IFC in the Palm Oil Sector

Oil palm fruits. Jambi, Indonesia | photo©CIFOR 

Overview

IFC’s engagement in the palm oil sector is guided by the World Bank Framework and IFC Strategy for Engagement in the Palm Oil Sector.

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 strategy prioritizes initiatives that support smallholders and foster benefit sharing with rural communities, as well as initiatives that encourage production on degraded lands and seek to improve productivity of existing plantations.

The World Bank Group’s approach in the palm oil sector includes requirements for assessments that must be completed before embarking on a program or investment. Analytical "tools", such as a joint World Bank-IFC Country Situation Analysis and IFC’s Risk Screening and Assessment procedure, enable a better judgement of key opportunities and risks, particularly around the issues of land use and acquisition, governance, community concerns, and working conditions. These tools 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 sustainable private sector investment and inclusive economic growth. IFC’s strategy in the palm oil sector is driven by the broader World Bank Group commitment to strengthen 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 includes advisory support and identification of viable investment opportunities with local, regional or larger players where projects can have positive impact either direct employment or by supporting smallholder farmers. We seek to engage with private sector partners throughout the industry’s supply chain, including producers, traders, and processors, who are able to demonstrate good management practices in environment and social sustainability and community and smallholder engagement. We may 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.