Amendment 260B

Environment Bill - Committee (7th Day) – in the House of Lords at 10:00 pm on 12th July 2021.

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Lord Randall of Uxbridge:

Moved by Lord Randall of Uxbridge

260B: Clause 109, page 108, line 37, at end insert—“(ba) paragraph 3;”Member’s explanatory statementThis amendment would change the parliamentary procedure for making regulations to specify requirements for the due diligence system to the affirmative procedure.

Photo of Lord Randall of Uxbridge Lord Randall of Uxbridge Conservative

My Lords, I speak principally to my Amendments 260B, 260C, 265B and 265C. Bearing in mind the hour, I will try to make this brief, but they are on important issues.

In the 25-year environment plan, the UK Government articulated an ambitious set of goals and actions for the UK, including the commitment that

“our consumption and impact on natural capital are sustainable, at home and overseas.”

I believe that the Environment Bill should reflect this commitment but, sadly, I do not think it adequately does. The goals and actions must be strengthened to tackle the growing problems caused by deforestation and drive action to significantly reduce our global footprint.

Due diligence legislation is only part of the comprehensive approach that will be needed to deliver deforestation-free supply chains and significantly reduce global footprint impacts more broadly. A mandatory due diligence framework should formalise and obligate responsible practices throughout UK market-related supply chains and finance to ensure comprehensive accountability and help prevent deforestation and other global environmental damage.

The proposed forest risk commodities framework is a welcome first step. It should, however, also commit the Government to introducing a legally binding target to significantly reduce the UK’s global footprint by 2030; address all deforestation linked to UK forest risk commodity supply chains, whether regarded as legal or illegal under local laws; include a mechanism to progressively improve the framework, its implementation and enforcement; establish equivalent obligations for financial institutions; ensure that the right to free, prior and informed consent of affected indigenous peoples and local communities is respected; and establish clear and effective due diligence requirements, including clarity on the acceptable level of risk, public reporting and adequate parliamentary oversight.

My Amendments 260B and 260C would upgrade the parliamentary procedure to affirmative resolution for regulations relating to this due diligence system. Given that the due diligence system required under paragraph 3 of Schedule 16 will be central to the effectiveness of the schedule, any regulations made to specify requirements for this system should be subject—in my opinion—to the affirmative procedure. This is essential, given the public interest in this important new provision and the need for adequate parliamentary oversight.

My amendments 265B, 265C and 265D seek to introduce a requirement that the Secretary of State must take the steps identified through a review to improve the effectiveness of Schedule 16. I welcome paragraph 17 of the schedule, which includes a requirement for the Secretary of State to review the effectiveness of the forest risk commodities framework every two years and to table before Parliament and publish a report of the conclusions, but there are no requirements regarding the quality, transparency or independence of this review. Nor is there a requirement to address any deficiencies or weaknesses identified by a review or to make any needed improvements to the content, implementation or enforcement of the forest risk commodities framework. Given the novelty of the due diligence framework and the fact that much of it will be set by secondary legislation, it is important that the review procedure ensures that, where deficiencies are identified, there are clear procedures that result in improvements to the framework. This would help to ensure that the measure is progressively improved over time and keeps pace with other legislation being developed, including in the EU. It would also enable the due diligence framework to be adjusted to address any deregulation or undermining of protections for forests in producer countries. The Secretary of State should be required to seek and consider independent expert advice and consult with stakeholders when proposing changes to the framework.

My amendment 293B asks for a requirement to set a global footprint target, as the Bill is silent on how the UK Government intend to address our global footprint. The Bill therefore does not deliver on the commitment in the 25-year environment plan, as I mentioned earlier. In its Biodiversity in the UK: Bloom or Bust? report, published on 30 June, the Environmental Audit Committee recommended that the Government should set a target to reduce the UK’s global environmental footprint. New evidence from the World Wildlife Fund found that, as a nation, we need to reduce our global footprint by three-quarters if we are to live within our planetary means. The report highlights that human impacts on the natural world are driven by overconsumption, unsustainable extraction rates and the methods we use to produce material goods. The UK is a particularly large consumer of products with a major environmental impact. The report found that the UK needs to reduce its ecological footprint by 60%, its material footprint by 38%, its biomass footprint by 48%, its nitrogen footprint by 89%, its phosphorus footprint by 85% and its carbon footprint by 85%.

Significant reductions in the UK’s footprint should not be interpreted as meaning that the UK’s economy must shrink, or that the well-being of UK citizens must be reduced. With very few exceptions, the targets proposed are about doing things differently. If the Bill continues to exclude measures to address the UK’s global environmental footprint, we will miss a very significant opportunity. I suggest that my Amendment 293B, which requires the Government to set a global footprint target, would provide them with the flexibility to develop that target following Royal Assent.

I welcome the steps that the Government are taking regarding illegal deforestation; however, Governments could make legal deforestation that is currently illegal in order to circumvent new measures—then we would have a problem. We should also be taking into consideration the many other issues surrounding this general subject; I think particularly of the cutting down of primary forest for biomass both in Europe and indeed in the US and Canada. These are difficult issues, perhaps too complex for us to include in this Bill, but we must address them. What we can do is ensure that we have full parliamentary accountability.

Photo of Lord Lucas Lord Lucas Conservative 10:15 pm, 12th July 2021

My Lords, I have two amendments in this group: Amendments 263 and 265. I thoroughly welcome the Government’s approach in this area. We have a responsibility as the consumers of forest products to make sure that they are sourced in a way we are comfortable with. To keep blindly consuming, say, palm oil without regard to the consequences is to take less than our responsibility for what is happening. It is our demand that is driving the production, and it is therefore our responsibility. We need to find ways in which we can exercise that responsibility without encroaching on the national rights of the people doing the producing. For instance, in the case of palm oil, I think it is entirely reasonable to ask that it is produced without further encroachment on virgin forest. My Amendment 263 suggests that we should also include peatlands and wetlands within that definition of “forest”. Both of these are environments that palm oil plantations can encroach on. They are both environments of great ecological significance, and we should therefore have as much interest in them as we do in a forest.

In order to know what is going on in response to our demand for palm oil, we need some information. The obvious information we have access to is satellite records, but they are not much use unless you can tie them to what is happening on the ground. We will need some form of baseline—I hope very much that COP 26 may provide that—or a map of where things are so that change can be measured from that. We need to be conscious of the fact that it is not necessarily the big boys doing the encroaching. It can be small farmers, subsistence farmers or people working out a small living who make the first cut, and then the big boys come in behind them, reward them and move them on to the next patch of virgin forest. What we need to watch is not some small detail but the overall effect, so that we know that palm oil sourced from a particular area or country has been done so ethically.

Amendment 265 deals with how we might make that work. I am suggesting that we should be able to give our approval to an organisation such as the Roundtable on Sustainable Palm Oil so that we can use it as an internationally recognised collaborative method of telling us which sources of palm oil are ethical. Then we should build some reward into that system. I am sure we would come up against the WTO again, but, as we have discussed before this evening, we need the WTO to become responsive to environmental imperatives. If a country is producing ethically farmed palm oil, we should be able to reward it with a premium, which should then go back into the process of making sure that palm oil is ethical and supporting the people producing it on those terms, so that we get a virtuous circle.

