester, de Queiroz, Verburg etc). The development of a coherent strategy for the World Bank Group will take some time and more consultations, but it will be time well spent. Until such a strategy is finalized and ready to be implemented, the IFC should continue to refrain from financing the palm oil sector, as requested by World Bank President Zoellick. A few remarks in addition to the contributions already made: * While the document acknowledges "the sector's negative impacts, including deforestation, biodiversity loss, greenhouse gas emissions, land use conflicts and questions over land tenure and human rights" (page 3), effective measures to address them are missing. The review was triggered by a highly critical CAO report which found that in providing financial assistance to the Wilmar Group, IFC had violated its due diligence procedures and Performance Standards and had allowed financial considerations to override social and environmental concerns. * In this respect, talking about "attacks on the palm oil industry" or even "black campaigns" is not helpful and the discussion should continue to focus on the facts. The adverse impacts of forest conversion, and the expansion of the palm oil sector on deforestation and GHG emissions in Indonesia is today universally acknowledged and well documented. So are the multiple harmful impacts on local communities and local economies. The World Bank President himself considered problems identified by IFC's own Compliance Advisor Ombudsman severe enough to suspend financing of the palm oil sector until a new strategy is developed. * Yet, the most important and most problematic areas are not dealt with or only touched upon on the surface in the framework, such as indigenous peoples rights, forcible land acquisition, forced resettlement, land tenure, labor and human rights violations and other issues raised by previous discussants. It is critical for the World Bank Group to learn the lessons from interventions in countries with both a high level of palm oil production and a high level of deforestation (such as Indonesia), in order to avoid harmful effects in countries which are currently planning to expand the establishment of palm oil plantations (DRC, Gabon, Liberia for example). * Surprisingly, the framework ignores one of the most important recent developments in Indonesia: The Indonesian government itself is very aware of the need to halt deforestation and as a first step, has announced a moratorium on new concessions involving deforestation of peatland and other natural forests in the context of a bi-lateral agreement with Norway (see article below). While the details of the implementation of the moratorium, notably a thorough review of existing concessions, are yet to be determined, a new World Bank strategy will need to reflect and support this paradigm shift rather than undermine it.Yet, the moratorium is nowhere mentioned in the framework. A new strategy needs to include a provision that the IFC will not finance companies who continue to contribute to deforestation, be it through direct plantation

management or by sourcing palm oil from suppliers who are clearing natural forest for conversion. * The suggested requirements for private sector companies as outlined in the document are insufficient and will not prevent debacles such as the Wilmar investment (which sparked this review in the first place) from being repeated in the future. "Compliance with IFC performance standards" for example is already required by IFC regardless of the sector. A requirement for certification or a plan to get there is equally insufficient, experience has shown that such plans leave too much room for companies to continue business as usual and to avoid stricter environmental and social requirements. * The strategy is designed for the World Bank Group as a whole, but it fails to describe how a reform resulting in much needed coherence between the World Bank and the IFC would be achieved and implemented. Most importantly, it remains unclear how the World Bank's operational policies would be triggered and implemented. As currently proposed, it would appear from the framework that any responsibility for improving governance and for implementing social and environmental standards would rest with the respective governments and the private sector, with little or no means to measure improvement or ensure accountability of the actors. * The IFC also needs to urgently put in place procedures to ensure due diligence and compliance with its own performance standards, a problem that has been identified by its own compliance advisor ombudsman and by the World Bank President himself. * The framework needs measurable objectives, demonstrable gains for affected communities and for forest protection, and clear standards, baselines and indicators. Environmental, economic and social outcomes need to be defined. (it is for example important to further qualify what is often referred to as "employment" and develop indicators for development and demonstrable improvement of local livelihoods, rather than the very generic, often repeated reference to economic growth. * Since measurable objectives are still lacking, the indicators for monitoring and evaluation (page 19) are subsequently underdeveloped. For example, the only indicator for improvements in the regulatory and policy environment is the "number of stakeholder dialogues" in target countries, clearly not an appropriate indicator to assess improved policy (and implementation). * A short comment on the importance of the regulatory framework and the rule of law: The document acknowledges that "Experience has shown that achieving an environmentally and socially sustainable palm oil sector in a country is difficult or impossible if the enabling policy and regulatory environment are weak". However, it later says that "IFC may invest in oil palm plantation operations and other palm oil sector companies even if the public sector legal/regulatory enabling environment is less than ideal". The World Bank should to address governance and regulatory issues with the host country, but only "where the relevant actors are willing partners". What happens if this is not the case? Will the IFC move forward with private sector investments regardless? There is a sequencing issue here. The history of the World Bank is full of examples where reforms have been promoted by the Bank in parallel to large-scale investments and this approach has largely failed (see Chad Cameroon for example). Where money is flowing regardless of the absence of rule of law, there is naturally no incentive to change the status quo, and whoever is playing the game of corporate and administrative corruption best will have an advantage. On the other hand, private companies (at least those that are interested in honest business) need a

functioning regulatory environment in order to operate, rampant corruption and bad governance increase the cost doing business for them. In sum, the document contains some useful and candid analysis of the problem, but when comparing the proposed framework to the World Bank's and IFC's approach as implemented in the past, we do not see a significant deviation from common practice. This review and strategy development could be a real opportunity for the IFC and the World Bank Group as a whole to learn lessons from past failures and to ensure that at least their interventions and investments in the future do no harm. In order to accomplish this, we believe that more time and a wider consultation is needed in order to develop an appropriate strategy. We therefore strongly support the proposal made by Indonesian indigenous peoples, small holders and civil society groups to extend the consultation period and to keep the suspension of financing for the palm oil sector in place until a comprehensive strategy is developed. We would be happy to contribute to the development of such a strategy. Sincerely Susanne Breitkopf Greenpeace --------------------------------------------------------------------------Indonesia May Cancel Permits To Save Forest Reuters Date: 19-Aug-10 Country: INDONESIA Author: Sunanda Creagh and Neil Chatterjee Indonesia's planned moratorium on the clearing of natural forest from 2011 may lead to the revocation of some firms' existing permits and will slash the size of a giant food estate, said the official in charge of the scheme. The two-year moratorium, agreed under a $1 billion deal with Norway to curb greenhouse gases from deforestation, has created uncertainty among investors in plantations, timber and mining, who fear their expansion could be stymied. Kuntoro Mangkusubroto, head of the presidential delivery unit, told Reuters the moratorium could also extend beyond two years, given that President Susilo Bambang Yudhoyono was determined to protect the country's extensive tropical forests. "Climate change is a real problem for the world and for a developing country like Indonesia. Well this is a new agenda and I believe we have to change the way we think about development," said Mangkusubroto in an interview. "Parallel to that, we cannot neglect the welfare of the people," he said, adding that strong economic growth of 7 percent was still possible while protecting nature. Plantation and mining firms have opposed the moratorium, which could slow the expansion of palm oil firms such as Astra Agro Lestari and delay coal and mining projects worth $14 billion by the likes of BHP Billiton. "It all depends on how many licenses someone has already, and whether they are affected or not depends on the type of licenses that have been issued," Mangkusubroto said, adding that compensation could come in the form of land swaps. "There might be opposition because, for sure, there will be industries affected," he said. "We are just controlling the way they utilize the forest." LAND CHALLENGE

One casualty will be the Merauke food estate in the easternmost Papua region, which he said will be cut to around 350,000-500,000 hectares from an initial plan for 1.2 million, partly because carbon-rich peat lands had been found there.Investors in Merauke include Singapore palm oil giant Wilmar and Indonesia's Medco. Mangkusubroto, who is meeting Norwegian officials this week, said the scheme was still on track for January 2011, even though the two governments have yet to clarify their definition of natural forest and exactly what a moratorium will mean for permits. For now, he could not be specific on how much of Indonesia's roughly 120 million hectares of forest would be included under the moratorium. He admitted that enforcing the scheme -- given illegal logging is rife -- was another problem. Mangkusubroto said a multilateral agency such as the World Bank may oversee the $1 billion, most to be given by Norway after emissions reductions have been proved, which would reduce the risk that corrupt officials would siphon off funds. The moratorium could also derail prospects for infrastructure project such as toll roads if they affect natural forests. Mangkusubroto said a government land acquisition bill was unlikely to be approved by parliament before next year, later than hoped for given poor infrastructure is a key deterrent for many foreign direct investors in Southeast Asia's top economy. (Editing by Sara Webb) posted 20 August 2010 by Manuel Chiriboga from email

GILLES CLICHE Welcome message from the moderator Dear Participants, Welcome to the e – consultation on the main reference draft document titled: “The World Bank Group’s Framework for Engagement in the Palm Oil Sector” which will take place between Monday August 9 and Friday August 20. The e-consultation is open to all types of comments and there is no prescribed format, besides asking you to make comments as brief as possible. Nonetheless the coordinator would like to suggest that up to Wednesday comments relate to: The global context and diagnostic of the Palm Oil Sector. Possible questions that could be answered, include, but are not limited to the following: a. Is the context analysis a balances perspective on the Palm Oil sector, weighing enough economic, social, environmental, cultural and policy concerns? b. Are critical issues well defined and established on solid information and analysis? c. Are key aspects of the palm oil sector missing d. Are the stakeholder perspectives on the Palm Oil sector considered adequately The consultation team hopes to foster a lively discussion, open to all points of view regarding the reference draft document. Daily we will make a synthesis of the main points made by participants and at the end of each broad area, as defined on the consultation program, we will suggest a broad synthesis. Participants are invited to comment on these if they feel it does not cover fairly the different points of view or if a critical point has been missed.

To make your comments please write to the following address: palmoil@dgroups.org. If you want to look at the draft document please do so at the following URL of the palm oil community in DGroups: http://dgroups.org/?y4ks53kl/view All comments will be also posted there if you want to refer to them. A couple of ground rules: the comments do not accept attachments so if you want to send a document to be uploaded do so by writing to admin.palmoil@rimisp.org and including the document. We will accept any comments you send us, including the most critical ones that use firm and direct language, but will not accept the use of personal attacks, foul language or insults. The e –consultation is a neutral; the moderator will only intervene through questions to touch on subjects that can help deepen the discussion or help animate the debate. So, with this lets get the ball rolling. Regards Manuel Chiriboga posted 09 August 2010 by Gilles Cliche from email Objective and Themes in The Framework Dear participants, Between today (12) and Monday 16 August, the facilitators would like to open the second period of the program of this e-consultation to focus the discussion on the framework’s objective and themes. The draft framework states that the World Bank Group’s objective in (re) engaging in the palm oil sector is: To invest in the potential of the palm oil sector to generate growth and incomes and contribute to food security while ensuring sustainable management of resources and the environment. It further defines four key themes that would frame the WBG future engagement in the sector: • Supporting the development of an enabling policy and regulatory environment • Mobilizing socially and environmentally sustainable private sector investment • Encouraging benefit sharing with smallholders and communities • Supporting sustainability codes of practice. These are elaborated in the section III of the draft document, pp. 11-14. We would like to invite the participants to focus on this section of the document, and to share their views on the appropriateness or not of the objective and its formulation, and to whether they think that the four themes are those needing to be stressed, do they adequately complement each other, are they properly and sufficiently defined in the document, or are there other themes or aspects missing? We welcome your opinions and perspectives on this component of the draft framework. Rimisp´s E-consultation Team posted 12 August 2010 by Gilles Cliche from email Summary of 16 August Summary of 16 August comments

