Commercial Organisations and Public Authorities Duty (Human Rights and Environment) Bill [HL]
Friday 10th May 2024
(6 months, 2 weeks ago)
Lords ChamberCommercial Organisations and Public Authorities Duty (Human Rights and Environment) Bill [HL] 2023-24 View all Commercial Organisations and Public Authorities Duty (Human Rights and Environment) Bill [HL] 2023-24 Debates Read Hansard Text Watch Debate Read Debate Ministerial Extracts
Baroness Young of Hornsey
That the Bill be now read a second time.
Baroness Young of Hornsey (CB)
My Lords, I declare my relevant interests: I am a patron of Anti-Slavery International, one of the sponsors of the Bill, and an honorary associate professor at Rights Lab at the University of Nottingham, where I also hold the position of chancellor. I express my gratitude to colleagues in the House and outside the House, especially Sian Lea from Anti-Slavery International, all colleagues at the Corporate Justice Coalition, and those in the fashion industry and at GoodCorporation. Consultation with businesses has been at the forefront of thinking about the Bill.
In many respects I am disappointed to be standing here today with this Bill. I often think about those who fought for the legislation that would abolish the enslavement of and trade in Africans in the 19th century, and wonder which of them would have thought that, almost 200 years later, legislators would still need to develop laws seeking to eliminate the gross violations and abuses that we know far too many endure in supply chains across the world today. That abhorrent trade was accompanied on a grand scale by deforestation, with a medium-sized galleon taking around 4,000 trees to construct. We may like to distance ourselves from that history, but it has become increasingly clear that, despite the efforts of organisations such as Anti-Slavery International, and despite the impact of the Modern Slavery Act on transparency in supply chains, too many commercial and public entities do not feel obliged to identify and prevent human rights and environmental harms in their supply chains.
What has brought so many commercial bodies, NGOs and trade unions to the conclusion that we need such legislation? We are in an era of complex corporate structures, where businesses operate with hyperextended supply chains. This is combined with the UK’s current legislative shortcomings, in failing to hold companies accountable for their value chain impacts. This presents substantial obstacles for victims seeking justice. This Bill highlights a critical need for new legislation to ensure corporate accountability and to protect human rights and the environment.
Forced labour continues to be a widespread and persistent issue within the supply chains of UK companies, and indeed companies elsewhere, and public authorities. The roots of this can be found in weak governance, poverty, discrimination and so on—things with which I am sure we are all familiar. There is also the fact that business models are focused on producing low-priced goods, turned around very quickly, and that companies have extensive outsourcing and long, globalised supply chains. These factors also contribute to forced, abusive and exploitative labour, and environmental harms.
Added to that is the continued reliance on weak auditing and certification schemes, and attempts to block workers’ access to their rights, such as restrictions on unions. This has produced the current situation, whereby these abuses take place on an all too regular basis. We believe that a due diligence obligation must cover all internationally recognised human rights and environmental standards.
There are connections between the environment and human rights. Some people have questioned why we have put these two together in the Bill, although it has to be said that the majority of people, particularly in businesses, are supportive of that. To clear this up, connections between the environment and human rights have been increasingly recognised by Governments, courts, and international organisations and societies. This is demonstrated by the unique and disproportionate way in which climate change and other forms of environmental damage impact vulnerable and marginalised groups, including increasing their vulnerability to modern slavery.
The United Nations guiding principles on business and human rights were seen as the first global standard for preventing and addressing this. The legislation that we are proposing would put legal responsibility on businesses, including the financial sector, and public authorities to prevent human rights and environmental harms in their value chains, and to conduct human rights and environmental due diligence as part of that prevention activity. The legislation would also allow victims of corporate abuses to access justice before the UK courts. This is a step forward from the Modern Slavery Act, in line with some of the most forward-thinking laws that are being developed globally, to push for corporate accountability for actions which contravene fundamental human rights. These principles, outlining how companies should undertake human rights due diligence by identifying, assessing, preventing, mitigating and accounting in order to address the potential for negative human rights impacts across operations and in value chains, have been widely accepted by Governments. Indeed, we are signed up to those principles.
