IFC in the Palm Oil Sector

Overview

IFC’s engagement in the palm oil sector is guided by the World Bank Group Framework and IFC Strategy for Engagement in the Palm Oil Sector adopted on April 1, 2011.

The framework and strategy were developed following extensive global consultations with a wide range of stakeholders including environmental and social NGOs, farmers, indigenous communities, private sector companies, international agricultural research organizations and governments. The stakeholder consultations helped to shape key areas of focus for Bank Group engagement in the sector, including:
· regulatory and governance reforms;
· responsible private investments;
· improved benefit sharing with smallholders and communities; and
· development and widespread adoption of environmentally and socially sustainable standards and codes of practice.

The World Bank Group Framework and IFC Strategy for Engagement in the Palm Oil Sector give priority to institutional and market initiatives that support smallholders and foster benefit sharing with rural communities and to initiatives that encourage production on degraded lands and seek to improve productivity of existing plantations.

The World Bank Group’s adopted approach in the palm oil sector also includes the use of new analytical “tools”, such as a joint World Bank-IFC Country Situation Analysis and IFC’s Risk Screening and Assessment procedure. These tools enable an assessment of key opportunities and risks, particularly around the issues of land use and acquisition, governance, community concerns, and working conditions. These tools are meant to guide the Group’s decisions on whether to engage, the level of appropriate engagements, and measures to avoid or reduce potential risks.

IFC's Focus

IFC has an important role to play in supporting and catalyzing sustainable private sector involvement and inclusive economic growth. IFC’s strategy in the palm oil sector is driven by the broader World Bank Group commitment to support client countries improve agriculture’s contribution to food security, economic growth, incomes of the poor, and environmental and social sustainability.

IFC's Strategy for Engagement in the Palm Oil Sector focuses on providing advisory support and identifying viable investment opportunities with local, regional or larger players in relatively underdeveloped areas, such as in lower income countries or frontier regions, where projects will have a relatively larger positive impact (e.g., through direct employment or by supporting smallholders). We seek to engage selectively with key private sector partners throughout the industry’s supply chain (producers, traders, and processors) who are able to demonstrate good management practices in environment and social sustainability and community and smallholder engagement. We are also able to invest in businesses associated with waste streams including biogas and compost. We can also invest in infrastructure such as ports and power plants as well as machinery manufacturers and contractors. We work with multi-stakeholder initiatives to develop voluntary industry-wide standards for sustainable development.

Current Initiatives

Africa
IFC is currently implementing advisory projects in the palm oil sector in Ghana, Liberia and Sierra Leone that focus on promoting and piloting the adoption of the principles and criteria of the Roundtable on Sustainable Palm Oil to the countries’ conditions and regulations.

East Asia
IFC is implementing a number of advisory projects in the palm oil sector in East Asia within its larger Biodiversity and Agricultural Commodities Program. These programs focus on biodiversity conservation efforts. In addition, IFC's Palm Oil Smallhoders Project in Indonesia seeks to provide solid understanding of sustainability practices that can increase the benefits flowing to smallholders and local communities from palm oil operations, as well as clear guidance to palm oil companies for action in this direction.