Thanks to Tobi Ogunbayo, Lars Gerard Hein, Johan Verburg, Luke, Reynier Funker & Charles Manu and Beth Gingold for their comments on this day. Two lead discussants reports were highlighted for further comments from participants: those of Andrés Espinosa Fenwarth and Scott Poynton. Scope of the document Echoing Stolle et al. and others, Beth Ginhold noted the lack of clarity of the purpose and intended use of the document, and of the relationship between the proposed framework and a comprehensive strategy. “…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.” She recommends to: • Use the WBG’s mission (reducing poverty) as the overall objective of the WBG’s engagement in the sector. From this overall objective more specific “sub”-objectives can be specified and for each “sub”-objective the rationale and possible action can be clarified. • Clarify the purpose of the framework by including an objective statement that explains how it will be used by the WBG. For example, “to enable the WBG to develop country-specific palm oil sector engagement strategies consistent with the WBG’s mission”, further pointing that “Many commentators have already provided a wealth of information that would be critical for developing country- and sector- specific sector strategies in different regions (e.g. R. Suharto, J. Roman, B.A. Abiola, and others), although it remains unclear how the WBG intends to use this information in the context of developing this framework.” • Clarify the different roles the WBG can play in engaging in the sector, including by avoiding the term “invest” in the objective statement. “A significant point of confusion during (a previous) stakeholder consultation resulted from lack of consistency in distinguishing between “investment” by the IFC and “engagement” by the World Bank. • Aim for “Benefit Maximizing” for smallholders and communities, rather than “Benefit Sharing” to take into account the fact that smallholders and communities experience both the benefits and the costs (economic, environmental, and social) generated by the sector (a point also raised by Norman Jiwan). Johan Verburg in his comments states that the focus of the document is largely on macroeconomic development plus the role of oil palm smallholders but that no mention is made of local sustainable development, an important element to consider in the achievement of global food security. He further stresses that the framework should set clearer preconditions for investments and thereby better guarantees for sustainability safeguards and compliance with WBG mission, standards and (sector) policies. Johan also invites to pay more specific attention for safeguarding and providing benefits to some vulnerable groups including labour, migrant labour, indigenous peoples, women, children and gender aspects of agricultural development in general. Luke (luke@goldtreeholdings.com) in his posting voices a concern that has been raised in several comments: “Until it is made clear whether the IFC supports RSPO and all their standards or not the situation remains confused. At the moment the IFC performance standards are not the same as RSPO – is this going to change?” For Reynier Funker and Charles Manu, the Framework emphasizes the cooperation between private and public sector, but it lacks clarity on the roles and responsibilities of the two sectors. If the government role is not well defined and private companies step in, there is a long term risk that small holders become fully dependent on one company, which may not always resist the temptation to use its “monopolistic” position in its own interest. They draw the attention to the

many examples in the FSG report “Improving the Livelihoods of Palm Oil Smallholders: the role of the private sector”. Ecological considerations For Lars Gerard Hein, the starting point for these considerations is that oil palm offers great commercial potential, but that ensuring adequate environmental safeguards in a potential IFC investment program is necessary to (i) protect interests of local people depending on ecosystem services; (ii) avoid very high CO2 emissions related to peatland development; and (iii) preserve key high conservation value areas. He asks for criteria for high conservation value forest to be made more concrete, and if off-limit areas could be demarcated, before the moratorium is lifted, both in the interest of effectively protecting biodiversity and in the interest of providing companies a level playing field and sufficient information to guide their business decisions. He further points to the lack of national control mechanisms for avoiding and mitigating environmental and social impacts in most Central African countries, and the risk that comparable or worse problems will arise as have occurred in South-East Asia. He sees a need to distinguish between West and Central Africa in designing strategies for dealing with environmental and social issues Nigeria oil palm production For Tobi Ogunbayo, there is need for strong advocacy in the area of oil palm production in sub Saharan Africa, mentioning that in Nigeria farmers in the area of oil palm are reducing daily while the country imports oil palm and the demand is on the rise and with the increasing population at 2.8% per annum and estimated population of 150million people, the demand and market will be very huge. “There is suitable soil and available demand” he claims: “IFC should look into this.” posted 17 August 2010 by Gilles Cliche from email Implementation approach, M&E, commitments section Dear Participants, While acknowledging the postings that have already covered (in part or in full) the section of the framework document on its proposed Implemention Approach, Monitoring and Evaluation (and related indicators), and the WBG/IFC Implementation Commitments (Section III, pages 16-20), we would like to invite you to further focus your attention and share your views on this specific section between now and Thursday 19 August. Of course comments on other sections continue to be welcomed, and we want to encourage everyone to participate. Rimisp´s E-consultation Team posted 17 August 2010 by Gilles Cliche from email Closing remarks on the World Bank Group's palm oil framework consultation. (Posted on behalf of Beth Gingold) After reviewing all comments (many thanks to all participants and organizers and the World Bank Group for providing this opportunity) a few closing remarks: · Given the serious concerns raised regarding this draft “framework” document, more time, analysis, and consultation will be required for the WBG to produce a “comprehensive strategy” for the palm oil sector, or any other specific clearly defined objective-driven strategy designed to address the conditions leading to the investment moratorium (i.e. the findings of the CAO audit).

· This consultation process has generated an impressive amount of informed feedback provided on a volunteer basis by participants with a wide breadth and depth of knowledge, reflecting substantial commitment of time and resources on the part of the participants. For various reasons, including this commitment required to participate, it remains likely that many equally important voices have not yet been heard. · In order to effectively harness this effort and knowledge, and recognizing the wide variety of issues and serious concerns that have been discussed, further drafts should be shared through an iterative and targeted consultation process. Beth Gingold posted 20 August 2010 by Gilles Cliche from email

EMILIE BÉLAND Summary of the First Period SUMMARY OF COMMENTS MADE BY PARTICIPANTS Summary of the First Period, 9-11 August The Global Context and Diagnostic of the Palm Oil Sector Participants value in the document the acknowledgment of the oil palm importance within a strategy to combat poverty, at the same time that the expected growth of the palm oil sector in the coming years makes urgent a comprehensive approach for the sector. Opinions are also to the effect that the document provides a good overview of the issues associated with the sector, including smallholders concerns. It was suggested that the treatment of the market growth could be expanded in the document, together with indications of the level of private investments in the sector in the last two to three decades. Another significant observation is the focus on environmental issues surrounding oil palm development in Indonesia and Malaysia making abstraction of the situation in the other producers countries. Additionally, the document could stress the fact that large scale monocrops have indirect environmental impacts , favour the concentration on land property and could hinder food security at the local level. “The only way in which this can be effectively addressed is by detailed regional planning exercises before land is made available for oil palm cultivation. This would also identify areas in the region which were for reasons of soil, climate or terrain unsuitable for OP, and would recommend control measures to ensure that the problems we have seen in Kalimantan, and appear also to be occurring in Colombia do not recur... Social control of sustainability standards is in theory highly desirable, but we must ensure that in the final decisions on what are likely to be contentious issues, adequate representation is given to people who understand the practical problems of running estates or smallholder schemes” (Henry Barlow). Some participants raise questions on the growth of the market versus the level of participation of small businesses. Gender considerations are not present. Other observations:

- The document should recognized that is was the outcome of the Compliance Advisor Ombudsman (CAO) 2009 audit report and not the CSO complaints to the CAO, which served to catalyze the process in the WBG to develop a strategic framework (p. 3 Rational for a New Framework). - One participant called for attention on the name of the sector. Should the document refer to “palm oil” or “oil palm”? - Observations to the effect that some specific issues at the core of the debate are omitted or treated lightly, such as: 1) Acceptance of RSPO standards and in particular the debate around GHG criteria; 2) Options and opportunities for implementation of a moratorium on further deforestation in Indonesia; 3) Certification: What is the end game? Cost of segregation in the supply chain? Realistic scenarios; 4) Role of RSPO: standard setting and/or governance body? - Current monitoring and evaluation indicators seem to be inadequate: too general, lack of specific environmental indicators, need to develop credible indicators. Regarding accountability, the strategy should use benchmarks and set targets for acceptable performance. (The discussion is on-going on these points: in particular participants are invited to suggest further Specific environmental indicators for 'Outcomes' of IFC financed private sector projects; and b) Specific environmental indicators for the associated 'Outputs' of IFC financed private sector projects (Richard Aitken) In the next day or so, we will work on a more detailed analysis to include a comparison in the different perspectives offered by the lead discussants. In the next section some highlights of the first four LD reports are presented. Highlights of Lead Discussants Reports During the period, four lead discussants reports were circulated for further comments from participants: Rhett Butler, Mongabay.com, USA; Rosediana Suharto, Indonesian Palm Oil Commission, Indonesia; Fred Stolle et al., World Resource Institute, USA; Juan Carlos Espinosa, WWF Colombia, Colombia. Their key observations are summarized below: RHETT BUTLER: The draft strategy provides a strong overview of the issues associated with oil palm cultivation, including smallholder concerns (e.g. “Trends in Private Sector Efforts” section), which are often overlooked. The Annex of key sustainability issues is a good summary. The background on the WBG’s previous engagement in the sector is particularly helpful and improves the transparency to the document. Likewise, the draft does a good job presenting the criticism of palm oil policy. The “lessons learned” sections in the annexes are quite useful. Weak Points - It remains unclear whether the World Bank Group will look at a company’s entire operations when evaluating whether to engage the firm. For example a company may be planning a project that meets World Bank standards, but may have existing, or be planning other projects that do not. Would the World Bank lend to the firm that has problematic subsidiaries and subcontractors? This point may be addressed on page 25 [“Stakeholders largely considered that the IFC should only engage with companies that are certified or rapidly moving toward certification”] and in the annex [“The need for careful selection of clients. The IFC’s investment experience shows that clients vary greatly in their capacity to understand and respond to environmental and social issues…”] but it could be clarified and put more upfront.

- The first sections of the draft include little mention of pollution (air and water) and waste management, which is are important environmental detriments of poorly managed oil palm plantations. These are mention in the Annex however. - Minor: Parts of the executive summary are slightly choppy and could benefit from some editing. Missing issues and gaps - A major missing issue is the lack of discussion on how carbon finance—specifically forest carbon finance—could be used to shape palm oil policy. While forest carbon finance remains controversial, it seems that the document should at least make mention of the issue. - In the safeguards section, the following is stated: “The Environmental Assessment is initiated as early as possible in project processing. The borrower is responsible for carrying out the EA and the World Bank advises the borrower on the EA requirements.” Unclear where there is an independent auditor or whether the borrower will conduct its own assessment. - More on transparency. Could the World Bank Group’s lending policy require operations, or perhaps even companies, to register their holdings (GIS coordinates) to allow for independent monitoring via remote sensing? ROSEDIANA SUHARTO The four key themes is the strongest strategy that will frame the future engagement of this sector. With these theme WBG can offer menu of interventions to governments on their regulatory and system, this will chances to streamline the different policy of central and district government then it will reduce the complicated investment procedure and related government procedure that do not match to each others. The investment in the future will also promote the implementations of sustainable practices in all level of plantations and support the smallholders’ certification that will encourage the better wealth of smallholders and community. Meanwhile in supporting the investment IFC have a very good instruments which is Performance Standard that to assess the practices of plantations, Advisory Services will play roles in addressing issues related to environment and sustainability and supporting smallholders productivity gains so it can contribute to poverty reduction as the main objectives of WBG. Weak points - The strategy does not consider the important role of smallholders in oil palm plantations and the specific issues they face: no access to financial bank loan (IFC micro credit facility); smallholders’ sustainable certification launch by RSPO is not easy to implement; the smallholders certification program should not marginalized the non RSPO certified smallholders. - The IFC Performance standards should be transparent and easy to understand, plantations should understand that this standards may not in conformity with the related government regulations. Missing issues and gaps - WBG and IFC understand that RSPO is business to business initiatives, that give all burdens to only producers not the others party, commitments only for RSPO member not other party such as government or others who are non member, as WBG members are government and IFC is the private hand of WBG it is very difficult to understand that RSPO standards will implemented. - Principle of sustainability is very important to be implemented but not all burden to growers only.

- The convening power of WBG to work across private, government sector and public organization is WBG key asset. This can facilitate open discussion with many stakeholders in reducing “black campaign “against palm oil in the form of accusations or allegations. - We must remember that palm oil is an agricultural commodity; it should not be treated differently to other commodities that use quite a large number of lands, and absorb and sequester less CO2. FRED STOLLE et al. The document provides evidence that the WBG has responded to several major concerns expressed during the consultations—especially concerns regarding the respective roles of the IFC and the World Bank. Specific strong points include that the document: 1) Is available as part of a public e-consultation process organized by an independent party; 2) Acknowledges the need to improve cooperation between the IFC and World Bank; 3) Provides information on the respective potential roles of the IFC and World Bank within a “framework,” for example by providing a summary of possible interventions in Table 1. Weak Points How this “framework” that provides a menu of options for the WBG’s “engagement” in the palm oil sector translates into “comprehensive strategy” for IFC “involvement”, and what decision-making processes at the WBG will be impacted”? More specific questions include: - How this document addresses the specific findings of the Compliance Advisor Ombudsman’s (CAO’s) 2009 audit? - What methodology was used to decide which information from the stakeholder consultations was included in the final document? - What data and analysis indicates that the menu of options identified in the framework will support WBG’s mission to “fight poverty”? - What internal reforms are necessary at the World Bank Group? Missing Issues and gaps: To address some of the issues World Resource Institute recommends the following: - Carry out robust analysis of data - Design the strategy around clear, measurable objectives - Support development away from primary forest JUAN CARLOS ESPINOSA: Strong points of the document: 1) Acknowledgement of oil palm’s importance within an agriculture-based strategy to combat poverty; 2) Emphasis on smallholders; 3) Combining regulatory requirements with sustainability standards; IFC only supporting oil palm projects aiming at certification. Weak Points - Addressing indirect impacts of large-scale monocrops: Large-scale developments of any monocrop can have synergic and cumulative environmental effects that are generally not accounted for in project-based environmental impact assessments, and they can also favor the concentration of land property and hinder food security at the local level. These types of indirect impacts are not acknowledged or addressed by the document.

