A large Malaysian forestry company has been warned by its bank that it must meet better environmental standards or face being dropped as a customer. Chuck Prince, chief executive of Citigroup, told an environmental and social risk briefing in New York that Rimbunan Hijau must obtain independent, third-party certification, by the Forest Stewardship Council, for its Papua New Guinea operations – or cease to be a client of the bank.
Corruption, bribery and human rights abuses against Rimbunan Hijau were revealed in a recent report by the Papua New Guinea labour and employment ministry. It said employees were badly treated by the company’s private police and forced to live in unacceptable conditions in company-controlled logging camps.
Last year a Greenpeace report accused Rimbunan Hijau of trafficking unlawfully harvested rainforest timber for export, logging vast areas of ancient forest in defiance of national laws, local customs and owners’ rights, and using the protection of political elites to impoverish local people.
Citigroup’s stand, in line with its policy declared last year to protect endangered ecosystems and oppose illegal logging, has been praised by forest conservation advocates, human rights activists and socially responsible investors.
Michael Brune, executive director of Rainforest Action Network, said: ‘I commend the Citigroup chief executive for having the courage of his convictions and demonstrating that American business can operate ethically and profitably. It will require this type of ongoing leadership to reform rogue industrial powers like Rimbunan Hijau.’
Ilyse Hogue, director of the network’s Global Finance Campaign, said: ‘The announcement by Chuck Prince is further proof that well-implemented initiatives can play a role in making the lives of the struggling communities better tomorrow than they are today. The rest of Wall Street now faces a clear choice to move toward environmental and social leadership or risk losing consumer confidence.’
Rimbunan Hijau says it does all it can to ‘ensure protection of the environment and maintenance of forest productivity through viable operations within acceptable safety standards’ and that it is ‘complying with the rules and regulations’ set out by the Papua New Guinea government.
A recent statement by the Papua New Guinea Forest Authority and the Papua New Guinea Government said that ‘neither the Rimbunan Hijau operations nor any other allocated timber projects in the country are operating illegally’.