Those are my two suggestions for how we might make things more effective than they appear to be in the Bill. It is important that we look for a system that does not just deal with the import of the primary product but enables us to get at imports that contain substantial amounts of the product; otherwise, we just disadvantage our own producers. Working through something like a round table or an import tariff scheme would allow us to do that.

Photo of Baroness Meacher Baroness Meacher Crossbench

My Lords, I will speak to my Amendment 264A. The noble Earl, Lord Sandwich, was very keen to speak on this amendment, to which he added his name, but for technical reasons was unable to do so.

I congratulate the Government on their attempt to tackle the alarming rate of deforestation. They plan to do this by prohibiting the use of certain commodities associated with illegal—I emphasise the word—deforestation and by requiring large companies to undertake due diligence and report on their activities in the relevant areas. I emphasise the word illegal because here lies the risk; the Bill as it stands risks incentivising Governments to change their laws to make sure that far greater deforestation—perhaps all of it—becomes legal. This Environment Bill will then have little or no benefit in preventing deforestation. I know this is not the intention of the Government, but I ask the Minister to consider most carefully the risk of leaving Schedule 16 as it stands.

As other noble Lords know, deforestation is a huge global problem and solving it has to be a top priority for COP 26. Just a couple of statistics will make the point. In 2020 alone, primary humid tropical forest loss covered some 4.2 million hectares—an area the size of the Netherlands. Paragraphs 2(1) and 2(2) of Schedule 16 make it clear that, as long as local laws are complied with, commodities grown on land where forest has been cleared can be traded commercially by UK companies. However, deforestation behind UK imports of commodities accounts for an area of tree loss almost the size of the entire UK. This year has seen the highest deforestation rates in the Brazilian Amazon in over a decade. This will only get worse without this amendment.

Apart from the Bill as it stands incentivising Governments to legalise deforestation in their own countries, even now a third of tropical deforestation is defined as legal and will not be tackled by Schedule 16, unless it is amended. Scientists in Brazil tell us:

“Currently in Brazil, approximately 88 million hectares … 4 times the size of the UK, could be cleared legally on private properties under Brazilian forest law.”

Another major issue is that laws relating to land use, forests and commodity production are often uncertain, inconsistent or poorly implemented, making the determination of legality very difficult, time-consuming, expensive or virtually impossible. Schedule 16 as it stands risks bogging down UK courts with difficult questions about the interpretation and application of foreign laws.

I know the Government have absolutely no wish to impose these problems on our industries. If they accept this amendment, they will surely provide clarity, consistency and certainty for UK businesses and for the countries of origin where deforestation is currently taking place. Leading UK companies have appealed to the Government to support a more rigorous standard than that set out in Schedule 16.

I thank the head of the Bill team and four other officials for the very helpful meeting we had on Thursday. They argued that 70% of deforestation for agriculture is illegal. Yes, but 30% is legal. Also, this is changing as we speak. The Brazilian Government are in the process of legalising forest lands. Paulo from Brazil, at a highly informative Global Witness meeting—I thank Global Witness for its incredible help on this—referred to a recent forest code which has legalised 12 million hectares of forest and a legislative package that will retrospectively legalise deforestation. The Bill encourages further legalisation to circumvent laws based on legality. This is dangerous. I understand that, despite all these issues, the Government want to work with producer countries to improve governance. This approach assumes that we are dealing with Governments who share our values—sadly, we are not.

Paulo from Brazil was appealing to the UK—appealing to me to appeal to the Minister, I should say—to introduce a strong law to prevent commercial activity based on deforested land, whether legal or illegal. He is deeply concerned about his Government’s determination to undermine our legality-based legislation.

I understand that we must take seriously the fact that WTO rules are against import bans. We need to argue for an exception to this rule on the basis that our law is the least restrictive to achieve our objective. In view of the regimes responsible for the world’s greatest forests, we can legitimately use the least restrictive argument in this case. I understand that the Government’s position is that we should not be creating a wall around the UK in the year of COP 26, but we would not be alone. The Minister will be aware that the EU is planning legislation to adopt a full deforestation approach. That is an approach in line with this amendment. I would be very grateful if the Minister could explain the Government’s attitude to this. I hope the Government want us to be a world leader on deforestation, not a weak state lagging behind the EU. I hope that the Government will bring forward their own amendment on Report based on a deforestation-free standard drawing on international standards and which would apply to all UK sourcing. Dozens of organisations from Brazil, Indonesia and Cameroon working on the front lines of deforestation called on the Government to take this approach, as did over 20 of the UK’s largest agri-food supply chain companies. I ask the Minister to follow that advice and I look forward to his response. I apologise for the length of this contribution.

Photo of Baroness Sheehan Baroness Sheehan Liberal Democrat 10:30 pm, 12th July 2021

My Lords, I will speak to the five amendments in the group which either appear in my name or to which I have added my name. I will confine my remarks to them in the interests of time, but I register my strong support for all the amendments in the group, with perhaps a question mark over Amendment 265 in the name of the noble Lord, Lord Lucas. It has not been explained in the amendment how relative product advantage would be measured.

I am fortunate to have been preceded by the noble Lords, Lord Randall and Lord Lucas, and by the noble Baroness, Lady Meacher, who spoke about why these amendments needed to have been tabled, so I can say a lot less. I am sorry to have to speak before my noble friend Lady Parminter, in whose name Amendment 265A appears. This is an important amendment, which—given the UK’s position as a leader in financial services—in many ways goes to the heart of our leadership on both climate change and human rights issues. It has my strong support.

I will address Amendment 264ZA in the names of the noble Baroness, Lady Jones of Whitchurch, and my noble friend Lord Oates, and to which I have added my name also. The amendment has been tabled to draw attention to the current situation in which human rights abuses of indigenous peoples abound, sometimes leading to death, and to offer a remedy of sorts. In order to make local laws fit for purpose, it is critical to ensure that the UK requires businesses to have evidence that the free, prior and informed consent—FPIC—of indigenous peoples in forest communities has been obtained in the production of forest risk commodities on their land and local area.

There is a strong body of evidence which shows that FPIC reduces deforestation, reduces attacks on forest custodians and develops strong, commercially productive relationships. This is particularly important for the 80% of indigenous and community lands that do not yet have secure legal rights. FPIC is defined under international law, and commitments to full or partial FPIC are included in a diverse array of industry standards, OECD guidance and company commitments. It should be specifically included in Schedule 16 to underscore our global leadership on both climate change and human rights. I also point out that the Global Resource Initiative task force—commissioned by BEIS, Defra, and the FCDO, so this is the Government’s own body—in its report of March 2020 specifically recommended that the UK Government urgently introduce a mandatory combined human rights and environmental due diligence approach to forest risk commodities.

Schedule 16 is the UK’s first due diligence process with respect to forest risk commodities, yet it makes no mention whatever of mitigating human rights abuses through free, prior and informed consent. This is a moral and practical oversight and I look forward to the Minister’s response about how this omission can be justified.

Amendment 264A, in the name of the noble Baroness, Lady Meacher, and the noble Earl, Lord Sandwich, which I support, seeks to address the potential gaping loophole that would be set up by differentiating between legal and illegal deforestation. Does the Minister accept that the British public do not want these tainted goods? I cite the remarkable outcome of the Government’s public consultation on due diligence on forest risk commodities: over 99% of respondents supported the introduction of legislation to reduce all deforestation. When can we expect a response to the consultation?