- The document focuses only on the major environmental issues surrounding oil palm development in Indonesia and Malaysia, making abstraction of the specific situation in the other producers countries. Missing Issues - Social control of sustainability standards: A major criticism of sustainability standards and certification schemes such as the RSPO is that it allows for companies to “greenwash” their notso-sustainable practices. The risk for this to happen is greater in countries with weak land tenure, social, and environmental regulations, and more so weak enforcement by local authorities. Although participatory mechanisms are part of the RSPO certification process, country-specific mechanisms need to be put in place to guarantee their effective implementation. - Suitability maps for oil palm cultivation: Although a high conservation value area assessment is required under the RSPO Principle 7 for any new oil palm plantation, both governmental institutions and private investors can benefit from the construction of oil palm suitability maps at national, subregional and local scales. The WB could include this exercise as part of their policy/regulation and private investment potential interventions, linked to environmental concerns. - Government incentives for oil palm development: Given the high prices for palm oil and its biofuel potential, many governments have designed many incentives for the development of this industry. We want to thank Mark Kofi Cobblah, A. Ikpi, Rolando Dy, Rhett Butler, Gloria Ofori-Boadu, Andrés Espinosa Fenwarth, Richard Aitken, Francisco Tramontin, Boladale Abiola Adebowale, Rosediana Suharto and Henry Barlow for their comments during the first period, and encourage all participants to contribute in the next phase of this e-consultation. posted 12 August 2010 by Émilie Béland from email

COMMENTS ON THE DRAFT SYNTHESIS REPORT RICHARD AITKEN Comments on preliminary draft synthesis of the consultation Dear Sirs, I am writing to comment on the preliminary draft synthesis of the consultation (24 August 2:30pm (est); recognizing that the “synthesis report is an attempt to capture the key messages expressed by participants but by no means do justice to the richness found in the individual interventions posted in the process”; I can see that I have actually been quoted several times in the present draft of the synthesis report. My principal comment is for the quote, which appears in the last paragraph on page 5 beginning "A strong reply to this concern..." with the quote starting “IFC will henceforth take a leading role… ”. This comment was not actually a reply to the concern that the RSPO certification process lacks transparency. It is actually a reply to a post made by luke@goldtreeholdings.com, who expressed that IFC support for the RSPO is unclear and causes confusion. “At the moment the IFC performance standards are not the same as RSPO,” he stated asking. “Is this going to change?” Well anybody has the right to answer yes or no to that question. My response was to answer “Yes, it is going to change!” (Hell Yes!) I elaborated on a “bold new era” emphasizing that reconciliation between the RSPO and IFC standards would be achieved with issues related to transparency and comprehensiveness being addressed. I’m happy that you like the post, but we all know that a whole lot needs to happen before the envisioned outcome is manifest. I therefore believe that the quote is not entirely appropriate for this synopsis. In place of the aforementioned, you might consider to balance my comments regarding the need to improve transparency at the RSPO with comments from palm oil corporate regarding their take on the deficiencies of the ongoing certification process. Yu-Leng Khor made some valuable comments on the RSPO in the third paragraph of his August 20th post. Furthermore, Eric Palola of the National Wildlife Federation (NWF) has made some very profound comments about certification in his August 18th post (see: the reply section of the “Fedepalma comments on the draft for e-consultation”). Thank you for your attention to the above. Sincerely, Richard Aitken, posted 24 August by Richard Aitken from email

EVA BENITA TUZON Comments on the synthesis May I kindly suggest that a refined visual illustration of the framework be created. I view that it is an excellent effort gluing together the varying and similar inputs in the discussion. I may have been a sheer reader of the participants' views but the knowledge gains would have a future use as we also develop, improve and proceed in venturing on the palm oil industry in the Philippines. A logical/results framework could best illustrate how policy makers, financiers, or the various stakeholders envision attaining a sustainable, equitable framework for the industry. The arguments could also be translated into a more straightforward action terms, e.g., institutional

mechanisms [roles and functions], contents and processes, at different levels [global, regional, national, local]. Thank you. Eva Benita A. Tuzon Department of Agrarian Reform, Philippines posted 24 August by Eva Benita Tuzon from email

BETH GINGOLD RE: Synthesis Report E-Consultation on the WBG's Draft Framework for Engagement in the Palm Oil Sector Thank you very much for providing this opportunity to comment on the draft synthesis report, this is an important step that was missing from the first round of consultations so really glad to see that the process is continually improving. Unfortunately there is not enough time to provide sufficiently detailed response, so I hope that there will be more time for comments on the “Draft” version of this “Preliminary Draft” before the “final version” is released. Here are some specific suggested changes that could help strengthen the document: Issue 1: A positive and comprehensive process • Add after paragraph 1. “Participants also identified many areas for further improvement in the process. For example, participants requested that the WBG provide clear objectives for consultations held and information on how the input will be used. Several participants requested a longer and more iterative consultative process. One group described the process as “very one-sided and hasty” including in comparison to other WBG policy review processes such as the Forest Policy Implementation Review and Strategy.” • Paragraph 3, change the first sentence to “The potential of the palm oil sector to contribute to poverty reduction and the emphasis on smallholders were generally appreciated.” (since there was a lot of disagreement about whether in fact the document sufficiently addressed poverty reduction) Issue 2: A Framework or Strategy • Paragraph 2: Edit as follows, and move either in front of paragraph 1 or after Paragraph 3 (to clarify that this is a separate concern from whether the moratorium should continue) “A major concern was the lack of clarity provided in the document regarding the purpose and intended use of the document, and the relationship between the proposed “framework” provided and a “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.” • Paragraph 4: Delete/edit to say: “A number of participants voiced the view that what is needed is for the WBG to move forward as soon as possible to re-engage with the palm oil sector.” (it is unclear whether participants who voiced this view also all agreed that the current document is "sufficient")

Suggested Additions (may require more time so could be after Frankfurt) • Explanation of objective of the consultation in the Introduction. • Objective of this synthesis (and how it will be used by the WBG) • An issue/message about the need for country-specific strategies (reflecting the different context in different countries) • References to the Annex when giving quotes so the context can be checked easily by the reader • A full bulleted list of the issues raised including some indication of the prevalence of the issue, with a particular focus on specific recommendations made to the WBG (i.e. “clarify the purpose of the framework by including an objective statement that explains how it will be used by the WBG”). The WBG can then use this document as the basis for creating a document that explains why each recommendation was or was not incorporated. • An analysis of who participated and who did not. In addition to providing a box about the respondents, there could also be an analysis of which stakeholders were or were not represented by the participants (for example, there was little or no government/private sector participation and little or no direct participation from smallholders and/or affected communities, uneven participation from different regions, etc.) Thanks Again, Beth Gingold posted 24 August by Beth Gingold from web

LUKE MARRIOTT RE: Comments on preliminary draft synthesis of the consultation The reason for my initial question was I am setting up a plantation and milling company in Sierra Leone. Our mill confirms to Malaysian industry/RSPO standards however we are now informed that IFC performance standards are 8 times stricter on the smoke emissions than RSPO standards. Aside from the lack of clarity on this it is exasperating that IFC seems intent on punishing a small company in a woefully poor and underdeveloped country based on guidelines designed for a completely different part of the world. I am afraid that my company's dealings with the IFC have been extremely unsatisfying. We have been met with bureaucracy and obfuscation at every turn, the IFC statements of its mission to help poverty reduction ring pretty hollow in our experience. Luke Marriott. posted 25 August by Luke Marriott from email

MOGANA S. FLOMO Comments on the Synthesis concerning the Framework Dear Palmoil administrators: Thank you very much for the 9 issues outlined and discussed in the synthesis you recently distributed for comments. In the first place, I would like to register here that if consideration can be given to the issues mentioned herein concerning the Framework, the WBG and IFC can use the refined Framework to start effective work in the oil palm sector. We need to notice that it is not an easy task to formulate laws that will address major issues especially laws that will affect the whole world. Laws are always amended while working. In the process of working, errors can be identified and rectified to continue to serve those who are in needs. Having gone through the 9 issues raised in the synthesis, I think that those issues commented on by participants, which are professionally pointed out by the group responsible for the analysis of the participants' comments, should be considered and placed in the WBG's Framework to be a working tool as a way forward to put the oil palm sector in its good footing. This is because if we do not start to use this framework now, we will go on with the next ten (10) years arguing, suggesting, and commenting without arriving on common ground. In actual facts, those who sent in comments, criticisms, and suggestions to make the Framework workable have done pretty well and that we should take these instruments to work with them now while we continue to consult in the future for the betterment of the oil palm sector. Thank you again for allowing me to be part of this e-consultation group. Sincerely, Prof. Mogana S. Flomo posted 25 August by Mogana S. Flomo from email

TOBI OGUNBAYO Clear Cut Policy Having read through the draft, there is still no clear cut framework to encourage and support small holder in oil palm production in Sub Saharan Africa. Thanks posted 25 August by Tobi Ogunbayo from email

FRANCESCO TARMONTIN Comments on PRELIMINARY DRAFT synthesis of the consultation Thank you for the comprehensive review of the online consultation round. While the very diverse set of comments provided by participants is broadly reflected and the main recurring topics of discussion are well described, I still would like to underline the fact that some very relevant comments on some 'sensitive' issues have not been openly addressed in the synthesis. Notably the option to implement a moratorium (in Indonesia) while production

standards are being enforced and the role WB could play in making this an effective tool towards consensus building. Another, more specific comment on page 2. Relating to the importance of governance to address key concerns: "Several participants stressed that the document was clear in its recognition of the many and important negative social and environmental impacts of the palm oil industry so far, such as deforestation, biodiversity loss, greenhouse gas emissions, land use conflicts and questions over land tenure and human rights". Linked to this, many considered important that the WBG recognizes that to have different outcomes in the future, important institutional, political and economic factors need to be changed globally and in each of the producing countries" This sentence does not sound right. Institutional and political factors are not disconnected from social and environmental concerns and do not constitute 'different' outcomes. They are very often the root cause of environmental and social concerns and therefore need to be addressed openly. posted 25 August by Francesco Tramontin from email

MISHKA ZAMAN Inspection Panel Observation on The World Bank Inspection Panel is mentioned twice in the Draft Framework. The first mention is factually correct, but the 2nd reference (below) on Page 6 can be made more accurate. Page 6: Concerns about sustainability-related issues in the sector were highlighted by the IFC’s Office of the Compliance Advisor 2 , the World Bank’s inspection panel, and civil society organizations and prompted a temporary moratorium in November 2009 on new World Bank Group investments in the palm oil sector pending development of a more strategic approach to engagement in the sector. The Inspection Panel observes that: 1. In addition to capitalizing the "I" and "P" in Inspection Panel, the Draft Framework should note that the Inspection Panel has not issued its findings with regard to the Request for Inspection it received pertaining to the World Bank (IDA) financed Smallholder Agriculture Development Project in Papua New Guinea. Thus it would not be correct, at this stage, to state that "concerns about sustainability-related issues in the sector were highlighted by the ...World Bank's inspection panel...” It would be accurate, however, to state that the Request for Inspection received by the Inspection Panel from smallholders in Papua New Guinea raises concerns about the sustainability of the WB-financed Smallholder Agriculture Development Project. For more information, please see documentation posted on the Inspection Panel's website at: http://web.worldbank.org/WBSITE/EXTERNAL/EXTINSPECTIONPANEL/0,,contentMDK:2251220 9~pagePK:64129751~piPK:64128378~theSitePK:380794,00.html The Inspection Panel would appreciate if a correction is made with respect to the above sentence in future iterations of the document. Thank you. Mishka Zaman posted 25 August by Mishka Zaman from email

REYNIER FUNKE Reynier Funke - Comments on the Synthesis Report Just a few comments: Pls. clarify how 83 contributions were made by 282 participants. I presume the table with background on participants will make it easy to distinguish between government, NGOs and actual industry players. My impression was that comments by those making a living with palm oil were a minority. I do also concur with the comments from Sierra Leone. The access to BG, but also other “development” banks, is often cumbersome for small companies. The projects considered for funding may need to exceed USD 5 Mio. In the context of small holders, even when well organized, this is a high threshold. If small holder access to finance shall be facilitated, very practical and measurable steps must be defined indeed. As far as I recall. there were several comments about the impact of biofuel policies, very little could be found in the synthesis. Reynier Funke posted 25 August by Palm Oil Administrator from web

JOHAN VERBUG Comments on draft synthesis report In a race against the deadline allow me to provide you with some feedback. Overall comment: over 80 contributions are summarised in only 8 printed pages, while capturing almost every key topic discussed. Congratulations, very good. Quote: Several participants stressed that the document was clear in its recognition of the many and important negative social and environmental impacts of the palm oil industry so far, such as deforestation, biodiversity loss, greenhouse gas emissions, land use conflicts and questions over land tenure and human rights". Comment: All these mentioned problems are symptoms of the same problem: uncontrolled land use change. One of the clear solutions, also specifically refered in the framework is land use planning. Both terms land use change and land use planning do not appear in the synthesis, altough refered to in various ways by participants. Quote: The emphasis on the effects of the palm oil sector on poverty reduction, on smallholders and on benefit sharing schemes, was generally appreciated by the participants. Comment: the wording suggest that participants in general appreciate that the palm oil sector has positive impacts on poverty reduction, smallholders and benefit sharing. Many have argued this is only true under strict preconditions. Alternative wording: The importance the framework places on the potential to achieve positive effects of the palm oil sector on poverty reduction, on smallholders and on benefit sharing schemes, was generally appreciated by the participants.

