The big four banks have defended their lending standards after a report linked them to companies accused of illegal land grabs in developing countries.
In its Banking on Shaky Ground report, Oxfam Australia has accused the big four - Commonwealth Bank, Westpac, National Australia Bank and ANZ - of backing companies that have contributed to illegal logging, forced evictions, inadequate compensation, food shortages and child labour.
'Banks are backing illegal and unethical practices'
The report found NAB had lent more than $200 million to Asian palm oil giant Wilmar, which has been linked to land grabs, and was named the world's least environmentally friendly company by Newsweek.
Oxfam Australia also accused Commonwealth of investing in an agribusiness giant whose Brazilian sugar mill is, it says, illegally sourcing sugar from indigenous lands.
ANZ was financing a Cambodian sugar plantation involved in child labour, military backed land grabs, forced evictions and food shortages, while Westpac has supported a timber company in PNG accused of logging pristine rainforest through an invalid lease arrangement, Oxfam Australia said.
"The banks are backing companies involved in illegal and unethical practices," Oxfam Australia chief executive Helen Szoke told SBS. "They’re not matching their own rhetoric as being ethical and sustainable investors with their actual investment practices on the ground."
"These are really stark examples where Australia’s big four banks are investing in companies that have forced people off the land and put them in circumstances where they’re having trouble feeding their family."
The big four banks 'must be transparent'
Dr Szoke told SBS the banks must be held accountable and compensate the communities affected.
"We want the banks to do three things. The first is: they must be transparent. They have to say which companies they’re investing in, that way we can understand what the impact of those investments are.
"The second we want them to do is say they will not tolerate companies that are involved in land grabs."
Dr Tzokes also wants all four banks to compensate communities that have been adversely affected by land grabs.
“They need to put pressure on those companies to make appropriate compensation to the communities that are affected,” she told SBS.
Dr Tzokes said Oxfam Australia has been involved in discussions with the banks, but said their responses have been underwhelming.
"We’ve been involved with discussions with the banks in the last few weeks and they’ve been very muted – from our perspective – in terms of their response," she told SBS.
But Dr Tzokes remains optimistic.
"This is a great opportunity for Australia’s big four banks to step up to the mark and help lift people out of poverty through their investment practices."
She added: "We're not saying pull out of investment in these companies we're saying use your investment power to hold these companies to account."
The big four on Monday declined to comment on their links to the specific companies highlighted by Oxfam Australia, but emphasised their commitment to ethical lending practices.
Listen: SBS Radio's Abby Dinham reports
Westpac linked to 'controversial' logging company WTK Group
Oxfam links Westpac with what it says is a "controversial" logging company in Papua New Guinea, Malaysian-owned WTK Group. The aid organisation claims the bank has had a 19-year long relationship with the logging company.
In 2003, PNG’s Department of National Planning and Monitoring reviewed WTK Group’s logging operations in the country, accused the company of illegal logging operations.
The company’s recent controversy called Special Agricultural and Business Lease (SABL) involved nearly 5 million hectares of land being passed from community groups to companies. WTK claimed that SABLs promoted "agricultural development", but a 2013 PNG Commission of Inquiry found otherwise.
The chief commissioner of the inquiry, John Numapo described the scheme as: "opportunistic loggers masquerading as agro-forestry developers are prowling our countryside, scoping opportunities to take advantage of gullible landowners and desperate-for-cash clan leaders."
Westpac welcomed the Oxfam Australia report and said it would stop lending to customers operating illegally or outside the banks own ethical standards. But it declined to confirm or deny their link to WTK.
The bank's head of sustainability, Siobhan Toohil, said it had scrapped funding arrangements in the past where clients had contravened the bank's social standards.
Ms Sioban Toohil said in a statement:
"Westpac has been prepared to exit customer relationships if we are not comfortable with the risk profile of a customer or related parties, or have concerns around their environmental, social and governance activities. This includes ‘land grabbing’."
WTK's lawyer in Port Moresby dismissed claims the company is linked to any controversial special agricultural and business leases (SABLs) across the country.
"If WTK Realty was involved in SABLs it would have been summonsed to give evidence in the commission of inquiry," lawyer Robert Bradshaw told the ABC.
ANZ financing sugar company linked to child labour, forced evictions
Oxfam also reports ANZ Bank is linked to Cambodian sugar plantation, Phnom Penh Sugar. The company has been accused of child labour, and evicting at least 1000 families to make way for the plantation in 2010. Families were reportedly given $100 as compensation.
There were also reports of food shortages for the families who were forcibly evicted, as resettlement sites were now infertile. Instead of attending school, children of these families were now working on these fields to help earn money.
The plantation is owned by one of Cambodia’s wealthiest men, Ly Yong Phat who is also a senator from the country’s ruling party. The Cambodian government allegedly gave permission for Senator Phat to proceed with the sugar plantation.
In 2013, the International Environmental Mangement Company found that Phnom Penh Sugar had “failed to implement environmental, health and social management programs required by ANZ to meet its ethical lending obligations.”
ANZ said it took its environmental and social responsibilities seriously, and had exited relationships in the past where customers were unwilling to adhere to its standards.
An ANZ spokesman said the bank is:
"Continuing to actively and closely review the way Phnom Penh Sugar is addressing its social and environmental obligations.
"ANZ has exited customer relationships in the past in circumstances where the customer
is unwilling to work collaboratively with ANZ towards meeting our standards."
CBA owns shares in sugar company sourcing from Indigenous lands
Oxfam's report says the Commonwealth Bank owns shares in an agribusiness that's failing to comply with orders in Brazil to stop sourcing sugar cane from Indigenous lands.
CBA is said to own shares to the value of $14.21 million in the company Bunge, which has been accused of using sugar cane from land stolen from indigenous Guarani-Kaiowá communities in Jatayvary, Brazil.
In a statement, the bank responded with the following:
"The Commonwealth Bank does not have a proprietary interest in the company; it is held in funds managed by the Group. Appropriate management and monitoring of environmental, social and governance issues and risks is expected as part of the managers’ investment process. We will engage with relevant parties on the issues raised in accordance with our investment policies on responsible investment and stewardship."
NAB associated with palm oil
Since 2010, NAB has lent palm oil company Wilmar more than $218 million. The World Bank Group has stopped lending to Wilmar and the entire palm oil industry.
Despite Newsweek calling the company the least sustainable company in the world, NAB continues its financial association with Wilmar.
NAB refused to provide specific information about its clients. In a statement to SBS, a NAB spokeman said:
"Due to legal and confidentiality reasons NAB cannot provide specific information about our clients.
"However we can confirm that when deciding whether to provide finance to a customer, NAB assesses the risk through a number of lenses including economic, environmental and social considerations. This includes assessing a potential customer’s background, character, track record and country of domicile.
"NAB’s assessment of social risks incorporates consideration of issues related to human rights such as improper land acquisition.
"NAB supports actions that promote better environmental and social outcomes for businesses and the communities in which they operate."