I tabled Amendment 264B to paragraph 3 of Schedule 16 on the due diligence system as a probing amendment to see what estimation the Government have made of the acceptable level of mitigation of risk by businesses operating forest risk commodities. If the objective of Schedule 16 to avoid products consumed in the UK contributing to deforestation abroad is to be met, UK businesses must be confident that there is no more than a negligible risk that their products are linked to deforestation. Does the Minister agree that a requirement to mitigate risk without specifying the extent to which risks must be mitigated is rather vague and subjective? What consideration have the Government given to the question, as an unqualified requirement to mitigate risks leaves businesses open to legitimately take the least action required to achieve the most minimal reduction in their assessment of risk rather than the action required to genuinely minimise the level of risk? What would stop this happening? In the way that Schedule 16 is currently drafted, it is not clear to me; maybe the Minister can enlighten me. I would appreciate a thorough response from him on this amendment, maybe in writing.

Amendment 265ZA in my name would require the Secretary of State to consult stakeholders when making regulations on the content and form of annual reports on the due diligence system, and on how such reports are to be made publicly available. The amendment is, I suppose, inspired by lessons learned in the implementation of Section 54 of the Modern Slavery Act 2015, which introduced a requirement on businesses above a certain size to publish a slavery and human trafficking statement every year. It has become apparent that changes are needed. The Commons Foreign Affairs Committee recently published a report which concludes that the MSA is too weak and the criteria for producing the statements are in need of reform. The implication for this part of the Environment Bill is that it is important to ensure that the form and arrangements for publishing reports by a regulated person should be informed by public consultation so that lessons such as those from the Modern Slavery Act can be properly factored in. I look forward to the Minister’s reply.

The final amendment in my name, Amendment 265AA, aims to strengthen the enforcement of Part 1 requirements and Part 2 regulations through a civil sanctions regime. As drafted, Schedule 16 states the potential for civil sanctions to be issued for failures to comply with the Schedule’s requirements, except where a regulated person

“took all reasonable steps to implement a due diligence system”.

However, “reasonable steps” is not defined; it could mean any number of things. The exception to liability is too broad and potentially undermines the effectiveness of the due diligence obligations. Would it not be far clearer to instead mandate a regulated person to take the steps necessary to implement an effective due diligence system, as my amendments suggest? My final question to the Minister is: why do the Government not do that? It would be far more effective to state what they actually want rather than a woolly form of words that is an open invitation to those with, shall we say, creative minds.

I will end with this reflection: deforestation is the second largest contributor to global warming, second only to fossil fuels. What happens to rainforests matters to us all. The Government should seize with both hands the opportunity presented by this Bill to play their part in stopping the wanton destruction of all rainforests, especially in this seminal year, when they hold the presidency of COP 26.

Photo of Baroness Parminter Baroness Parminter Chair, Environment and Climate Change Committee, Chair, Environment and Climate Change Committee

My Lords, I rise to introduce Amendment 265A in my name, for the support of which I am grateful to the noble Lord, Lord Randall of Uxbridge, the noble Earl, Lord Sandwich, and the noble Baroness, Lady Jones of Whitchurch.

Like other Peers, I welcome the inclusion of Schedule 16 and its introduction into law of an essential means of combating the deforestation associated with the consumption of forest risk commodities in the UK. Yet the trade in these commodities is only the final stage of the supply chain; their production must also be financed and, because the UK is such an important global source of capital, British banks and financial institutions currently supply a considerable proportion of this investment.

As Global Witness reported, in 2020, UK banks channelled over £900 million into over 300 major companies involved in forest risk commodities such as palm oil, soya and beef. Between 2013 and 2019, UK-based financial institutions were the single biggest source of international finance for six major agribusiness companies involved in deforestation in the climate-critical forests of Brazil, the Congo basin and Papua New Guinea, providing £5 billion over this period. I am not claiming that all this investment financed illegal activities, but, almost certainly, some of it did. As Forest Trends reported earlier this year, over the period of 2000-2012, 49% of tropical deforestation for agricultural commodities was thought to be illegal; between 2013 and 2019, the proportion rose to at least 69%. Illegal conversion of forests for agriculture is destroying an area of forest the size of Norway each year.

The point is that these banks do not have adequate systems in place to ensure they are not funding illegal deforestation. Extending the same requirements for the exercise of due diligence to banks as this Bill would impose on importers is a sensible move. This is not merely my view. That was the conclusion of the Global Resource Initiative Taskforce of sustainability leaders from finance, business and civil society, which was established by this Government in 2019. It was chaired by Sir Ian Cheshire, who was at that time chairman of Barclays UK. In its report last year, it concluded:

“Financial institutions provide enabling financial services across the commodity supply chain and so should be obligated to exercise due diligence with regard to their lending and investments.”

No other mechanism currently requires banks to carry out due diligence for illegal deforestation. The Government have argued, in their response to the Global Resource Initiative report, that the requirements for reporting on climate-related financial information that they intend to introduce will tackle the problem—but in reality they cannot. These reports will focus only on annual carbon emissions and are not suited to identifying the links between the provision of finance for agricultural crops growing on land cleared of forest several years before; they will also not require any assessment of the legality of the forest clearance.

The reports the importers of these commodities will be required to issue on the actions they have taken to establish their due diligence systems will provide helpful information but, again, they will relate to the final stages in the supply chain—the trade of the commodities. Far better, surely, to require banks to conduct due diligence on their lending and interventions at the start of the process when the initial finance is provided.

The financial sector is one of the British economy’s greatest strengths, but it will fail to remain so if it continues to fund activities which contribute to the climate and nature emergencies. I recognise and applaud the many steps that individual banks and financial institutions are already taking to green their activities. Requiring all of them to conduct due diligence to avoid their lending contributing to illegal deforestation is hardly a radical move. Indeed, it is the minimum we should expect.

Photo of Baroness Young of Old Scone Baroness Young of Old Scone Labour 10:45 pm, 12th July 2021

My Lords, I very much welcome the Government’s commitment to requiring businesses to ensure that the forest risk commodities they use to have been produced in compliance with local laws, but it is only a start, as other noble Lords have pointed out. I particularly support Amendment 293B in the name of the noble Lord, Lord Randall of Uxbridge. What we have in the Bill does not deliver on the commitment in the 25-year environment plan to ensure that

“our consumption and impact on natural capital are sustainable, at home and overseas.”

The Environmental Audit Committee’s recent biodiversity report called for

“a target to reduce the UK’s global environmental footprint”, as does the amendment, and I support that idea.

Commitment to a target would set an ambition to do more over the next few years and allow the Government to develop further measures covering issues such as illegal deforestation, as raised by the amendment of the noble Baroness, Lady Meacher, and financial issues, as raised by the amendment in the name of the noble Baroness, Lady Parminter. I know that the Minister has a personal commitment to this issue, and I hope he can respond positively.

On a particular case which the noble Lord, Lord Randall, raised just now and previously, every year, an area of forest and biodiversity bigger than the New Forest is sacrificed to feed biomass-based electricity generation in the UK. The replacement forests take decades to mature and cannot be regarded as equivalent in either carbon or biodiversity terms. The people of Britain pay through the nose for this: they pay more than £2 million per day to subsidise those large biomass power plants. In view of the damage to forests and biodiversity caused by the wood pellet industry in the USA and Estonia, can the Minister use the Bill to review the dubious sustainability claims made by Drax, end public subsidy and ensure that the performance of a large biomass power plant is not compared with hugely polluting coal but with other green technologies such as wind and solar?