Quote: Also highlighted by many was the WBG's commitment to certification as an integral and essential element of the palm oil sector, and "the recognition of the need to protect High Conservation Value Forests and critical habitats as part of palm oil sector development." Comment: this - although not specifically - refers to RSPO. Next to HCV conservation another key pilar is the protection of land rights. please add that. this logically leads to reference to FPIC, later in the document. Quote: This puts on the table the issue of better coordination between the IFC and the WB, which, if achieved, would be a major positive step in improving the economic, social and environmental performance of the palm oil sector. Comment: various contributors, including myself, have ventured into the topic of conditional not optional collaboration of WB and IFC, in order to materialize the opportunities of complementarity. Coordination is now only lightly - too llightly - touched upon in the summary. Section: What is off limits Comment: This section misses to mention the issues of WBG safeguards and what should be triggering them, as well as the issue of categorisation of projects. these two issues have also been central to the CAO investigations. Quote: It was pointed out -several times - that RSPO's Principles and Criteria are in conflict with WBG policy in this matter. Comment: this could be read the wrong way round, since RSPO requirements are more strict on this than WBG commitment to free prior and informed consultation instead of consent. Alternative text: It was pointed out -several times - that RSPO's Principles and Criteria (FPIConsetn) go beyond WBG policy in this matter (FPIConsultation) and that IFC as an RSPO member should commit fully to its standard. Quote: Changes to its Principles & Criteria are frequent (annual) and this makes it more difficult and costly to implement. Also, since there is frequent change, there seems to be only a short time period in which to assess the effectiveness and consequences of changes in standards? Corporations find such frequent change difficult to handle, and smallholders fear that it will be even more difficult for them to handle." Comment: This may have been said and I should have responded then, but it is factually not right. RSPO P&C have been adopted in 2005, field-tested and confirmed (without changes) in 2007. Ever since no changes have been made to the P&C, although the need to add greenhouse gas criteria has been called for by many but has not yet lead to acceptable additions. the only change is a separate additional requirement on new plantings, adopted by Jan 1st of this year. the participant may have been confused with the requirement for certified members to continuously improve (principle 7) which is normal practice in many common management system standards such as ISO 9000 and ISO 14000 series. Quote; 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. Comment: the phenomenon refered to here is acronymed ILUC and is central to many of the discussion on biofuel standards, indirect land use changes or in other words; replacement effects. the term should not be missed in the summary. and while I have not used the term in my second contribution to the discussions, this is exactly what i was refering to when discussing the main impacts to be relevant at the landscape level, in contrast to the WB working at the national policy level and the IFC working at the plantation company level. please see my earlier comments for the full arguement used. Comment: a few commentators have referred to the examplary role that the WBG could be playing for other investors, notably FDI investors in palm oil plantings from Malaysia or China and

commercial banks, notably equator banks. this in my view is the only major omission in the summary, others are merely a matter of emphasis and sometimes wording. I am wishing the RIMISP team good luck in finalising the synthesis report and presenting it to the Frankfurt meeting next week. Johan Verburg posted 25 August by Johan Verburg from email

FAIZAL PARISH RE: Comments on draft synthesis report Dear all, I endorse Johans comments - especially on RSPO - it is correct that there have been no changes to the P&C since their adoption in 2005. The RSPO certification system should be promoted and utilised by WBG. Furthermore reference to critical habitats should include mention of peatlands which are the most important carbon stores in SE asia and are the most important source of GHG emisions from LULUC in the oil palm sector. The RSPO Peatland working group is developing best mangement practices for oil palm on peatlands to to guide measures to reduce emissions from existing plantations on peat. Faizal Parish Global Environment Centre Cochair RSPO Peatland Working group posted 25 August by Faisal Parish from email

LEAD DISCUSSANTS’ REPORTS RHETT BUTLER Comments by Rhett Butler These comments to the “The World Bank Group’s Framework for Engagement in the Palm Oil Sector” draft were done by Rhett Butler. You can download the original document by visiting this link: http://dgroups.org/?s989kfcr/view Registered participants can submit their comments by email at palmoil@dgroups.org; messages will be distributed to all the registered participants after being accepted by the site administrator. ----Comments on the World Bank Group’s draft palm oil strategy Overall I found this an interesting and useful document that provides clarity on the World Bank Group’s strategy for re-establishing an investment policy for the palm oil sector. I’ve organized my comments as suggested in the introductory email. (a) the strongest positive points of the draft strategy The draft strategy provides a strong overview of the issues associated with oil palm cultivation, including smallholder concerns (e.g. “Trends in Private Sector Efforts” section), which are often overlooked. The Annex of key sustainability issues is a good summary. The background on the World Bank Group’s previous engagement in the sector is particularly helpful and improves the transparency to the document. Likewise, the draft does a good job presenting the criticism of palm oil policy. The “lessons learned” sections in the annexes are quite useful. This is an important point that could be brought forward: “The Bank favors preventive measures over mitigatory or compensatory measures, whenever feasible.” (b) the weakest points It remains unclear whether the World Bank Group will look at a company’s entire operations when evaluating whether to engage the firm. For example a company may be planning a project that meets World Bank standards, but may have existing, or be planning other projects that do not. Would the World Bank lend to the firm that has problematic subsidiaries and subcontractors? This point may be addressed on page 25 “Stakeholders largely considered that the IFC should only engage with companies that are certified or rapidly moving toward certification”] and in the annex [“The need for careful selection of clients. The IFC’s investment experience shows that clients vary greatly in their capacity to understand and respond to environmental and social issues…”] but it could be clarified and put more upfront. The first sections of the draft include little mention of pollution (air and water) and waste management, which is are important environmental detriments of poorly managed oil palm plantations. These are mention in the Annex however. Minor: Parts of the executive summary are slightly choppy and could benefit from some editing. For example, the text that goes from “In common with other forms …” to “…Development of oil palm on

peat land causes especially high levels of carbon emissions and irreversible damage to fragile ecosystems.” (c) missing issues and gaps A major missing issue is the lack of discussion on how carbon finance—specifically forest carbon finance—could be used to shape palm oil policy. The World Bank’s Forest Carbon Partnership Facility, Forest Investment Fund, and Biocarbon Fund may offer opportunities to create incentives for producers (e.g. members of certification systems or roundtables) to adopt better environmental practices. For example, the draft document states the World Bank is going to encourage production on marginal lands but does not state how it plans to do this. One way might be to use funds generated from carbon finance to subsidize the start-up costs of operations on Imperata grasslands. While forest carbon finance remains controversial, it seems that the document should at least make mention of the issue. In the safeguards section, the following is stated: “The Environmental Assessment is initiated as early as possible in project processing. The borrower is responsible for carrying out the EA and the World Bank advises the borrower on the EA requirements.” To me it is unclear where there is an independent auditor or whether the borrower will conduct its own assessment. I’d like to see more on transparency. Could the World Bank Group’s lending policy require operations, or perhaps even companies, to register their holdings (GIS coordinates) to allow for independent monitoring via remote sensing? posted 09 August 2010 by Palm Oil Administrator from web

M.R. CHANDRAN Comments by M.R. Chandran These comments to the “The World Bank Group’s Framework for Engagement in the Palm Oil Sector” draft were done by M. R. Chandran. You can download the original document by visiting this link: http://dgroups.org/?7w5511az Registered participants can submit their comments by email at palmoil@dgroups.org; messages will be distributed to all participants after being accepted by the site administrator. ----The World Bank Group’s Framework for Engagement in the Palm Oil Sector - (DRAFT 2010) Comments and views on key areas of the above report by: M. R. Chandran, Lead Discussant A. The strongest positive points of the draft strategy I. Overall I consider the WBG‘s Framework report for (re)engagement in the palm oil sector to be positive. II. However, I think it a pity that the Draft‘s Executive Summary commences on a rather negative, downbeat note with the weak opening, and strong second, paragraphs. This important summary would have presented a more positive impact on readers if it had commenced with the present first

paragraph under the heading ‗Current Status and Future Trends‘, modified to also take in the content of the present opening paragraph of the Summary. III. The IFC existing and proposed involvement brought to mind the very considerable good work which was previously undertaken by Commonwealth Development Corporation in its heyday, (sadly CDC now appears to have lost its way.) IV. Annex I is very comprehensive in highlighting the problems faced by, and requirements for, the industry, most especially in the Indonesian context. V. Clear in its support of the large benefits of the crop (lowest cost oil to meet the energy needs of a growing global population; to reduce hunger & malnutrition and to improve the lives of the rural poor) and continuance to try and justify supporting it. VI. Clear in its desire for improved sustainability. VII. Ability of WB to be involved at influential levels, e.g. government. VIII. Ability of the WB to bring global experience to bear on a local basis. IX. Recognition that many difficult solutions are required and they may differ for different countries/situations although this appears not fully reflected in Executive Summary. B. The weakest points I. Assumes local governments are effective. II. The procedural side is so complex that people will simply give up on it and find other routes for finance. III. The WB seems to have swallowed all the myths about the bad effects of oil palm. While sustainable palm oil is a wish that dominates media types, e.g. the BBC, EU press & civil society groups etc; it is rare to hear any normal person say they would not buy “X product” unless it was certified sustainable. IV. In many areas it seems simply to be duplicating the efforts of others, e.g. why not assist RSPO to develop sustainability concepts rather than seeming to want start from scratch. V. Heavy reliance on RSPO scheme working well, especially for smallholders. VI. Too many conditions and too difficult to administer or require disproportionate resources. VII. Many principles and criteria not well founded on information and data from R&D and untested and difficult to implement especially if smallholders are an important target. VIII. Fate of producers in uncertain hands if RSPO or other certification scheme not properly or unfairly administered. IX. Probably the heavy reliance on local implementation, bureaucracy and high costs could make the implementation of RSPO unsustainable. C. Missing issues and gaps Gaps missing from this Framework are categorised under 3 specific areas as follows: 1. Engagement with Governments

I. Greater emphasis ought to be placed on the World Bank‘s engagement in the public sector to help induce positive change at the national and industry levels. II. There is a need to appreciate the different levels of development among producing countries both in terms of the socio-economic development as well as forest cover and biodiversity. For example, the African countries cannot be grouped with the SEA countries given their level of development. Hence there must be a structure put in place to recognise this gap and the African countries should be immediate beneficiaries of the resumption of WB/IFC financing for oil palm development. III. In addition to engagement with the public sector, the World Bank could use its considerable influence to put pressure on the banking sector, both national and international, to withhold loans for oil palm developments from any private sector organisations that are not members of the RSPO, or do not contend with the principles of that organisation. IV. The World Bank could help governments fund EIS (Environmental Impact Studies) in areas considered for development (for timber extraction, mining, agriculture) in advance of concessions being granted, rather than, as in Indonesia, after the concession has been granted for development. V. The above would help governments identify HCV, peat and other important areas that should be conserved, or only developed for specific purposes, for better land use planning VI. The World Bank could work more closely with major importing country governments to promote sustainable palm oil as an important contributor to reducing poverty (―more than 40% of growers are smallholders‖), and furthering economic development in many developing countries. [There is a perception by the governments and the private sector of certain palm oil producing nations that, especially in Europe, governments of importing nations may support, or at least be indifferent to the anti palm oil lobby as a secondary means of imposing a trade barrier against the importation of palm oil.] 2. Sustainability Challenge. I. The lack of a good definition of sustainability going forward. II. A lack of connection with helping to resolve the key sustainability issues, e.g. cutting down forest to put good quality edible oil into auto engines is plain stupid, whereas using that same oil to reduce malnutrition is laudable. III. No test and verification of RSPO principles and mechanism for “continuous improvement” RSPO principles and criteria in place or obvious here. IV. Need to reduce emphasis on acceptance of RSPO and certification scheme but focus on accepted best practices and proper land management issues. V. My main point of contention is on the advisability of over-reliance on the RSPO or other certification schemes to improve “sustainability” of the industry. On the contrary, it is possible that wrong allocation and investment in manpower resources may weaken it, e.g. some unnamed Government Linked Companies (GLCs), in Malaysia. VI. Improved and widely workable RSPO (or unnamed sustainability scheme) can be possible if it is possible for the WBG to engage the respective Governments and take out the real key issues of biodiversity and deforestation and place their responsibility under national governments, even

