In January 2014 the press in Cambodia and Australia released a number of articles concerning the role of the ANZ Royal Bank in financing the activities of the Phnom Penh Sugar Company (“PPS”), which owns and operates a highly controversial sugar plantation and refinery in Kampong Speu Province, Cambodia. In February 2010, PPS began illegally seizing and bulldozing farm and residential land belonging to more than 1,500 families in the Thpong and Oral districts in the Kampong Spue province. An estimated 100 families in Pis and Plourch villages were forcibly evicted from their homes. As a result the families are faced with food insecurity, job insecurity and homelessness and many had to pull their children out from school to work for PPS as it was the only source of income available. The Australia and New Zealand Banking Group Ltd. (“ANZ”) is a major controlling entity of ANZ Royal Bank and one of the signatories to the Equator Principles (“EPs”). Many consider that ANZ acted contrary to the guidelines contained in the EPs thereby facilitating the human rights abuses committed by PPS.
Put simply the EPs are a set of guidelines developed by major financial institutions (over 80 major financial institutions in 34 countries) in 2003 and revised in June 2013 (EP III) which aim to assist them in making better lending decisions in regards to the environment and society. The aim of the EPs is to put checks and balances in place so that financiers can refuse to finance projects, which could negatively impact human rights and the environment.
The EPs classify projects that are to be financed into groups “A”, “B” and “C” according to risk. Depending on the level of risk associated with a project, the guidelines recommend specific due diligence activities to be carried out including:
- the appointment of independent experts to prepare social and environmental reports;
- a requirement that there be consultation between the company receiving the finance and the community which will be affected by the project;
- where there is a high-risk project the EPs recommend ongoing reporting and monitoring requirements on the banks’ client to ensure continued compliance with the EPs.
ANZ is a major financier of projects in many emerging Asian and Pacific economies. In 2010 it commissioned a report prior to financing PPS’ sugar plantation, which recommended that the activities of PPS were of a high risk and required urgent action to comply with the EPs. However, ANZ did not remedy the issues identified in the report and instead proceeded to finance part of PPS’ sugar plantation without further regard to the EPs.
EPs have greatly increased global attention and focus on the responsibility of banks when it comes to financing projects in the developing world, particularly in respect to indigenous peoples, labour standards and land rights. However, the ANZ/PPS example highlights that commitments to guidelines and standards look great on paper but are pointless if not implemented.. Of particular concern is the lack of transparency in the application of the EPs and the fact that more than 10 years on from their development there is still no grievance mechanism within the EPs for the communities impacted by the projects. Unfortunately this means that commitments to guidelines, such as the EPs, can be used to convey an image of social responsibility without any real commitment.
Ellie Setakeh, CCHR Professional Volunteer, contributed to this blog post.