Photo of Baroness Bennett of Manor Castle Baroness Bennett of Manor Castle Green

My Lords, it is a great pleasure to follow the noble Baroness, Lady Young of Old Scone, and to express my support for nearly all the amendments in this group, except Amendments 263 and 265.

We should start by acknowledging that this is yet one more sign that campaigning works. Schedule 16 represents amendments brought by the Government in the other place which reflect the campaigning of a great many NGOs and other groups and, as other noble Lords have said, the conclusions of the independent Global Resource Initiative Taskforce. However, as multiple briefings that we have all received show, it still needs improvement to deliver on the recommendations of the GRIT and the expectations of UK consumers and businesses.

I shall not go through each amendment, but I shall start with Amendment 293B in the name of the noble Lord, Lord Randall of Uxbridge, because it is in many ways the most far-reaching and crucial. This is the one that calls for a global footprint target. I shall start with the benefit for the UK, before looking more broadly. It would reduce the risk of future pandemics; I do not really need to say more than that. It would help safeguard against the economic costs of biodiversity decline and climate change. The WWF Global Futures report calculated that that will cost the world at least £368 billion a year, with the UK suffering annual damage to its economy of £16 billion a year by 2050. It would also support the resilience of UK and global businesses. It would help businesses to manage risk proactively. Coming back to the Government’s desire, of which we so often hear, to be world-leading, it would mean that the UK was the first country to embed the latest pledge for nature into its legislation. It is crucial.

It is worth noting that this amendment is another way of addressing the issue I addressed in the amendment I moved to Clause 1, many days ago, on reducing resource use rather than making it more efficient. We need to reduce our ecological footprint by around 75% to fit within ecological limits. The WWF global footprint report looked at some of the key issues: our material footprint needs to come down by 38%, biomass by 48%, nitrogen—for which I tabled a specific amendment earlier—by 89%, and phosphorous by 85%.

The most basic amendment that I would surely suggest the Minister has to adopt in some form is Amendment 264A, in the name of the noble Baroness, Lady Meacher. She has already made many powerful arguments, in particular that if we do not introduce this amendment there will a perverse incentive to encourage the legalisation of deforestation. UK businesses could also benefit from this amendment. Currently, in many parts of the world laws relating to land use, forests and commodity production are numerous, uncertain, inconsistent and poorly implemented. It is very difficult to determine legality, and companies can be trapped in a regulatory, paperwork minefield from which the amendment of the noble Baroness, Lady Meacher, could free them. Of course, 2.1 million hectares of natural vegetation within the 133 Brazilian municipalities that currently supply the UK with soya could be legally deforested.

I come now to Amendment 264ZA in the name of the noble Baroness, Lady Jones of Whitchurch, which calls for the recognition of customary land ownership and membership systems. Some 80% of indigenous and community lands are held without legally recognised tenure rights. We know that in indigenous and tribal territories, deforestation rates are significantly lower. Ensuring respect for customary tenure rights is an efficient, just and cost-effective way to reduce carbon emissions. Noble Lords who have been reading The House magazine might know that I have some recommendations for summer reading in there. I would like to add an extra one: Imbolo Mbue’s second novel, How Beautiful We Were, which is set in a fictional African village and shows how it was depleted by centuries of the activities of fossil fuel companies, forest exploitation and rubber plantations, going back to slavery. We really cannot allow this kind of relationship with the world to continue.

I come now to Amendment 265A in the name of the noble Baroness, Lady Parminter. What we are doing here is the reverse of what your Lordships’ House achieved in the Financial Services Bill. After a lot of wrestling, we finally got a reference to climate—although, unfortunately, not biodiversity—into the Finance Bill. What we also need to do is to get recognition of the damage the financial sector does to the rest of the world, and we need to see finance addressed in all the other Bills. The UK is the single biggest source of international finance for six of the most harmful agribusiness companies involved in deforestation in Brazil, the Congo basin and Papua New Guinea, lending £5 billion between 2013 and 2019. These UK banks included HSBC, Barclays, and Standard Chartered. We simply cannot allow this to continue.

Noble Lords may not think so, but I am really trying to be brief, so I will turn to some very short concluding thoughts. If deforestation was a country, it would be the third largest emitter of carbon, behind China and the US. Some 80% of deforestation is associated with agricultural production, yet figures published this afternoon from five major UN agencies show that the number of people without access to healthy diets has grown by 320 million in the last year. They now number 2.37 billion in total. A fifth of all children under five are stunted because of lack of access to the most basic resource of all: food.

We have to stop wrecking other people’s countries. We have to ensure that our lives are lived within the limits of this fragile planet, and that everyone else has access to that same basic level of resources that is their human right.

Photo of Lord Blencathra Lord Blencathra Chair, Delegated Powers and Regulatory Reform Committee, Chair, Delegated Powers and Regulatory Reform Committee

My Lords, I declare my interests as in the register. While I warmly welcome all the provisions that the Government have put into this Bill on this matter of due diligence, I also support the amendments in the name of my noble friend Lord Randall of Uxbridge, who moved them so powerfully, eloquently and rapidly. I pay tribute, too, to the passionate and excellent speech by the noble Baroness, Lady Meacher, which was a pleasure to listen to.

I will comment first on Amendment 265A, in the name of the noble Baroness, Lady Parminter, my noble friend Lord Randall of Uxbridge, the noble Earl, Lord Sandwich, and the noble Baroness, Lady Jones of Whitchurch. It is a rather ingenious and clever approach, and I was appalled to hear that British institutions—if I heard the noble Baroness correctly—have raised about £5 billion of funding for the illegal destruction of rainforest. If British banks and financial institutions are involved, we have to find ways of putting a stop to them doing that sort of thing.

The current provisions in the Bill quite rightly impose obligations on regulated persons who are trading products from endangered rainforests. As in every other business, however, the normal rule is “Follow the money”: if you want to catch illegal or improper behaviour, look at the money flows. Putting an obligation on all financial institutions to exercise the same due diligence as the companies that import and export timber would plug a potentially big gap. How do we crack down on money laundering and terrorist financing? We do it by putting an obligation on all financial institutions to report transactions above £10,000. It works for illegal money transactions, and it can work for destructive timber transactions or the financing of palm oil, soya bean or ranching projects.

I rather like my noble friend’s Amendments 265B and 265D. Why should we try to save the rainforest? The rationale for saving the rainforest is infinitely greater than just reducing carbon emissions—important though that is—or saving indigenous people or preventing mahogany and other tree species from being extinguished. The rationale is that the rainforest is the “medicine cabinet” of the world, to steal another phrase from the Prince’s Rainforests Project.

As rainforest species disappear, so too do many possible cures for life-threatening diseases. Currently, 121 prescription drugs that are sold worldwide are derived from plant sources, and 25% of western pharmaceuticals are derived from rainforest ingredients. However, fewer than 1% of tropical trees and plants have been tested by scientists. So we have tested 1% and are burning the other 99%, yet we are getting 25% of our drugs from that small 1%. That is a very dangerous pyramid.

A single pond in Brazil can sustain a greater variety of fish than is found in all the rivers of Europe put together. A 25-acre area of rainforest in Borneo may contain more than 700 species of trees—a figure equal to the total tree diversity of North America. A single rainforest in Peru is home to more species of birds than are found in the entire United States, and the number of species of fish in the Amazon exceeds the number found in the entire Atlantic Ocean.