regional government or international auspices. This can include peat forests. As both go together frequently, the regulation can be monitored closely by remote sensing and other new dedicated means by an international agency (e.g. supported by WBG) set up to do this regularly. Also land tenure and ownership issues should rightly be dealt with by Government and then, land released for development will be ―clean. VII. The rest of the issues involved in current sustainability definition i.e. focus on best practices, soil conservation and land management will be more digestible and easier to act upon by industry and certification bodies. VIII. Otherwise as seen presently, there will be lopsided development in Industry with diversion of limited resources to certification and other paper/survey exercises of very limited benefit but demanding of man-power and time. Despite the lack of manpower resources, the current pressure has led to over-investment in certification etc by internal and outside agencies of the plantations and with less investment in R&D needed on productivity and efficiency by plantations to the eventual detriment of production, environment in terms of need for more cultivation areas and meeting world needs for palm oil. IX. The consequent reliance on an efficient RSPO administration and supervision as well as ―expert independent reviewers‖ appointed by RSPO to run the scheme is unlikely to be healthy for the Industry with too heavy reliance on possible transient non-industry resources and administrators with no real responsibility for success and survival of industry. X. At the moment, the producers bear brunt of burden of certification and some consideration in terms of compensation of costs are needed for this for it to work over long term but the consumers mainly in the poor countries have to bear it finally. Over-emphasis on RSPO working well, certification needs and especially for smallholders is therefore not really advisable for WBG unless the scheme is made simpler to implement, less costly and palatable for the producers XI. If RSPO does not work or not accepted by industry members and small holders due to various reasons, what is plan B for WBG then? XII. As usual, the Devil will be in the details! Look at the requirements for local regional variations, Implementation and regulation and sustainability of the RSPO scheme drawn up with changes in personnel etc over time; nightmare with local authorities and bureaucracy for certification schemes and examination in over-regulated industry e.g. comparison with successful SMS rubber scheme where only final product is tested and verified. Hence break the scheme up as suggested and simplify it to make it workable and more meaningful to the producer on his land. 3. General Observations I. There is an increasing need in the smallholder sector to focus on replanting palm over 25 years and/or low yielding palms (<15 tonne FFB/ha). This will become ever more crucial in improving smallholder yields in the future. It is worth specific mention. There are probably lessons to be learned from the rubber industry smallholder replanting schemes in Malaysia 20-30 years ago. World Bank/IFC might wish to stress this need to the relevant government authorities, and could perhaps offer to assist them, and conceivably private sector schemes to achieve this. II. Given the risks of monoculture on such a vast scale as OP, in S E Asia particularly, the report should at least mention the possibility of evaluating alternative sources of vegetable oil, by commissioning the growing of small plots of the 25 or so largely S. American species of oil bearing palms – to assess:

a. Growth characteristics. b. Suitability for different soils and climates in S E Asia. c. Productivity in terms of oil per ha, and the chemical characteristics of the oil produced compared to palm oil. III. All of this could provide a risk management safety net in case oil palms in the region are hit by a devastating lethal pathogen. (cf Mad Ridley and his rubber seeds at the end of the 19th century.) Some further comments on the Framework and some of the wording below: Global Themes: A Menu of Local Actions: Correct theme and emphasis on “local action” which also indicate the complexity and difficulty of the work involved to achieve success. 1. Policy and Regulatory Environment* - Work with governments and other partners to design appropriate policy & institutions - Support Implementation of land registration systems - Build capacity for environmental and social impact assessment and regulation - Strengthen forest and land governance and administration - Build knowledge bases for productivity - Facilitate dialogue on policy and regulatory issues [* excerpt taken from the WBG’s Framework for Engagement in the Palm Oil Sector Draft] Agree basically. However modify to allow following: 1. More emphasis needed by WBG on R&D support and personnel, especially in development of new improved planting varieties and biotechnology for industry to build and widen genetic and knowledge base. 2. WBG to deal adequately with deforestation and biodiversity loss issues and impacts on national and regional basis. Need to set up agreements with Governments on this as land release in their (State/Provincial) hands. Set up institutions, e.g. Remote sensing centres to monitor loss of forests and report regularly and deal with Governments. a. Need more coordinated R&D and knowledge on environmental and social impacts - now based on small and scanty studies. Focus on what conservation and biodiversity is required for sustainability on regional and national basis and advise the Governments respectively to enforce them. b. Need to test out impacts of RSPO criteria on environment and soil conservation/fertility, many not be properly tested or verified. 2. Mobilize Sustainable Private Sector Investment* - Direct investments including loans, equity finance, trade finance, guarantees, funds, etc. - Advisory services on supply chain linkages, eco-standards, investment climate, labor standards, community investment, etc. - Increase the role of local/regional FIs in providing access to finance to smallholders and SMEs [* excerpt taken from the WBG’s Framework for Engagement in the Palm Oil Sector Draft] Main comment is the sustainability of the private sector outsourced advisory services suppliers and their commitments to improvements in knowledge and R&D (being privately funded, not large and presumably highly profit orientated). RSPO demands “continuous improvement” – where will this come from here in these services?

So where will the pull for improvements and pushes come from? And who will provide the knowledge and information here? The industry R&D institutions and Universities are not apparently coordinated in any meaningful manner for this now, in the main producer countries. The motives of NGOs are not all pure. How can WBG assist here? 3. Benefit Sharing with Smallholders and Communities* - Renew focus on smallholders - Invest in infrastructure development to provide access to markets - Strengthen smallholder producer organizations - Strengthen smallholder extension and advisory services - Invest in improving productivity - Improve access to finance [* excerpt taken from the WBG’s Framework for Engagement in the Palm Oil Sector Draft] Agree basically on strong infrastructure development and finance support but need large network and strong local management, governance and drive to succeed in improvement of productivity. So choice of local partners for latter critical. In a perennial crop like oil palm, choice of correct planting material and early development at planting/replanting is critical. So, maybe focus on these areas up to maturity and then leave to the small- holders and local Government advisors/extension services? Benefits to smallholders will flow to communities. 4. Sustainability codes of Practice* - Support development of standards and certification systems - Strengthen RSPO’s institutional capacity - Assist Clients in achieving RSPO or equivalent certification - Assist in improving smallholder access to certification [* excerpt taken from the WBG’s Framework for Engagement in the Palm Oil Sector Draft] On the certification standards and systems, my view is that RSPO is trying to do too much and formulating the conditions e.g. inclusion of GHG criteria and certification process. Proving too difficult and unjustifiably costly (in the process, making the poor countries who are the predominant consumers to pay more) for universal adoption, which must be the aim. In their commentary of January 12, 2010, Rhett A. Butler and Lian Pin Koh on mongabay.com said ―Consumers should help pay the bill for 'greener' palm oil‖. The bill based their estimates of the cost of large-scale adoption of CSPO on a palm oil price of 9 US$781/ton (2006-08 average; USDA-FAS 2009) and an estimated 15% price differential between uncertified and certified palm oil (RSPO 2009) for Indonesia—the world‘s largest palm oil producer—which consumes 4.9 million tons of palm oil annually (2008 values; USDA-FAS 2009), was an additional cost of US$571 million by switching from consuming uncertified to certified palm oil; whereas for the United States, which consumes 960,000 tons of palm oil annually (and is experiencing rising palm oil demand), the added cost would be US$112 million. For the individual consumer in Indonesia, he or she would need to spend an additional US$2.50, which represents 0.13% of his or her annual income (per capita GDP); whereas an American consumer would only need to spend an extra US$0.40, equivalent to 0.0008% of his or her yearly income. Thus, an individual in a developing country such

as Indonesia not only has to shoulder the cost of producing sustainable palm oil, but he or she would also be much heavily burdened by switching to using sustainable palm oil, compared to a consumer in a richer nation such as the United States. Unfortunately they seem to miss the point of ―why should the Indonesians or anybody else pays more? if only a small proportion of the palm oil may not be ―sustainable‖ and this can be rectified by the authorities enforcing the existing laws and regulations in many cases too. So here, we are trying to make certifications difficult and costly and at the same time, trying hard to do the difficult job of improving the administrators and support services to implement it, although we know that if the Governments do their job, ―sustainability‘ as currently defined is not difficult. Get the Governments to enforce the HCVF and deforestation laws (and associated loss of biodiversity problems), draw up and enforce fair land demarcation allocation laws and rights to the native people, civil and social rights and RSPO to focus on ―best practices and soil conservation― i.e. in the previous definition for sustainable land management and then you can have a simpler 10 and workable system for “sustainability”. Otherwise what happens if the plantation producers reject RSPO? Some comments on the wording of the document Comments on Exec summary: “The World Bank Group is aware of the sector‘s negative environmental and social impacts, including deforestation, biodiversity loss, greenhouse gas emissions, land use conflicts, and questions over land tenure and human rights.” Remarks: Which large scale agricultural enterprise does not disturb the environment negatively? The extent and long lasting impacts in terms of re-use of the land is not at serious risk as evident from on-going plantations since the start of the industry in 1918 in Malaysia. Social impacts are largely positive and biodiversity loss, GHG, land use, human rights etc in overall context are only very small aspects of whole currently. Why paint the whole palm oil sector negative in these aspects?? Comments on Exec summary: “In recent years, strong efforts have been made to better understand and address these challenges. The Roundtable on Sustainable Palm Oil‘s (RSPO‘s) protocols are an encouraging contribution, but there is still significant scope for moving the industry to a more sustainable footing.” Remarks: What is seriously wrong with the industry here if issues raised against the industry are seen in proper perspective as noted above? Comments on Exec summary: “...the IFC will, through its investments and advisory services products, support private sector development and promote environmentally and socially sustainable palm oil production. These interventions will be informed by the four themes identified in the present framework and focus in particular on broadening support for smallholders, expanding the number of internationally certified companies and increasing the supply of Certified Sustainable Palm Oil. Remarks: Not clear if any preference to private sector and small-holder support and in what proportions? Comments on Exec summary: “IFC will invest only where its interventions will meet IFC‘s Performance Standards and will have clear and measurable development impacts that contribute to

economic growth and poverty reduction. In particular, IFC will only invest in plantation operations that are certified for sustainable palm oil production according to an internationally-recognized certification scheme, or have a time-bound action plan to achieve such certification. Remarks: What IFC performance standards and when imposed – at start of development on promises? Internationally recognised certification scheme – who will do this? RSPO? Comments on Exec summary: “…the IFC‘s Advisory Services will play a role in addressing issues related to the environmentally and socially sustainable enabling environment for private sector businesses as well as supporting smallholders for better management practices and productivity gains.” Remarks: To Check this out and what role extent. Comments on Exec summary: “The IFC will strive for a global portfolio of projects and programs that will contribute to meeting its objectives of scaling up development reach and impacts while also contributing toward economic, environmental, and social sustainability.” Remarks: Interesting – meaning that development of crop will not stop or cannot be stopped; in other words the crop is good basically? Comments on Exec summary: “IFC may invest in oil palm plantation operations and other palm oil sector companies even if the public sector legal/regulatory enabling environment is less than ideal, if IFC is convinced that the project will have strong and measurable development impacts and that any risks can be mitigated through other governmental or non-governmental programs, including other World Bank Group operations, if present. …the World Bank Group, in partnership with others, can play a significant role in promoting change in the palm oil sector.” Remarks: Not very clear how? Improving infrastructure would be a big help. World Bank Group Commitments: “For the WB: Bring global analysis and local lessons learned into policy dialogue.” Remarks: “Basis of global analysis and local lessons” based on scanty data and ad hoc studies frequently. It now rests more on influence and eloquence of proponents. Better and more directed studies and information needed to draw up more reliable knowledge of what is going on and needed to mitigate any potential serious problems, if any. Can WBG play a role here? Improvement of collation of info, R&D papers and dissemination of info and knowledge needed. World Bank Group Commitments: “Facilitate benefit sharing for smallholders and communities.” Remarks: It is also probably a fallacy that many small holders and communities are deprived as a result of oil palm development in their areas. Again more studies are likely to be useful. World Bank Group Commitments: “For the IFC : Mobilize private sector investment in sustainable palm oil production through direct investments, with strengthened due diligence including requirements for certification of palm oil producing operations; delivering advisory services as well as strengthening access to finance, for both smallholders and SMEs; 2. Strengthen the RSPO’s capacity, and assist clients to achieve RSPO or equivalent certification.” Remarks: Problems of basis of strict RSPO standards?

World Bank Group Commitments: “For the World Bank and the IFC: 1. Support international certification schemes and in particular, smallholder inclusion in any such schemes. 2. Strengthen coordination and collaboration between the World Bank and IFC through joint analysis, Country Assistance Strategies, advisory services and investment climate diagnostic tools. 3. Strengthen monitoring and evaluation.” Remarks: General: Is there a balance here between requirement for licensing and certification for OP and other oil crops? Section 2 of main report: Pg 7. This commodity (PO) can stimulate further economic development and contribute to a rising standard of living for poor people in many developing countries, when environmental, social, and governance risks are adequately addressed. Remarks: Take exception to this statement: the risk elements are already addressed!! Section 2 of main report: Pg 7. In recent years, cultivation of oil palm has grown exponentially. The often negative impacts associated with this expansion have focused increased attention on the environmental and social sustainability of the sector, particularly in Indonesia and Malaysia (the two largest producers of crude palm oil). Remarks: Malaysia too? I do not agree. Section 2 of main report: Pg 8. In Southeast Asia, where eco-standards in the form of the Roundtable on Sustainable Palm Oil (RSPO) certification system are gaining traction, it is expected that planting will gradually shift away from forested areas with high conservation values to existing agricultural land or areas designated as degraded. Remarks: Insinuates that only HCVF used now for new plantings!! Section 2 of main report: Pg 9. Some 70 percent (4.2 million ha) of Indonesia‘s oil palm plantations are on land that was previously forested; more than 56 percent of the expansion between 1990 and 2005 occurred at the expense of natural forest cover. Similarly, about half of Malaysia‘s oil palm expansion has been at the expense of forests. Remarks: You have assumed Indonesian planted area at 6.0 mil ha – it is more in the region of 7.5 mil ha. Surprised at this - based on LP Koh‘s paper – who has checked and verified this in Malaysia? Need to define forests – secondary, logged-over, degraded etc. posted 12 August 2010 by Palm Oil Administrator from web

ANDRES ESPINOSA FENWARTH Comments by Andrés Espinosa These comments to the “The World Bank Group’s Framework for Engagement in the Palm Oil Sector” draft were done by Andrés Espinosa Fenwarth. You can download the original document by visiting this link: http://dgroups.org/?bngmgchb Registered participants can submit their comments by email at palmoil@dgroups.org; messages will be distributed to all participants after being accepted by the site administrator.

