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Scandinavian banks linked to violations of indigenous peoples’ rights in Borneo

[Report 2017.03.07]

Indigenous people in Borneo have fought for their rights against international companies for decades. Photo: Swedwatch

Scandinavian banks have invested hundreds of millions of dollars in companies that are linked to violations of indigenous peoples’ rights in Borneo, according to a new report from Swedwatch and Fair Finance Guide Sweden.

The destruction of Borneo’s forests has been referred to as one of the greatest environmental crimes of our time. The forest destruction and the dispossession of land from its traditional owners has resulted in a far-reaching human rights disaster. The report Silent Approval is based on an extensive field study in Borneo, which examines the impacts of four companies on indigenous peoples’ rights and links to seven Scandinavian banks. The results of the study show that all the banks invest in several of the companies and that the banks have not acted responsibly. Some of the companies were also included in the ethical funds of the banks. 

The report outlines the investments of the Scandinavian banks Danske Bank, Handelsbanken, Länsförsäkringar, Nordea, SEB, Skandia and Swedbank in four companies associated with risks and impacts on indigenous peoples and their forests in Borneo. The report shows that the banks are investing hundreds of millions of dollars in the companies, and that none of them have taken appropriate action. 

Case 1: The traditional agriculture land of a Kayan and Kenyah indigenous community in Sarawak was bulldozed with no prior consultation, to give way to the Malaysia-registered company IOI’s oil palm plantation. The company has not provided compensation to enable them to maintain their traditional livelihoods for the future.

Case 2: A Dayak Murung indigenous community in Central Kalimantan has been affected by the Australian-British mining company BHP Billiton’s large IndoMet Coal project. The community’s access to traditional forests and land has been restricted, and there have been negative impacts on their agriculture.

In these cases, involving BHP Billiton and IOI, the banks failed to conduct their own checks and balances to verify project documentation, capture communities’ perspectives and ensure independent field checks to verify actual impacts on indigenous lands and forests. The banks also report that they have been reassured by statements from the companies themselves, which claim, for example, that projects are developed on ‘state land’ with ‘no protected areas’, and that the communities have been ‘consulted and compensated’.

Case 3: The Swedish company AAK imports and sells palm oil to customers that produce food, chocolate and cosmetics. The analysis highlights gaps in the company’s due diligence regarding risks and impacts on indigenous rights on Borneo. Despite several banks being in close dialogue with AAK, they had not brought these weaknesses to the company’s attention.

Case 4: Deutsche Bank provided financial services to a former Sarawak political leader, who in turn has been accused of facilitating large-scale deforestation and dispossession of indigenous land for the benefit of himself and his family. The report’s analysis concludes that the seven banks, which all hold shares in Deutsche Bank, do not have adequate systems in place to detect and act on allegations, which concern a financial relationship between a bank and a disputed leader, which is extended over time.

Although states are responsible for protecting indigenous peoples’ rights, the state bodies and court systems in both the Malaysian and the Indonesian part of Borneo have failed to protect the rights of their indigenous citizens. Also, in line with internationally recognised standards, companies and financial actors are required to respect the rights of indigenous peoples throughout their operations and financial activities. The report shows that the Scandinavian banks have not taken adequate action to defend indigenous rights in the four cases. However, the banks are already part of international investor initiatives with a focus on human rights, and a key recommendation from the report is that the banks should use these forums as platforms to actively promote indigenous rights issues. 

About the report

The report Silent Approval - The role of banks linked to the crises faced by Borneo’s indigenous peoples and their forests has been developed by Fair Finance Guide and Swedwatch in association with Fair Action and the Swedish Society for Nature Conservation. The documentary film The Borneo Case, www.theborneocase.com, will be premiered in Sweden in conjunction with the report.

Made in collaboration with: 
Fair Finance Guide, Naturskyddsföreningen, Fair Action
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