So I repeat my question: how can we in the West be so stupid as to permanently destroy, or fund the destruction of, a habitat when we have not looked at 99% of the species in it? Some scientists estimate that we are losing more than 130 species of plants and animals every single day through rainforest destruction. We just do not know, yet we are carrying on regardless. Estimates of the total number of species in the world vary from 2 million to 100 million, the best estimate being that there are about 10 million species of living things, ranging from nematode worms, slugs, molluscs, plant life and fungi to trees, birds and the cuddly animals that we worry about.

Biodiversity, however, is not just about saving the red squirrels, polar bears, orangutans, lemurs and tigers—as vital and close to my heart as some of those are. Of far greater importance to the planet are the plants and bugs that we never see and are not cuddly.

As John Sawhill of the Nature Conservancy said:

“In the end, our society will be defined not by what we create, but what we refuse to destroy.”

Like the noble Baroness, Lady Meacher, I have pointed out that that is why the rainforests are so important. They are being destroyed at an alarming, escalating rate and the types of alternative uses to which the land is being put are changing constantly: soybeans, palm oil, bananas, pineapples, tea, coffee, rubber and cattle ranching. As the destroyers of the lungs of the earth keep changing their modus operandi, so we must be nimble and flexible and change our response. That is why I like my noble friend Lord Randall’s amendments, because they suggest to the Government that we build in a review procedure and if things change, we change our approach.

I say in conclusion to the Minister that I do not think the amendments impose an unreasonable burden on the Government, and I commend them to him.

Photo of Lord Thomas of Cwmgiedd Lord Thomas of Cwmgiedd Chair, Consolidation, &c., Bills (Joint Committee), Chair, Consolidation, &c., Bills (Joint Committee) 11:00 pm, 12th July 2021

It is a great pleasure to follow the noble Lord, Lord Blencathra. In the light of what he has said, it is unnecessary for me to say anything other than to warmly endorse his words in respect of Amendment 265A in respect of the financial services industry and the amendments in the name of the noble Lord, Lord Randall of Uxbridge, on the longer-term plans.

I shall concentrate on one aspect only, in view of the lateness of the hour: the methods on which control over the use of forest risk commodities can most effectively be framed for enforcement in the United Kingdom. Three methods are under consideration. They can be cumulative and probably should be, and should operate together. What is essential is to examine each and see whether one can stand on its own or whether all three would work better together.

I take the first, which is the proposal in the Bill to allow the use of forest risk commodities only if local laws have been complied with. This is unlikely to be effective and indeed, as the noble Baroness, Lady Meacher, explained, it could be counterproductive. The reason why it is likely to be ineffective is that most of the localities with which we are concerned have legal and legislative systems that do not protect from deforestation because of political and economic pressure. Even if protection is initially given, there are numerous instances of retrospective validation of deforestation in contravention of local law. Such retrospective validation would make the use legal under the local law and would therefore render this method of halting deforestation nugatory. Furthermore, proof that the commodity was produced in contravention of local law is likely to cause significant difficulty and uncertainty and considerable expense if the matter comes for enforcement in the UK. Thus, in my view, the first method is unlikely to be effective.

The second method, as set out in the amendment in the name of the noble Baroness, Lady Jones of Whitchurch, is to add a further requirement in respect of the locality: the informed consent of indigenous people and local communities. I would welcome this as a vital addition and safeguard, if the first method is to be chosen. However, although I have no doubt that NGOs and other organisations would give every assistance in establishing whether informed consent was given, I would anticipate that establishing the factual position in a UK court would be far from easy—the difficulties are obvious. However, if the first method is to be used as set out in the Bill, this would be an essential part of having effective enforcement.

The third method is that set out in the amendment in the name of the noble Baroness, Lady Meacher, which is to prohibit use if land has been deforested after the commencement of the schedule as further delineated in regulations made by the Secretary of State. In my view, this amendment would be wholly effective on its own and certainly buttress the other two methods. It would leave no room for dispute as to the status of the areas from which the commodity comes, as it is an objective standard not dependent on proof or either local law or the consent of the indigenous people or local communities.

If the third method were adopted, it would give great clarity, which is essential if this law is to operate as a deterrent to industries in the UK using forest risk commodities in breach of what everyone agrees ought to be prevented. I therefore warmly support the third of the methods—that is, the amendment in the name of the noble Baroness, Lady Meacher—but if that cannot be done, we must have the amendment in the name of the noble Baroness, Lady Jones of Whitchurch.

Photo of Lord Harries of Pentregarth Lord Harries of Pentregarth Crossbench

My Lords, I wish to support Amendment 264ZA, in the name of the noble Baroness, Lady Jones of Whitchurch, and Amendment 264A, in the name of the noble Baroness, Lady Meacher. As we know, the rate of deforestation on our planet is a scandal and an increasing threat to both our climate and the extent of our biodiversity. In some parts of the world, it is also a threat to the indigenous population who live in the forests, a denial of their fundamental human rights. Their habitat, their lives and their livelihood are often endangered by deforestation.

Amendment 264ZA, in the name of the noble Baroness, Lady Jones, rightly seeks to ensure that if forest risk wood is imported, it has been felled only with the permission of the indigenous population. It is not enough just for local laws to be observed, which may be too permissive or open to manipulation by local interests; there must be safeguards for those most directly affected. Our laws cannot reach into those areas, but we can at least ensure that we do what is open to us to do in this country, which is to have appropriate checks in place for importers of forest risk material.

Amendment 264A, in the name of the noble Baroness, Lady Meacher, has a similar purpose: to do what we can in this country to prevent exploitive deforestation. It would ensure a total prohibition, except in relation to indigenous people, on importing forest risk products from agricultural land which should never have been cleared in the first place, as trees should still be standing. The noble Baroness put forward powerful arguments in favour of her amendment, strongly supported just now by the noble and learned Lord, Lord Thomas of Cwmgiedd, with his important phrase about retrospective validation. A forest which should never have been felled in the first place might get some kind of legal retrospective validation, but we need to ensure that that wood should still not be imported. For those reasons, I strongly support both those amendments.

Photo of Lord Oates Lord Oates Liberal Democrat Lords Spokesperson (Energy and Climate Change)

My Lords, I declare my interest as chair of the advisory board of Weber Shandwick UK. As we have heard in this debate, deforestation poses a catastrophic threat to biodiversity and to the climate of our planet, but in addressing these issues we should show some humility and acknowledge up front that we have almost completely deforested our landscape in the UK and in much of Europe, and we need to be conscious of that in all our debates.

However, the fact remains that life on our planet will not be sustainable if the current rate of deforestation continues. We have heard a range of analogies and figures in this respect. The World Wide Fund for Nature estimates that the equivalent of 30 football pitches of forestry were lost every second in the tropics in 2019. That is a staggering rate of destruction and there are many worrying signs that it is accelerating.

I welcome the Government’s attempts to address the issue in the schedule, but they would be immeasurably strengthened by the majority of the amendments in this group. There seem to be a few main themes in the amendments. The first is around strengthening parliamentary procedures to ensure proper scrutiny of the delegated powers under this section of the Bill. Amendments 260B and 260C in the name of the noble Lord, Lord Randall, to which he spoke so clearly, seek to tackle that. From these Benches, we certainly support him.