----COMMENTS ON THE WORLD BANK GROUP´S DRAFT FRAMEWORK FOR ENGAMENT IN THE PALM OIL SECTOR [1] The World Bank Group (WBG) has kindly invited us in our personal capacity to participate in the econsultation on the projected draft palm oil strategy to serve as an output for the final policy document. Our views will cover: a) The positive aspects of the proposed strategy; b) The weakest points; and c) The missing issues and gaps. a) Positive Aspects of the WBG Palm Oil Strategy The most important aspect of the WBG new approach is certainly its willingness to reconsider the global suspension imposed on new investments in the palm oil sector. The moratorium is conceivably not helping at all to improve the image of the palm oil industry. These timely consultations are the first and right movement towards a new compressive framework to allow the WBG to reengage worldwide in the palm oil industry with its resources and proven experience collected since 1965, especially in connection with its fight against poverty and support of smallholders. We are particularly fond of the common approach taken in the draft strategy to include joint, coordinated and clear cut objectives and policy actions by the World Bank and the IFC in the palm oil sector. This powerful methodology will reinforce the planned impact of their policy decisions and enhance the possibility for these global institutions to fulfill its mission: to foster economic growth, advance rural development and reduce poverty. We are also keen on the proposed objectives related to investing in the palm oil sector to generate economic growth, employment and steady income, contribute to food security while ensuring the promotion of environmental and socially sustainable models for the palm industry in producer developing countries. Besides, we highly regard the four key global themes selected as main drivers of the projected strategy for the palm oil industry, namely a) Policy and Regulatory Environment, b) Mobilize Sustainable Private Sector Investment; c) Benefit Sharing with Smallholders and Communities; and d) Sustainability Codes of Practice. These objectives and basic topics are comprehensive in nature and realistic in practice, which are considered indispensable in any workable public policy formulation and monitoring. b) The Weakest Points Albeit the proposed strategy for the palm oil industry is giving renewed attention to smallholder producers and communities, we believe that the Colombian Association experience may well serve here to enhance the WBG efforts to transform the private sector in a catalytic force to improve the livelihoods and productivity goals of palm oil producers in developing countries. The Association scheme allows smallholders to quickly gather experience and receive prompt and adequate technical assistance, which in turn generates economies of scale, improves productivity and facilitates access to long term finance and to local and foreign markets in related industries. The draft outlines the possible concerns that may arise when the palm oil industry is examined with the eyes of the supply chain structure, which should be further explored to address it properly to improve the image of the palm oil sector, somehow tainted as a result of practices or production processes that are not in all cases and in all countries deemed to be environmentally sound and sustainable in the long run. c) The Missing Issues and Gaps Although the draft recognizes that palm oil is used in the food industry, in the cosmetic and the oleochemical sectors, as well as in the production of biodiesel, gives no weight whatsoever to the

latter, even though biofuels shall contribute with one third to the rate growth of palm oil production in the coming years. Biodiesel as an alternative clean fuel is here to stay as a first-rate substitute for petroleum derivates with a demonstrated environmental record in the reduction of carbon dioxide emissions. It would be highly recommendable to include the production of biodiesel as part of the palm oil supply chain that would be admissible for consideration and support from the WBG. Palm oil yields are a crucial concern, special among smallholders. A significant factor with regard to this complex issue has to do with reduced productivity associated with Phytosanitary diseases of palm oil trees. Hence, it would advisable to include this essential element into the WBG equation. All the same in as far as research and development, including sharing applications of South-South know-how and technology, which should, in our view, be part of the core of the WBG framework strategy for the palm oil industry for the benefit of all developing palm oil producing countries. ============== [1] The following comments are made under our own responsibility and do not necessarily reflect the opinions of the Ministry of Agriculture and Rural Development of Colombia. posted 16 August 2010 by Palm Oil Administrator from web

JUAN C. ESPINOSA Comments by Juan C. Espinosa These comments to the “The World Bank Group’s Framework for Engagement in the Palm Oil Sector” draft were done by Juan C. Espinosa, WWF Colombia. ----Strongest Positive Points • Acknowledgement of oil palm’s importance within an agriculture-based strategy to combat poverty: As the document shows, oil palm has proven to be a crop that, if well managed, can help improve the livelihoods of rural communities in tropical countries. The main issue is how to better manage oil palm plantations and mills, and ensure that the benefits of this activity reach the rural poor. • Emphasis on smallholders: A major strength of this document is the emphasis it places in assisting smallholders. This is not only necessary if the World Bank’s oil palm strategy is to effectively contribute to combating poverty, but it can also prevent undesired effects of large-scale oil palm developments such as land (and wealth) concentration, displacement of peasant communities (most of which end up in poverty belts around urban centers), or peasants becoming farm workers instead of owning their own land and its production. Given the nature of the oil palm crop and production chain (being it a perennial crop that requires certain level of economies of scale), 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. Most of these topics are adequately covered in the document. • Combining regulatory requirements with sustainability standards: When working with such a largescale and influential industry, it is crucial to have a comprehensive approach with regulatory and market-based mechanisms, as they are clearly complementary. Even though the RSPO has set up a high-level standard for sustainable production of palm oil, it is still a voluntary mechanism and as such cannot reach to the entire palm oil industry. In addition, issues related to land tenure, labor conditions, identification and protection of country and region-specific high conservation value areas, and rights of ethnic communities need strong regulation, monitoring and enforcement

mechanisms. The document acknowledges that “the development, adoption, and implementation of sustainability standards and codes of practice is, when accompanied by complementary regulatory requirements, an effective means for influencing sector-wide change in the industry”. • IFC only supporting oil palm projects aiming at certification: Another major strength of the document is the fact that IFC will only finance oil palm projects already producing certified palm oil or with a clear time-bound commitment to do so. As already mentioned, sustainability standards as the RSPO are currently the most recognized and comprehensive collection of principles and criteria for sustainable palm oil production, and their adoption is the basis for the WB and the IFC to guarantee that their investments are effectively promoting a sustainable endeavor. Weakest points • Addressing indirect impacts of large-scale monocrops: The document clearly states that oil palm cultivation will continue to grow in the future, primarily in Southeast Asia, although it will most likely spread to a variety of countries in Africa and Latin America. Although smallholders have traditionally played a vital role in the development of oil palm cultivation throughout the world, the steady increase in palm oil demand for food and other industrial uses, and especially biofuels, is favoring the establishment of large-scale agro-industrial production models. Large-scale developments of any monocrop can have synergic and cumulative environmental effects that are generally not accounted for in project-based environmental impact assessments, and they can also favor the concentration of land property and hinder food security at the local level (if most peasants convert significant portions of their land to oil palm, which has happened in several regions in Colombia). These types of indirect impacts are not acknowledged or addressed by the document. • Focusing only on a fraction on environmental issues related to oil palm development: The document highlights only the major environmental issues surrounding oil palm development in Indonesia and Malaysia – deforestation, threat to focal species such as the orangutan, and GHG emissions (mainly linked to peat land conversion). It is very important to note that these may not be the main environmental concerns in other palm oil producing countries. In Colombia, for example, oil palm cultivation has primarily occurred in areas that had been deforested decades ago and were used for agriculture or cattle ranching (with no appreciable indirect land-use change effects). However, oil palm expansion is expected to happen in a vast area of natural savannahs, potentially affecting other type of high conservation areas that do not receive much national or international attention. Water is the other main environmental concern for oil palm development in Colombia. Oil palm is a thirsty crop (another aspect not addressed in the document), and as such needs irrigation infrastructure. There are many examples of oil palm plantations that have severely affected wetlands in the process of building such infrastructure, and others that have drained wetland ecosystems and converted them to oil palm plantations, with negative effects over users downstream. • No specific environmental performance indicators: Table 3 (pg 19) has no specific environmental performance indicators. Missing issues • Social control of sustainability standards: A major criticism of sustainability standards and certification schemes such as the RSPO is that it allows for companies to “greenwash” their not-sosustainable practices. The risk for this to happen is greater in countries with weak land tenure, social, and environmental regulations, and more so weak enforcement by local authorities. The latter is the case in Colombia. Many social and human-rights NGOs that participated in the discussions of the Colombian National Interpretation of the Principles and Criteria of the RSPO stated that for the RSPO scheme to avoid greenwashing it required a social control mechanism in place. This mechanism would allow for civil society to actively participate and provide input at different stages of RSPO audit and verification processes. Although these participatory mechanisms are part of the RSPO certification process, country-specific mechanisms need to be put in place to

guarantee their effective implementation. • Suitability maps for oil palm cultivation: Although a high conservation value area assessment is required under the RSPO Principle 7 for any new oil palm plantation, both governmental institutions and private investors can benefit from the construction of oil palm suitability maps at national, subregional and local scales. These maps will inform of: a) the areas best suited for oil palm cultivation from a soil and climate perspective; b) the areas that, even if they are well-suited for this crop, have environmental restrictions (and what type of management they require) or are declared as no-go areas because of their high conservation value; and c) areas that might be well-suited for oil palm cultivation and have no significant environmental restrictions, but do not have the necessary infrastructure or proximity to markets for them to be economically viable in the short run. Such maps have already been one for the Kalimantan province in Indonesia and at a national scale in Colombia, and are key inputs to uide oil palm expansion in a more sustainable way at a landscape scale. The WB could include these exercises as part of their policy/regulation and private investment potential interventions, linked to environmental concerns. • Government incentives for oil palm development: Given the high prices for palm oil and its biofuel potential, many governments have designed many incentives for the development of this industry. In Colombia, for example, they include tax exemptions on land property, soft loans for machinery and plantation costs, tax exemptions for palm oil mills and biofuel refineries, and biofuel mix mandates that guarantee a steady demand and stable prices for biodiesel. None of these incentives, however, is linked to or dependant on social and environmental performance. This should be a key issue for the policy/regulation intervention strategy to address. [1] These comments were drafted in August 2010. posted 09 August 2010 by Palm Oil Administrator from web

NORMAN JIWAN Comments by Norman Jiwan These comments to the “The World Bank Group’s Framework for Engagement in the Palm Oil Sector” draft were done by Norman Jiwan. You can download the original document by visiting this link: http://dgroups.org/?ay30jagb Registered participants can submit their comments by email at palmoil@dgroups.org; messages will be distributed to all participants after being accepted by the site administrator. ----The World Bank Group’s Framework for Engagement in the Palm Oil Sector – DRAFT Point of reviews by Norman Jiwan Sawit Watch, Head of Department Social and Environmental Risk Mitigation Initiatives (a) the strongest positive points of the draft strategy

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In general the draft framework has laid down the key fundamental pre-requisite and guidance for the World Bank Group and IFC in dealing with the palm oil industry. The draft strategy helps to lay down basic crucial aspect for the World Bank Group and IFC in engaging with palm oil industry and external stakehlolders. The draft framework is very useful whenever the World Bank Group and IFC can make the most of it for better and continual improvement of the existing oil palm plantations and palm oil industry. The draft framework becomes strategic bench-marking for the World Bank Group including IBRD, MIGA, IFC and other Equator Banks

(b) the weakest points Social issues, civil and political human rights, labour issues – migrant workers and stateless children, and gender issues of exploitation. Food security and indigenous livelihoods. There is unclear on how WBG/IFC focus on yield improvement programs for smallholders and optimising existing oil palm plantations – zero deforestation and toward low GHG emissions Vulnerable groups: still need clear framework, procedure and measures as pre-condition before any new investments and services; climate change responsibilities of all services, clients and intermediaries including supply chain of client: still unclear how the World Bank Group and IFC undertake role in the reduction of emissions from historical projects and clients free, prior and informed consent – IFC is an ordinary member of the RSPO which fully adopts FPIC in principles and criteria on sustainable palm oil (criterion 2.3, criterion 6.5, criterion 7.4). IFC should undertake an upward harmonisation on FPIC consistent with RSPO standard and UNDRIP. Historical issues and failures in nucleus estates and smallholders schemes (NES) and palm oil transmigration programme in 1980s had triggered deforestation and violation of human rights of indigenous peoples in Indonesia. There must be internal enforcement mechanism to deal with violations committed by the staff of the IFC and World Bank Group in order to make sure the World Bank Group's new palm oil sustainability engagement framework is credible with effective enforcements.

