HSBC in the dock over timber IPO

London, 8 March: HSBC has violated its own forestry sector sustainability guidelines by arranging a stock exchange listing for Malaysian timber firm Samling, according to London-based NGO Global Witness.

Samling raised HK$2.2 billion ($280 million) via an initial public offering on the Hong Kong Stock Exchange yesterday. HSBC was joint arranger of the deal with Credit Suisse and Macquarie Securities.

HSBC's forestry sector guidelines says the bank will not provide financial assistance to commercial logging operations in primary tropical moist forest and high conservation value forest. It prefers to deal with clients who are certified by the Forestry Stewardship Council (FSC), but is prepared to work with customers that are "following a credible path towards achieving compliance".

According to Global Witness campaigner Mike Davis, Samling's "bread and butter business" is logging tropical moist forest in Guyana, Papua New Guinea and Malaysia. He noted that a large area of Samling's territories in Guyana had been identified as high conservation value forest by a consultant working for WWF.

Global Witness also noted that, in January, Samling subsidiary firm Barama had its FSC certification suspended after an audit found that Barama had failed to conduct appropriate environmental impact assessments, did not have a forest management plan, and was logging lands without the free and informed consent of local people. Just under half of Samling's land in Guyana is FSC accredited.

"They are the archetypal logging company and it's astonishing that HSBC would want to be involved," Davis said.

The FSC also covers the rights of indigenous people. Samling's listing document notes that it is being sued by two groups in the Malaysian courts. One case involves local people claiming they have native customary rights over land within Samling's timber concession areas; the other involves local people claiming the award of a logging concession was unconstitutional and wrongful.

"HSBC's association with Samling makes a mockery of its forest policy and commitments on climate change. HSBC must terminate its relationship with Samling with immediate effect, and consider carefully what to do with the profits raised from this listing," said Anthea Lawson, a campaigner at Global Witness.

A group of 37 NGO from 18 countries, including Global Witness, today called for investors and banks to shun Samling.

A spokesman for HSBC said he could not comment on the bank's relationship with any particular company "for legal and regulatory reasons".

The bank's guidelines note that forestry is a complex industry where standards vary and continue to evolve.

It states: "It is not possible to put in place a prescriptive guideline that covers all aspects in detail at the local level. Our lending executives therefore are expected to make reasoned, common sense judgements in implementing this guideline.

"However, exceptions will be a rare occurrence."

Efforts to reach Samling for comment before press time proved unsuccessful.