The second theme seeks to tackle the issue of legal deforestation and the rights of indigenous people. The amendment of the noble Baroness, Lady Meacher, is critical if the Bill is to have real effect. As we have heard, it is supported by the noble Earl, Lord Sandwich, who, for technical reasons, was not able to be here but was very keen that his support was underlined.

As the noble Baroness, Lady Meacher, said, and as the noble and learned Lord, Lord Thomas of Cwmgiedd, underlined, if we continue simply with the definition in the Bill as the Government have drafted it, the Bill could end up being counterproductive, either having little effect or incentivising countries to legalise further deforestation, as the noble Baroness said.

We know that there is a particular issue in certain jurisdictions, and we have heard about the situation in Brazil, where, sadly, the President seems to have little regard either for the need to protect forests or for the rights of indigenous people. Although I understand that there are a lot of complexities around WTO rules, their main focus is around non-discrimination; as long as one tackles that and provides a mechanism that is non-discriminatory but focused on actions, that should be possible.

Amendment 264ZA, in the name of the noble Baroness, Lady Jones of Whitchurch, which I have also signed, aims to ensure that forestry commodities cannot be used unless the consent of indigenous communities has been obtained prior to their production.

There are those who claim that measures to prevent deforestation are somehow a case of westerners seeking to impose their values on other countries, having hypocritically destroyed their own forests. However, the reality is that local indigenous people suffer most from deforestation, and it is very often unscrupulous multinational, often western, firms that are responsible for destroying forests and the livelihoods of indigenous people. My noble friend Lady Sheehan and the noble and right reverend Lord, Lord Harries, also set out the importance of the human rights angle in relation to deforestation. The amendment of the noble Baroness, Lady Jones, seeks to address this gap, and we on these Benches strongly support it.

The third theme in this group of amendments relates to the financing of forest destruction, which is a critical area. Amendment 265A, in the name of my noble friend Lady Parminter, which has support from across the Committee, seeks to address the financing of deforestation, and is highly significant. My noble friend explained the critical role of capital, including UK capital, in funding tropical deforestation, and the fact that banks do not have the mechanisms in place to ensure that they are operating proper due diligence and not funding illegal forest clearance. As the noble Lord, Lord Blencathra, said, the watchword here is “follow the money”—that is critical. My noble friend also highlighted the need to protect the reputation of the City if we are to establish ourselves as a centre of green finance in the world. This amendment would help in all these regards.

The theme of global impact is enshrined in Amendment 293B of the noble Lord, Lord Randall, which would require the Government to set a target to reduce the UK’s global footprint. Again, this is a key amendment in tackling deforestation. As the noble Baroness, Lady Bennett of Manor Castle, said, it is perhaps the most crucial because it gets to the heart of the issue by targeting resource use, and we support this approach.

Finally, there were a number of other important amendments in the name of my noble friend Lady Sheehan, including: Amendment 264B, on introducing an assessment of the level of risk; Amendment 265ZA, which, as my noble friend explained, would require the Secretary of State to consult with relevant persons before making regulations under the schedule; and Amendment 265AA, which would require a regulated person to take all steps necessary to implement an effective due diligence system, rather than the lower bar of “reasonable” steps. The noble Lord, Lord Lucas, also had a number of amendments which are interesting, but we would want to understand a little more about their operation before supporting them.

As currently worded, Schedule 16, while a welcome step forward by the Government, is full of loopholes and, as we have heard, could be counterproductive. Those loopholes would undoubtedly be exploited by unscrupulous political and commercial interests that do not care about either our planet or its people. The majority of the amendments in this group seek to plug many of these loopholes and therefore strengthen the Bill’s ability to deliver on what I believe is the Government’s good intent. I hope, therefore, that the Minister will respond positively and undertake either to accept amendments on Report or to come back with government amendments.

Photo of Baroness Hayman of Ullock Baroness Hayman of Ullock Opposition Whip (Lords), Shadow Spokesperson (Environment, Food and Rural Affairs) 11:15 pm, 12th July 2021

My Lords, this is a really important group of amendments and I am pleased that, despite the late hour, we have managed to have a good debate around them. I will speak to Amendment 264ZA, in the name of my noble friend Lady Jones of Whitchurch and the noble Lord, Lord Oates, but we also support other amendments in this group and thank noble Lords for tabling them. There are some very important points that need to be addressed.

In his introduction to his amendment, the noble Lord, Lord Randall of Uxbridge, talked about the Government’s 25-year environment plan and their commitment to ensuring that

“our consumption and impact on natural capital are sustainable, at home and overseas.”

It is therefore a bit disappointing that the Environment Bill does not currently reflect this commitment adequately.

The Global Resource Initiative task force recommended back in March 2020 that the Government

“urgently introduces a mandatory due diligence obligation on companies that place commodities and derived products that contribute to deforestation”, whether legal or illegal under local laws, on the UK market. It also recommended that, since not all businesses have begun to commit to and implement sustainable supply chains, a legally binding target to end deforestation —as we have heard from other noble Lords—would provide the “necessary signal” for a shift in industry behaviour. As the noble Baroness, Lady Bennett of Manor Castle, did, we welcome the Government’s amendment that was tabled in the other place following campaigning, and the fact that Schedule 16 now includes a new prohibition on the use of certain commodities associated with illegal deforestation and requirements for large companies to undertake due diligence and reporting. However, as we heard in the debate, the provisions simply do not go far enough in progressing either the GRI recommendations or the level of action that is demanded.

The noble Baroness, Lady Sheehan, mentioned the lack of attention to human rights in Schedule 16. NGOs such as Global Witness and Forest Peoples Programme have highlighted that there is currently no mention of human rights or of indigenous peoples and others who live in forests and rely on them for their livelihoods and survival. The Bill must be strengthened to tackle the growing problems caused by deforestation and to drive action to significantly reduce our global footprint. The noble Lord, Lord Oates, talked about the appalling impact of this country’s role in deforestation. This really does need to be better recognised. Due diligence legislation is only part of the comprehensive approach that will be needed to deliver deforestation-free supply chains and to significantly reduce global footprint impacts more broadly.

Land conversion for agricultural purposes is often associated with negative human rights impacts. Beyond local laws, it is therefore critical to ensure that the UK requires businesses to have evidence that the free, prior and informed consent of indigenous peoples and forest communities was obtained in relation to the production of forest risk commodities on their land and in the local area. Our amendment does this, although I am aware that some indigenous communities see this as just the starting point. We thank the noble Earl, Lord Sandwich—as others have done—for his support; he was unable to speak in the debate today.

We offer our support to Amendments 260B and 260C in the name of the noble Lord, Lord Randall of Uxbridge. Schedule 16 introduces an important requirement that regulated businesses must not use certain forest risk commodities in their UK commercial activities unless relevant local laws are complied with in relation to that commodity. This is an important first step, but it does not go far enough since 30% of tropical forest destruction is defined as legal under local country laws. The noble Baroness, Lady Meacher, expressed her concerns that this could create a loophole, and the noble Lord, Lord Oates, also mentioned this. This loophole could risk limiting the effectiveness of the legislation and, as the noble Baroness said, could even incentivise Governments in countries such as Brazil to roll back forest protections in order to access UK markets. As deforestation is more prevalent where local laws are not enforced or upheld, this also poses challenges as to how the UK will interpret exactly what is meant by “legal”. So, we support the very important Amendment 264A in the name of the noble Baroness, Lady Meacher, which addresses this. This amendment also provides for an exception for forest risk commodities produced by indigenous peoples, as the noble Baroness spelled out so clearly.