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What does this statement stand for? Page 24 … In Indonesia some smallholder groups referred to what they called a “black” campaign by some environmental groups that they felt grossly exaggerated the environmental issues in their area. They expressed the fear that this could affect the global demand for palm oil from Indonesia… The final framework should use an impartial sentence wording. Unclear supply chain mechanisms the only way in which World Bank Group can achieve avoid reputational risks, gain credibility and enhance positive image in the public and private sector. (c) missing issues and gaps It is still not clear on how the framework will address labour issues in particular migrant workers and stateless children, and gender issues of exploitation in producing countries in Indonesia and Malaysia. Non-land acquisition aspects of oil palm plantation development including access to health and clean water streams, air and spaces for the needs and activities of local communities. World Bank Group and IFC still need to undertake upward harmonisation with other international norms, rules and voluntary standards: still unclear how World Bank Group will deal with all ongoing cases and unresolved problems in the sector in the different producing countries. Land tenure and social conflicts in very complex and cross-cut aspects of civil and political, social, economic, and cultural rights of affected peoples and local communities shown by

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increasing and escalating conflicts from 160 in 2004 and 630 in 2010 in Indonesia. A shocking conflict figure issued by National Land Agency (BPN) claims 3500 ongoing conflicts in Indonesian palm plantations. Indonesia is good example for the World Bank Group to work together with clients and willing governments of host countries towards better and effective resolution mechanisms and resources. posted 12 August 2010 by Palm Oil Administrator from web

SCOTT POYNTON Comments by Scott Poynton These comments to the “The World Bank Group’s Framework for Engagement in the Palm Oil Sector” draft were done by Scott Poynton. You can download the original document by visiting this link: http://dgroups.org/?zy2j440j Registered participants can submit their comments by email at palmoil@dgroups.org; messages will be distributed to all participants after being accepted by the site administrator. ----Comments on The World Bank Group’s Framework for Engagement in the Palm Oil Sector By Scott Poynton, Executive Director, The Forest Trust Strongest Positive Points of the Draft Strategy Overall I believe that it is very positive that the World Bank Group (WBG) has recognized the need for a Framework for Engagement in the PO sector and that it has undertaken a broad consultation process; this is very encouraging. I concur that this represents a significant opportunity for the WBG to re-engage and tackle some of the challenges facing the sector. I believe that the strongest positive points of the Draft Strategy are: 1. Its understanding of the major challenges for the PO industry and the root causes of much of the social and environmental problems in the sector 2. The IFC intervening at the project level to catalyze private sector led economic development in a sustainable manner 3. The stress being placed on early engagement in particular with projects involving new plantation operations to improve project design 4. A strong focus on smallholders including: a. A commitment to ensuring that improved project design ensures better inclusion and impacts on smallholders b. A commitment to improving benefit sharing for smallholders and communities c. Broadening support to smallholders by promoting better management practices and productivity gains – this is key. 5. A commitment to: a. Ensuring the protection of critical habitat/HCV habitat b. strengthening RSPO’s capacity and

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assisting clients to achieve RSPO or equivalent certification

Weakest Points of the Draft Strategy I believe that there are some very serious weak points in the strategy that, if not addressed, risk the WBG’s involvement in the PO sector exacerbating the sector’s negative environmental and social impacts. Specifically, these are: 1. Whilst the Strategy notes that the process of land acquisition for large-scale oil palm development can generate negative impacts on vulnerable groups, it in effect outlines no concrete actions that will definitely happen to address these. Governments can choose to engage with the World Bank to address these concerns but will they? Experience suggests that they will not and that even if they do, processes will be long, drawn out and unlikely to yield meaningful change. Meanwhile, land acquisition and clearance will continue in the field with on-going negative impacts. Government engagement doesn’t guarantee change yet change is much needed in this area. Without concrete actions, these negative impacts on vulnerable groups will continue and will be exacerbated by IFC private sector investment. 2. Linked to this is that the strategy fails to acknowledge the importance of Indigenous Peoples (IP). Yes, they’re mentioned and negative impacts on their livelihoods are acknowledged but nowhere does the Draft Strategy identify concrete actions to deal with these critical social issues. It doesn’t discuss the importance of IP Customary Rights nor – and most critically – does the Strategy deal with the issue of Free Prior Informed Consent and the right of IP communities to say “No” to oil palm plantation development. The Strategy assumes that everyone wants oil palm development. Some communities, like IP communities, may not want oil palm developments on lands that they see as theirs – that they have Customary Rights over – so whilst the Draft Strategy highlights smallholders, it completely leaves out IP communities. This is a major weakness indeed; a critical failure I would say. 3. Overall and fundamentally linked to these first two points, I believe the Strategy is built on an outdated approach to sector support that has many times failed to deliver socio-economic development to the full cross section of society and in effect was what caused the WBG to be challenged by civil society. The approach is that the IFC will invest in private sector development whilst the World Bank will – if the partner government is willing – engage to solve the broader overarching issues. This is summed up perfectly and accurately in the Strategy on page 12: “Issues regarding land acquisition, land tenure, forest governance, and the rights of workers, communities, and Indigenous Peoples are at the root of much of the social and environmental problems in the sector.” TFT agrees completely with this. Yet the Strategy then goes on to say: “Resolving these challenges and ensuring consistent application of good practice and fairness are the ultimate responsibility of national governments.” TFT argues that this logic is seriously flawed and has been proven incorrect in many other contexts. Many in the development community have long ago come to understand that governments consistently fail - and often fail with dreadful consequences - to resolve these issues. The prevailing counter-wisdom argues, and TFT is a strong advocate of this, that the private sector must lead in resolving these issues. The Strategy highlights the importance of looking at supply chains but this is a passing note that sees no further development in the Strategy. TFT believes that there is only a limited role for the World Bank in this entire process because partner governments will likely not engage to resolve these issues or if they do, will do so weakly and with no meaningful results. Thus the WBG should – must – focus on strengthening the capacity of private sector palm oil players to resolve these critical issues themselves. TFT is implementing this approach in its work in the PO sector and in other sectors where governments have so far been unable or are unwilling to resolve

these critical issues. By working right along the entire supply chain, one partner can reinforce and support another, right down to the ground where the issues are arising. As an example, Nestlé recently announced Responsible Sourcing Guidelines (which are linked with RSPO) that make it clear to their suppliers that they will not tolerate deforestation in their products. Nestlé itself is investing in technical assistance programs to address these issues. If Nestlé suppliers could receive further IFC support to meet these RSGs, then government engagement in these critical issues becomes merely desirable rather than critical if we’re to avoid negative impacts on vulnerable groups and destruction of Critical Habitat/HCVs. TFT thus urges a serious re-think of the underlying development model that underpins the Strategy; focus on helping the private sector get it right and the WBG will catalyze equitable and sustainable development. Leave it to the readiness and capacity of governments and the negative impacts will continue. Two further suggestions that could strengthen the Strategy are: 1. The Strategy notes that it is expected that planting will gradually shift away from forested areas but proposes no concrete actions to accelerate this shift. Again, it is left to a land use planning process that may or may not happen or that may not be effective. The Strategy should again focus on assisting the private sector to move in this direction; 2. TFT would like to see it made very specific that the IFC will focus on investing in infrastructure that will assist the private sector bring segregated CSPO to market. posted 16 August 2010 by Palm Oil Administrator from web

IRENE SSEKYANA Comments by Irene Ssekyana These comments to the “The World Bank Group’s Framework for Engagement in the Palm Oil Sector” draft were done by Irene Ssekyana. You can download the original document by visiting this link: http://dgroups.org/?0k9frnxw Registered participants can submit their comments by email at palmoil@dgroups.org; messages will be distributed to all participants after being accepted by the site administrator. ----COMMENTS ON THE DRAFT WORLD BANK GROUP’S FRAMEWORK FOR ENGAGEMENT IN THE PALM OIL SECTOR. By Irene Ssekyana Greenwatch 1.0 INTRODUCTION The World Bank is in the process of coming up with a framework for sustainable engagement and involvement in the Palm Oil sector globally. According to the Bank, this engagement is as a result of complaints from environmental and other civil society organisations citing the eminent degradation and destruction that the Palm Oil has contributed to the environment. A series of consultations were held in April, May and June 2010 in several locations including Washington D.C., Accra, Ghana, San Jose, Costa Rica, in Indonesia and in Amsterdam, The Netherlands. The consultations have engaged a number of stakeholders including civil society, private sector and government who gave

their views on key issues in the palm oil sector and the possible role the World Bank Group could play in addressing some of the identified challenges. As part of the wide consultations, we were approached by RIMISP, the Latin American Centre for Rural; Development, an impartial consultancy group contracted by the Bank to conduct further consultations electronically to be lead discussants to guide the e-consultations. We would like to first of all commend the World Bank for coming up with this framework , which like the other operational provisions (on Tobacco, on Forests, natural habitats dam safety,) are intended to improve the performance and benefits of the sectors in order to contribute to economic development and poverty reduction. We also appreciate the World Bank for the effort put in engaging analytical research, field work to inform this document and the recommendation for not supporting Palm Oil developments in areas of High Conservation value. 2.0 GENERAL COMMENTS The World Bank Group’s core mission and policy is to fight poverty. However, whether or not this mission and policy has been or is being achieved over the many years of the Bank’s existence remains debatable. It is good that the framework proposes a shift of the industry from dependency on natural forest land, wetlands and highly biodiversity rich and sensitive areas to marginal lands. However, focus on marginal and other agricultural lands is likely to require the extensive use of fertilizers, pesticides and herbicides that may have significant negative environmental impacts. These calls for caution and care in the manner in which the palm oil plantations will be managed on the proposed marginal lands. Adherence and enforcement of social and environmental considerations will therefore be paramount. 3.0 SPECIFIC COMMENTS 3.1 Strengths of the Strategy i. The proposed strategy captures the key concerns of the different stakeholders in respect to social, economic and environmental considerations. It acknowledges the challenges associated with the industry and highlights areas for opportunity and innovation. ii. It also recognizes the need for knowledge and technology development and transfer. iii. The proposal for palm oil developments on marginal and “degraded” land in place of areas of high biodiversity value and conservation is a positive intervention. The strategy recognizes the need to define what constitutes marginal and “degraded” land. iv. The development of internationally recognized and comprehensive certification schemes at regional and national levels is a positive intervention. In addition, the proposal to certify smallholder farmers in groups will open up opportunities for the farmers to access finance, increase production and productivity, in puts, and markets. v. The proposed crop insurance scheme in the strategy will go a long way to secure farmers and other investors from crop loss and price fluctuations. vi. The recommendation for multi-stakeholder engagements that particularly involve civil society is a very good initiative, because often times civil society are perceived by the industry as antagonists. vii. The strategy recognises that the industry is emerging in countries with weak policy, legal and institutional frameworks and proposes strengthening these sectors at the country level to meet the demands of the industry. viii. The strategy also scores highly on its sensitivity to learning from past experiences.

3.2 Weak points i. The term “investment climate” is not clear in the document. The need for a climate conducive for investment is obvious. However it could mean that a country may be coaxed into adjusting its frameworks for the sake of the industry unfairly to favour international companies at the detriment of indigenous companies. The strategy should focus on developing local entrepreneurial capacity to invest in the sector. It is important therefore to clarify what is meant by “investment climate” and the thinking behind it. ii. Considering economies of developing countries and their financial systems, it would be necessary for the strategy to explain how the crop insurance intervention would be applied. With changing climates and unreliable weather patterns, what would happen if there were widespread crop failure? Would the insurance firm be in position to pay up for the loss? Wouldn’t this kind of scenario be a source of social distress and disorder, particularly where small-holder farmers fail to pay up the acquired loans? What would be the role of the Bank/IFC in such a scenario? iii. The benefit sharing alluded to in the strategy focuses at the macro-economic level. For example, infrastructure development, extension of advisory services, among others. However, the strategy should also indicate what and how the benefits will trickle down to the household/farm level to improve livelihoods and reduce poverty. iv. The document contains statements that are misleading. For example: a. “IFC may invest in oil palm plantation operations and other palm oil sector companies even if the public sector legal/regulatory enabling environment is less than ideal….”(Pg.18 para 2). To allow IFC to invest in a country where public sector legal/ regulatory framework is less than ideal, would open up for the violation of human rights by both IFC and the industry. This is recognized in the main text of the strategy document (pg. 12) where it states “Experience has shown that achieving an environmentally and socially sustainable palm oil sector in a country is difficult or impossible, if the enabling policy and regulatory environment are weak”. It is therefore surprising that IFC could opt for such an approach. This is also a deviation from the Bank’s quest of promoting good governance in host countries. It is important to clearly spell out what is meant by “less than ideal” and state the benchmarks below which it is not acceptable for IFC to invest. b. “…IFC is convinced that the project will have strong and measurable development impacts and that any risks can be mitigated…” (Pg.18 para 2). It is also important to provide the indicators for what is referred to a “strong and measurable development impacts”. c. “…any risks can be mitigated through other governmental or non-governmental programs, including other World Bank Group operations, if present. ….”.(Pg18 para 2) The strategy needs to provide evidence and guarantees on how “any risks” will be mitigated by governmental or nongovernmental programs, including World Bank and their respective effectiveness in addressing such risks. The implication of the statement is that the investment over-rides political, social and environmental consideration provided IFC is convinced that it is worth (i.e. in economic terms or as a demonstration [1]) investing in the project. This could lead to project failure to reduce poverty, ensure environmental sustainability and spur human rights abuses. d. “IFC will invest only where its interventions will meet IFC’s Performance Standards and will have clear and measurable development impacts……(Pg. 17 para 5)”. IFC should have its own inbuilt indicators for developments impacts instead of relying on developers to generate the indicators. e. “…In particular, IFC will only invest in plantation operations that are certified for sustainable palm oil production according to an internationally-recognized certification scheme… (page 4, para 10).” What if the certification scheme is biased and faulty? Is having an internationally-recognized certification scheme the answer to the problems associated with the industry?

