HSBC: world’s local bank raises money for global forest destruction

Press Release – 05/03/2007

HSBC appears to be violating its own forest sector guidelines by arranging the stock exchange listing for Malaysian timber giant Samling, a company notorious for destroying tropical forests and the abuse of local communities, said Global Witness, Monday.

Global Witness found evidence that Samling Global was illegally sourcing timber from a Cambodian wildlife sanctuary in the 1990s, and has followed its activities ever since. Samling and its related companies have caused controversy in Cambodia and Papua New Guinea, and continue to do so in Guyana and Malaysia.

Samling is selling a 25.3% stake on the Hong Kong stock exchange, with which it hopes to raise a reported $280 million for paying off debts and expanding into new areas. HSBC, which announces its results today, is joint arranger of the deal with Credit Suisse and Macquarie Securities. Public trading in the shares begins on 7 March.

"While HSBC is planting trees to reward its retail customers for requesting online statements, Samling is cutting them down. By helping Samling to raise a war-chest for new logging projects, HSBC is turning its own environmental commitments into meaningless greenwash," said Anthea Lawson, a campaigner at Global Witness.

HSBC's 2004 "Forest Land and Forest Products Sector Guideline"¹ says it will not deal with commercial operations logging in primary tropical moist forest, high conservation value forest, or logging in violation of local or national laws.

Logging untouched tropical forest is precisely what Samling and its related companies have done for years in Cambodia, Malaysia, Guyana and Papua New Guinea. In the Malaysian province of Sarawak, Samling is one of the companies logging the last remaining areas of primary forest. The local Penan people face an on-going battle to prevent the destruction of the forest and their livelihoods. In addition, 210,000 hectares of a concession in Guyana logged by Samling subsidiary Barama is high conservation value forest.² Global Witness also has evidence that Samling and its related companies have violated laws in Cambodia, Guyana and Papua New Guinea.

HSBC's guideline also says that the bank prefers to deal with customers who operate managed forests that are certified by the Forest Stewardship Council (FSC, or equivalent, or who are ‘following a credible path towards achieving compliance within a maximum of five years'.

Global Witness notes, however, that in January 2007 Barama had its FSC certification suspended after an independent audit found ‘systematic major nonconformities'.³ Barama had failed to conduct appropriate environmental impact assessments and did not have a forest management plan for the certified area. In addition the company is logging in Amerindian lands without the free and informed consent of local populations.

Only last month HSBC donated $8 million for research into the long-term effects of climate change on forests. But equally important is effect of industrial-scale logging on forests and, therefore, on climate change. According to last year's Stern Review, emissions from deforestation contribute more than 18% of global emissions, a greater share than the global transport sector. ⁴

"HSBC's association with Samling makes a mockery of its forest policy and commitments on climate change. HSBC must terminate its relationship with Samling with immediate effect, and consider carefully what to do with the profits raised from this listing," said Anthea Lawson.

Ends

Contact:

Anthea Lawson on +44 (0)20 7561 6397 or +44 (0) 7809 616 545 or alawson@globalwitness.org

Notes to editors:

1. The guideline can be found here

2. ASI-Accreditation Services International GmbH, ‘FSC Annual Surveillance of SGS for 2006 - Forest Management Audit to Barama Co Ltd (BCL) Guyana' November 2006, http://www.accreditation-services.com/Documents/ASI-Forest%20Management%20Audit-Guyana-SGS-2006-Final.pdf

3. It has been identified as having particular environmental, socio-economic, biodiversity or landscape value

4. This figure includes all causes of deforestation.

5. Some of HSBC's environmental commitments and claims:

• Has guidelines for doing business with companies in the forestry sector
• Has signed the voluntary Equator Principles which set social and environmental standards for project finance; was involved in redrafting them in 2006
• Became carbon neutral in October 2005
• Was voted Sustainable Bank of the Year by the Financial Times in 2006
• Gave an $8 million grant to the Smithsonian Tropical Research Institute in February 2007 to investigate the long-term effects of climate change on forests

6. Global Witness campaigns to achieve real change by highlighting the links between the exploitation of natural resources, conflict and corruption. Through a combination of covert investigations and targeted advocacy, Global Witness has changed the way the world thinks about the extraction and trading of natural resources, and the devastating impact their unsustainable exploitation can have upon development, human rights and stability. Global Witness was co-nominated for the 2003 Nobel Peace Prize for its leading work on ‘conflict diamonds' and awarded the Gleitsman Foundation prize for international activism in 2005. For more information visit http://www.globalwitness.org/.

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