We also support Amendment 265A in the name of the noble Baroness, Lady Parminter, on finance. Schedule 16 does not address the financing behind deforestation. The noble Baroness, Lady Parminter, talked about the huge amount of financing that comes from the UK and the lack of due diligence. I have to say, I learned an enormous amount from her introduction to the amendment, and I thank her for it. In March 2020, the Global Resource Initiative task force recommended that the UK should require companies to undertake checks on deforestation risk in their supply chains and that similar measures should apply to finance. But the Government chose to cover supply chains only, responding that UK finance institutions can use the new information gained from companies undertaking due diligence reports to inform their decisions. However, experience has shown that this is likely to fail and that they are likely not to do so unless required to by law. This is very important as broad-based measures on finance, such as the Task Force on Climate-Related Financial Disclosures, or similar efforts on nature or biodiversity, are really not suited to the specific issues around deforestation and are unlikely to curb financing. The Bill needs to specify that UK finance institutions must not provide financial services to commercial enterprises linked to deforestation and human rights abuses, so we strongly support the noble Baroness’s amendment.

We also support Amendments 265B to 265D in the name of the noble Lord, Lord Randall of Uxbridge, which seek to introduce a requirement that the Secretary of State must take the steps identified through a review to improve the effectiveness of Schedule 16. Amendment 293B in the name of the noble Lord, Lord Randall of Uxbridge, would require the Secretary of State to set a target to significantly reduce the global footprint, and we support this amendment as well. In his introduction to this amendment, the noble Lord referred to the Biodiversity in the UK: Bloom or Bust? report that was published in June by the Environmental Audit Committee, which recommended that the Government should set such a target.

We also welcome Amendment 263, tabled by the noble Lord, Lord Lucas. The noble Lord, Lord Blencathra, talked passionately about global biodiversity, but it is important that we are all very aware of our own impacts on this. The production of forest risk commodities is linked to the conversion and degradation of natural ecosystems other than forests; noble Lords have mentioned savannahs, wetlands, peatlands, grasslands, and mangroves. The noble Lord, Lord Lucas, talked specifically about the production of palm oil, and other noble Lords have mentioned soya as well. There is no policy justification for limiting provisions to forests when other natural ecosystems are under the same pressures from commodity production and provide the same or even greater biodiversity and climate benefits.

A large number of amendments have been discussed in this group, and it has been an important debate on an important issue. I hope that the Minister has listened carefully to the many amendments that have been debated. It is clear that noble Lords have some very serious concerns and believe that it would not take a lot to improve the Bill quite significantly on this aspect. I await the Minister’s response with interest.

Photo of Lord Goldsmith of Richmond Park Lord Goldsmith of Richmond Park The Minister of State, Department for Environment, Food and Rural Affairs, Minister of State (Foreign, Commonwealth and Development Office)

I have a number of amendments to address, but before I do, I will take a step back and emphasise what these measures are designed to achieve. Worldwide agricultural expansion drives almost 80% of deforestation. A significant proportion of deforestation is illegal—in some of the world’s most important places, it is closer to 90%. Decades of voluntary action have failed to end our contribution to deforestation through the products that we buy. Our measures will change that. Businesses will be required to ensure that the forest risk commodities that they use are not produced on illegally deforested land. We will consult on the commodities to be included soon, but these could include beef, cocoa, leather, palm oil, rubber, soya and so on.

It has been said in a number of contributions today that we are lagging behind and need to catch up, but it is worth reiterating that we are not only the first country in the world to introduce anything like this legislation but the only country to do so. Of course, we must do much more, but we are doing much more. No one would pretend that this is our sole, single answer to deforestation, but it is an extraordinarily important part of our answer to tackling global deforestation.

To address one further point before I go into the details of the amendment, the noble Baronesses, Lady Bennett and Lady Hayman, suggested that we reluctantly accepted this amendment on the back of campaigning. It was the Government who initiated and commissioned the GRI report which made this recommendation, and we have been working for many months to get this right. It is not something that just popped in as a last-minute concession in Committee in the other place.

I shall start by speaking to Amendments 264, 264A and 264ZA, tabled by my noble friend Lord Lucas, the noble Baroness, Lady Meacher, and the noble Baroness, Lady Jones of Whitchurch. Given the fundamental role of producer countries in protecting their forests and ecosystems, and the huge proportion of illegal deforestation, our due diligence requirements are based on legality, and I want to explain why. Our experience has shown that we get the best results for both people and the environment when we work as closely as we can with producer country Governments and communities —something which is crucial in this year of COP 26 and COP 15 on biodiversity. Working in partnership with timber-producing countries on implementing the timber regulation and the Forest Law Enforcement, Governance and Trade action plan has contributed to increased natural resource governance in those countries. We want to replicate this approach for forest risk commodities.

In response to comments made by the noble Baronesses, Lady Meacher and Lady Sheehan, adopting these amendments would be a departure from the Government’s approach and would come at a cost. The UK is a big market in global terms, but on our own we are not big enough to cause the shift globally that we need in the way that commodities are grown. We can have an impact but not a huge impact. To have that kind of shift, we need other countries to join us, and we know from the extensive diplomatic outreach that we have already done, and which I have been involved in, that we can only build that coalition using the approach that we have adopted, based on legality. That has been very clear in the discussions that we have had.

We are working hard right now to build a global movement of consumer and producer countries committed to working with us to tackle this problem, and we are making enormous headway. If other countries are beginning to consider doing something similar, that is because of UK leadership. Incidentally, the EU has not yet decided what it is going to do; it has announced an intention to tackle due diligence but has not committed to any particular form. But if Japan, New Zealand and even the USA—we heard—are looking favourably at doing something on due diligence, that is because of the work that the United Kingdom has done. I do not believe it would be happening without the leadership that the UK has shown. There is a tendency to self-flagellate and always see the worst in our country, but there are certain areas—and this is one of them—where I think we can be proud of the leadership that we have shown.

Changing our approach would grind that progress to a standstill, and while the UK would subsequently be sending a strong signal—I have no doubt about that—a signal is all it would be; and we need radical change. This is the biggest problem in the world, and if we are going to break the link between commodity production and illegal deforestation, which accounts for such a huge proportion of deforestation, signals are not going to be enough. We need action, and the process and method that we have chosen is one that we believe, based on intense outreach, will lead to the action we need, not just the sending of some great virtue signal.

The UK also recognises the vital role that indigenous people and local communities play in protecting forests. We are one of many countries supporting work to secure the rights of indigenous peoples and local communities to forest lands—for example, through our forest governance, markets and climate programme. I would like to reassure the noble Baronesses, Lady Meacher and Lady Jones of Whitchurch, that producer country laws protecting the land rights of indigenous peoples and local communities are in scope of our legislation already, including laws that require obtaining free, prior and informed consent.

Additionally, the new FCDO land facility programme will work with central Government, land agencies and local communities and businesses to promote reform of land governance and administration. This will include tackling barriers to the recognition and protection of communities’ land rights. We are working also with non-governmental organisations through the FCDO’s global “Land: Enhancing Governance for Economic Development” programme to build a global network of paralegals helping indigenous communities and local communities defend and protect their land rights.