f. “…The IFC will stress early engagement… involving new plantation operations (with CSO participation, if possible)… (page 4, 11).” It should be a requirement that all new Palm Oil Plantations be subjected to constructive civil society scrutiny. g. “The industry estimates that one job is created for each 5-hectare plantation developed” (Annex III, page 33). Is this sufficient justification for the investment considering the number of unemployed persons and therefore the amount of plantation acreage that would be required to cater for the unemployment burden in developing countries? v. There is a need to revise the proposed indicators in the strategy document for Monitoring and Evaluation. For instance, under theme 1, outputs: Policy and regulatory frameworks for sustainable palm oil production and land-use developed at country level. Instead of: “Number of stakeholder dialogues on policy and regulatory issues in target countries”; Outcomes: Supported governments actively implementing and enforcing their policy and regulatory frameworks for sustainable palm oil production and land-use. Instead of: “Number of target countries which have undertaken agreed activities such as E&S assessments “; Theme 2: Outputs: Many and large ($ volume) private sectorIFC investments achieved in the palm oil sector. Instead of : “Number and volume ($) of IFC investments in sector”; Outcomes: An industry that operates based on sustainable palm oil production, land-use and poverty reduction principles and practice, taking into account [“Number of permanent employees in palm oil entities”; “Number of small and medium enterprises engaged (upstream, downstream)” and “Number of small farmers engaged (land < 50 Ha)]”; Theme 3: Outcomes: Smallholders and smallholder groups having adopted sustainable palm oil production. Instead of “% increase in targeted smallholders using sustainable production practices”; Outputs: Appropriate Risk Management tools for the palm oil industry developed. Instead of “Number of risk management instruments developed” Outcomes: Effects of price and weather volatility on the palm oil industry stabilized. Instead of: “Number (percent) of smallholders using risk management instruments.” 4.0 Missing Issues/Gaps i. More investment in research on agro-ecological zoning for palm oil. ii. More commitment to the already existing World Bank Policies, safe guards and Operating Procedures in regard to compliance to avoid going against its own policies and safeguards principles. The Bank needs, not only to be seen to, but to demonstrate commitment to its mission and a shift from “the business as usual” approach. iii. Linking this strategy with on-going global climate change and bio-fuel versus food security debates. iv. How this strategy will benefit the majority poor in relation to the over-arching Bank’s principle of poverty reduction. [1] of good environmental and social performance. posted 12 August 2010 by Palm Oil Administrator from web

FRED STOLLE Comments by Fred Stolle et al. These comments to the “The World Bank Group’s Framework for Engagement in the Palm Oil Sector” draft were done by Kirk Herbertson, Beth Gingold, Moray McLeish and Fred Stolle.

The original document is available in this link: http://dgroups.org/?yswcwks2 Registered participants can submit their comments by email at palmoil@dgroups.org; messages will be distributed to all the registered participants after being accepted by the site administrator. ----The World Resources Institute [1] appreciates the World Bank Group’s (WBG’s) invitation to comment on the draft document “The World Bank Group’s Framework for Engagement in the Palm Oil Sector.” This analysis draws insights from WRI’s participation in the WBG’s consultation process in Washington D.C. (a) Strong points: Throughout this process the WBG has continually improved its responsiveness to critical feedback and this e-consultation indicates that the WBG is open to further improvements. The document provides evidence that the WBG has responded to several major concerns expressed during the consultations—especially concerns regarding the respective roles of the IFC and the World Bank. Specific strong points include that the document: • Is available as part of a public e-consultation process organized by an independent party. • Acknowledges the need to improve cooperation between the IFC and World Bank • Provides information on the respective potential roles of the IFC and World Bank within a “framework,” for example by providing a summary of possible interventions in Table 1. (b) Weak points: Although the objective of the process is commendable, the document lacks clarity regarding critical elements such as how this “framework” that provides a menu of options for the WBG’s “engagement” in the palm oil sector translates into “comprehensive strategy” for IFC “involvement”, and what decision-making processes at the WBG will be impacted”? How does the menu of options link with the WBG’s objective of reducing poverty? More specific questions include: • How this document addresses the specific findings of the Compliance Advisor Ombudsman’s (CAO’s) 2009 audit? The specific findings of the CAO audit found that IFC’s environmental and social due diligence fell below acceptable levels in palm oil investments. The document does not respond to CAO’s recommendations, for example, to improve IFC’s due diligence and supervision. • What methodology was used to decide which information from the stakeholder consultations was included in the final document? The document recognizes the “legitimacy” of certain stakeholder concerns but does not provide information on the methodology that was used to determine whether a particular viewpoint was incorporated into the document. For example, the draft states that “there were strong calls from stakeholders urging the World Bank Group to re-engage and tackle some of the challenges facing the sector” [2] but does not mention that a 2010 letter signed by over 100 civil society organizations stated that “until the necessary legal and procedural reforms are in place, the WBG *should+ not be investing in palm oil operations” [3]. Another example is the issue of “Free prior and informed consent” (FPIC). FPIC is not mentioned in the main document (except as “consult adequately with existing customary users or provide compensation” on p 23). FPIC has been extensively discussed in the consultations and is a critical part of the Principles and Criteria of the Roundtable on Sustainable Palm Oil. • What data and analysis indicates that the menu of options identified in the framework will support WBG’s mission to “fight poverty”? Throughout the draft, it is unclear what data the WBG has used to support its conclusions. The connection between the macro-level data provided—on contribution to national economies, tax revenues, and job creation—and poverty reduction is not clear. What analysis links certification with poverty reduction? What analysis addresses the distribution of

development impacts—both positive and negative—across different groups, including indigenous communities, different types of smallholders and women? • What internal reforms are necessary at the World Bank Group? The draft does not fully clarify the roles of the World Bank and IFC in ensuring environmental and socially responsible investments. (c) Missing Issues and gaps: To address some of the issues WRI recommends the following. 1. Carry out robust analysis of data. There is a need for a robust analysis that goes deeper than the macro level, to understand the many nuances of complicated economical, financial, environmental and social issues related to the palm oil sector. For example, the term “smallholder” covers a very diverse group of actors. Smallholders can be farmers in a plasma scheme, urban investors who use caretakers to oversee their rural land, on-site farmers with a few hectares of their own land. The ways to work with and lift these actors out of poverty might vary considerably. The design of a strategy that makes sense for all relevant stakeholders requires in-depth analysis. This should include analysis of potential impacts on vulnerable groups, including women. 2. Design the strategy around clear, measurable objectives: The final strategy should contain a set of performance indicators that can be measured and reported upon. This should be combined with an accountability mechanism that could include enhanced oversight of environmental and social due diligence in palm oil investments, internal accountability and incentive structures, and public reporting on progress. 3. Support development away from primary forests The WBG indicates that it “strongly supports” a shift of oil palm plantation expansion away from high conservation value forest to degraded land. Any investments in the expansion of plantations, on forest or degraded land, should be based upon a transparent and systematic methodology for prioritizing acceptable areas for sustainable palm oil development. Such a methodology must take account of the following criteria (see Graphics below): • Environmental. The area designated for palm oil development should be degraded from a forest carbon perspective. Developing the area will not result in significant greenhouse gas emissions or reduce critical environmental “high conservation values” including biodiversity preservation and clean water supply. • Economic. The area is biophysically capable of profitable oil palm production in terms of climate, topography, and soil properties. Highest priority areas meet minimum plantation size and proximity to infrastructure requirements. • Social. Risks to local people are identified and mitigated. Local people will benefit from the activity and agree to participate in a process to obtain free prior and informed consent. • Legal. Legal land status allows for conversion to oil palm plantation and expansion does not conflict with existing concessions or other rights, including traditional rights of indigenous communities (Note that a Graphic on the above criteria is contained in the original document) [1] WRI has received funding from the WBG for multiple projects and has applied for funding under the IFC’s Biodiversity and Agricultural Commodities Program. [2] Draft strategy, p. 6. [3] http://www.forestpeoples.org/documents/ifi_igo/ifc_wbg_ngo_palm_oil_may2010_eng.pdf This analysis was carried out by: Kirk Herbertson, Beth Gingold, Moray McLeish and Fred Stolle. For more information, please contact Fred Stolle. fstolle@wri.org+1 202 729 7694 posted 09 August 2010 by Palm Oil Administrator from web

ROSEDIANA SUHARTO Comments by Rosediana Suharto These comments to the “The World Bank Group’s Framework for Engagement in the Palm Oil Sector” draft were done by Dr. Rosediana Suharto. You can download the original document by visiting this link: http://dgroups.org/?a2n82bfc Registered participants can submit their comments by email at palmoil@dgroups.org; messages will be distributed to all participants after being accepted by the site administrator. ----COMMENTS ON THE WORLD BANK GROUP FRAMEWORK FOR ENGAGEMENT IN THE PALM OIL SECTOR Introduction The World Bank Group have engaged in palm oil sector in Indonesia since 1970 in Nucleus Estate (NES) project, although the project was not successful by that time, the smallholders who involved in this project was not facing any difficulties during Asian financial crisis in 1997 to 1998, which resulting a massive devaluation of Rupiah and the increase of palm oil prices. It was concluded by CIFOR that “oil palm is seen to emerge as the winner on all counts”. The NES type of project in some area gave a better life to hundreds thousand of smallholders in Riau area and also in some of West Kalimantan areas. This type of mechanism was copied and implemented by many private plantations that help smallholders to increase their welfare. World Bank and IFC have abundance of experiences that can be referring any time for further development of oil palm plantations projects in the future. Along with the increasing demand of sustainable palm oil, criteria and requirements added to palm oil is getting more complicated, assistant from WBG is expected. The strength of WBG group palm oil strategy The four key themes is the strongest strategy that will frame the future engagement of this sector:
   

Supporting the development of an enabling policy and regulatory environment Mobilizing socially and environmentally sustainable private sector investment Encouraging benefit sharing with smallholders and community Supporting sustainable codes and practice

With these theme WBG can offer menu of interventions to governments on their regulatory and system, this will chances to streamline the different policy of central and district government then it will reduce the complicated investment procedure and related government procedure that do not match to each others. The WBG group has experiences that can support improvement in their policy and strategy that challenge that oil palm industry. The investment in the future will also promote the implementations of sustainable practices in all level of plantations and support the smallholders’ certification that will encourage the better wealth of smallholders and community. Meanwhile in supporting the investment IFC have a very good instruments which is Performance Standard that to assess the practices of plantations, Advisory Services will play roles in addressing issues related to environment and sustainability and supporting smallholders productivity gains so it can contribute to poverty reduction as the main objectives of WBG.

The weakest points The strategy do not see the importance role of smallholders in oil palm plantations, smallholders do not have any access to financial bank loan (IFC micro credit facility), this is because they do not have guarantor where not all smallholders are not under plasma or KKPA scheme. Smallholders’ sustainable certification launch by RSPO is not easy to implement, for the group certification involving independent smallholders will be costly. The smallholders certification program should not marginalized the non RSPO certified smallholders. The IFC Performance standards should be transparent and easy to understand, plantations should understand that this standards may not in conformity with the related government regulations for example: High Conservation Value Forest and Free Prior Inform Consent (FPIC), if IFC this standards is mandatory, the plantations will be in big dilemma, either to follow IFC standards or government regulations (this what happen now in Indonesia to some company that follow RSPO standards). In implementing Performance Standards the plantations have to do internal assessment, to find if there are non compliances, to be corrected before third party assessment is done. The missing issues and gap WBG and IFC understand that RSPO is business to business initiatives, that give all burdens to only producers not the others party, commitments only for RSPO member not other party such as government or others who are non member, as WBG members are government and IFC is the private hand of WBG it is very difficult to understand that RSPO standards will implemented. This standard does not follow articles of WTO and GATT. Principle of sustainability is very important to be implemented but not all burden to growers only, this become obvious as we witness the facts that producers has implemented certification of sustainable palm oil to fulfill the EU demand ,but the manufacturers and retailers reluctant to purchase ,and announced the use of sustainable palm oil, the earliest is 2014. This gap cannot be explained, on the other hands RSPO promote supply chain certification, but buyers only buy through Green Palm, which product are not traceable. The convening power of WBG to work across private, government sector and public organization is WBG key asset. This can facilitate open discussion with many stakeholders in reducing “black campaign “against palm oil in the form of accusations or allegations. The WBG and IFC has to verify the issues, not to generalized it, before taking side as seen in the Draft of The World Bank Group ‘s Framework for Engagement in the Palm Oil Sector” page 9. We must remember that palm oil is an agricultural commodity; it should not be treated differently to other commodities that use quite a large number of lands, and absorb and sequester less CO2. Dr. Rosediana Suharto (Komisi Minyak Sawit Indonesia) c/o: Gedung C Lt. 5 R. 504-505 Kanpus Kementerian Pertanian Jl. Harsono RM No. 3 Ragunan Jakarta Selatan 12550 Indonesia posted 09 August 2010 by Palm Oil Administrator from web

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