As part of the forest governance, markets and climate programme, a grant of £2 million to the Asia Foundation in Indonesia is supporting action to improve sustainable forest and land governance effectively by helping communities assert their ancestral rights over the land they inhabit. I am keen, as colleagues are, to extend this work dramatically. To that end, I recently held a round table with the NGOs working in this space and indigenous groups to understand how we can most effectively intervene to enable indigenous people not just to protect themselves but to assert their land rights in such a way that they can live in perpetuity in the forest that they have protected for generations. It is not a coincidence that 80% of the world’s forests that are intact are lived in by indigenous people. So, we have a lot more work to do there.

On Amendment 265A, tabled by the noble Baroness, Lady Parminter, we are actively supporting and developing tools to drive sustainability in the finance sector, including as part of our response to the Dasgupta review. This includes, for example, the recently launched Taskforce on Nature-related Financial Disclosures, which was endorsed by G7 Finance Ministers. If, as we hope, the Taskforce on Nature-related Financial Disclosures grows in the way that its carbon equivalent has—which a number of noble Lords mentioned in previous debates —we will see real results. We believe that using these bespoke tools offers the best way of influencing the financial sector in the way we know we must. Adding financial services to the requirement in the Bill could create a lot of additional work for little gain. We have already committed to targeting influential larger businesses through this legislation which have a greater sway over supply chains. Extending these measures to cover financial services could duplicate the requirements that the regulation will already place on larger businesses operating in the UK.

I turn to the remaining amendments tabled by my noble friend Lord Lucas, beginning with Amendment 263. I would like to assure him that the definition of “forest” as set out in paragraph 1, is based on that of the Food and Agriculture Organization, which is:

“land of more than 0.5 hectares with a tree canopy cover of at least 10%”.

This includes forested wetlands and peatlands and sparsely forested savannah. As well as this, once a forest risk commodity is brought into scope, the legislation will apply wherever that commodity is produced.

On Amendment 265, it is important to emphasise that these measures are not designed to give an advantage to products that have been subject to due diligence—that is not their purpose. Their purpose is to ensure that all regulated businesses will be legally required to undertake due diligence. If businesses in scope do not meet the requirements set out in legislation, not only will they not get the advantage, they will be subject to fines and other civil sanctions. This includes, under the prohibition, the import of specified products that have not been produced on land that was legally occupied and used.

I assure the noble Baroness, Lady Sheehan, on her Amendment 264B that the Government recognise that risk mitigation is an important part of an effective due diligence system. Setting the risk mitigation level in this Bill would limit the scope of the legislation to commodities where risk mitigation to a negligible level is possible. Instead, we have chosen to give ourselves the ability to set the risk mitigation level in secondary legislation, so that we are able to change it whenever we need to, over time—for example, in response to technological innovation that allows risk to be reduced to a lower level.

The noble Baroness also raised the question of consultation through Amendment 265ZA. I assure her that the Government will engage extensively with a wide range of stakeholders when developing the annual reporting requirements. This will help ensure that our measures can be as effective as possible in the first instance. The Government will consult publicly to gather views on further details of the due diligence requirements, including on reporting.

Turning to the noble Baroness’s Amendment 265AA, I assure her that the Government are committed to ensuring our regulations are as effective as possible in order to have the greatest impact on illegal deforestation. There may be cases where a business may take all reasonable steps as part of its due diligence exercise but, for reasons beyond its control, may breach the prohibition. This amendment would mean that there would be no defence available for businesses in such a case, which we do not think is proportionate or right. After all, businesses would have to have undertaken due diligence to discover the breach in the first place.

In response to Amendments 260B and 260C from my noble friend Lord Randall of Uxbridge, I reassure him that the regulations that would be subject to his amendment are detailed and technical in nature, so the negative procedure is most appropriate. These regulation-making powers are clearly delimited by the framework set out in primary legislation, and I note that the Delegated Powers and Regulatory Reform Committee did not make any recommendations on altering the powers in our schedule.

My noble friend Lord Randall of Uxbridge also raised, in his Amendments 265B, 265C and 265D, the importance of regular reviews and transparency. He is right, and a number of noble Lords have made the same point. Schedule 16 contains a provision that will require the Secretary of State to conduct a review of the law’s effectiveness every two years once it comes into force and to set out steps he intends to take as a result. That will include a particular focus on the impact of our legislation on deforestation. We can, and will, take action if we are not seeing the results we hope for and expect. For example—and it is a point made by the noble Baroness, Lady Meacher—if a country were to start legalising activities that are currently illegal to get around the new laws we are bringing in, that would clearly be a problem. It would also become apparent in our review process, and we would act. We are committed to doing so.

I also thank my noble friend Lord Randall for tabling Amendment 293B. As I have said many times in this debate, the Bill gives us the power to set long-term legally binding targets on any matter relating to the natural environment, including contributing towards objectives on reducing our global footprint. The UK Government are committed to leaving a lighter footprint on the global environment, as set out in the 25-year plan. We have commissioned the Joint Nature Conservation Committee to develop a global environmental footprint indicator to help us understand the UK’s global footprint. The first phase of this work was published in May this year, with further development to follow later in the summer. The outcomes of this work will help inform our future thinking on the most appropriate approach to drive change in this area.

I know I have not been able to answer all the points raised on the legislative framework in detail today so, in the interests of time, I commit to write to Peers. We are undoubtedly pioneers in these measures, and I appreciate the interest in getting them right. We know we need to continue consulting to get them right, so I welcome further discussions as we develop the detail on the secondary legislation.

These due diligence measures show, as I said earlier, that the UK is a world leader and is serious about tackling illegal deforestation in our supply chains. But I reiterate that deforestation is a global issue that requires global collaboration. We need a shift in the entire global market, if we are to protect the world’s precious forests. As COP 26 co-president, the UK has launched the forest, agriculture and commodity trade dialogue, which I mentioned earlier; we will work with other Governments to discuss and agree an inclusive vision and road map to take actions globally on forests, agriculture and the commodity trade. In the last few weeks alone, that process has already yielded results beyond what we expected. I thank noble Lords for their amendments on this matter and ask my noble friend Lord Randall to withdraw his.

Photo of Lord Randall of Uxbridge Lord Randall of Uxbridge Conservative 11:30 pm, 12th July 2021

My Lords, before I start I should make two apologies. One is for the rapid introduction of my amendments at the beginning of this group; I wanted to ensure that everybody in this debate got a fair chance and that we were able to finish at a reasonable time—if you can call this a reasonable time. I am grateful to all those who supported them; I am also grateful to those who tabled their own amendments. We have had a very important debate.

My second apology is to my noble friend the Minister. I am trying to squeeze a little more out of the Government, but he personally and the Government deserve a huge amount of praise for these pioneering measures. We should be incredibly proud of them and, as he said, we cannot do it on our own. To be at the forefront of this is tremendously exciting. Of course, we always want a bit more, but I could recognise, even though I am not there in person, the passion my noble friend has for this issue—as do other noble Lords in the Chamber and elsewhere. I hope we will see further things perhaps happen over the summer, but I beg leave to withdraw my amendment for now.

Amendment 260B withdrawn.

Amendment 260C not moved.

Clause 109 agreed.

Amendments 261 and 262 not moved.

Photo of Baroness Finlay of Llandaff Baroness Finlay of Llandaff Deputy Chairman of Committees, Deputy Speaker (Lords)

We now come to Amendment 262A. Anyone wishing to press this amendment to a Division must make that clear in debate.