A key point of the due diligence framework is that businesses should be proactive—this is critical—in addressing potential and actual negative impacts, and think in terms of harms and risks to people, not just to their own companies. Given that so many states have signed up the framework, and given that this model of human rights and environmental due diligence has been widely adopted, why do we need to enshrine such principles in law? It is because those frameworks are voluntary. Unfortunately, it gives me no pleasure to say that too many companies, commercial and otherwise, do not feel obliged to conform to or follow those principles or to acknowledge that framework. To put it simply, the voluntary approach has not worked.
We knew at the time of the passage of the Modern Slavery Act that it was ground-breaking and a world-leading piece of legislation, and many of our major and most trusted commercial organisations led the drive for transparency and supply chains, as in Section 54 of the Act. But it is no longer the case that Section 54 is at the forefront of legislation. Perhaps most importantly, it has not been as effective as we would have hoped anyway. I will not go into the detail of its merits and shortcomings; that review has already been undertaken by a committee of noble Lords.
Currently, there are several due diligence laws. The EU has recently passed its corporate sustainability due diligence directive, and this Private Member’s Bill—COPAD, for short—builds on the EU laws and existing laws, such as the German supply chain law, the French duty of vigilance and the Norwegian transparency Act. There is also draft legislation being considered in Belgium, Austria, the Netherlands and South Korea.
I realise that no Government want to impose burdensome procedures on business, but to claim that this proposed legislation would be too onerous and cumbersome is to miss the point. The Bill has been proposed and supported by businesses—again, by some of our most trusted and successful commercial entities.
Much is packed into the Bill, but I want to make sure that other noble Lords have the chance to express their opinion and, indeed, perhaps to suggest where we might wish to rethink some of the clauses in the Bill. We are open to receiving amendments.
If we adopted COPAD, we would be more aligned in terms of trading with leading global counterparts and we would be able to ensure a level playing field for business. That is the term that frequently comes up with the businesses with which we have consulted—to make a level playing field for those businesses that want to do the right thing. Such legislation aligns very much with the trade statement commitments that we made in 2023.
I started with historical references—and I know that we like to distance ourselves from that particular period of our joint histories and articulate the abhorrence we feel at that trade. But if we want truly to make a distance between ourselves and what happened then, we have to take the opportunity to right the wrongs that are currently going on around the world and affect millions of people. I beg to move.
Lord Browne of Ladyton (Lab)
My Lords, it is a pleasure to rise in support of this Bill. In doing so, I congratulate the noble Baroness, Lady Young of Hornsey, not just on introducing the Bill but on the lucidity and moral force that characterised her opening speech.
In opening, I feel bound to observe that the Bill, or rather—I am anticipating, but I think I will be proved right—the Government’s reluctance to accept it, is part of a regrettably familiar pattern. The Government identify an injustice and vigorously concur that it must be remedied before declining to act, even when a proportionate and measured solution is offered to them.
Even if I restrict myself to the last couple of months, the Bill takes its place as but one example of this apparently contradictory approach to policy. It is true of the Employment and Trade Union Rights (Dismissal and Re-engagement) Bill, which had its Third Reading in your Lordships’ House earlier today. It was true of my amendment to the Rwanda Bill, on which the Government were forced to concede only after weeks of self-inflicted delay. Several recently departed Ministers, and a couple of incumbents, have admitted that they understand the necessity of reversing persistent cuts to the size of our Armed Forces—but again the Government have failed to rally to a clarion they themselves have sounded. So while the Government once more offer their imitation of the deaf adder of scripture, what opportunities are they missing in refusing to support the Bill?
The Bill engages a real moral imperative. It replaces a patchwork of admittedly valuable provisions under the Companies Act 2006 and the Modern Slavery Act 2015, among others, with something that is at once clearer and more effective. Crucially, it is proportionate and realistic in what it demands. Clause 2, which establishes a duty for commercial organisations to prevent humanitarian and environmental harms in their own activities and those of supply chains
“so far as is reasonably practicable”,
is hardly demanding Promethean levels of ambition from responsible agencies. It is simply establishing in law the very least that anybody should expect.
Likewise, I point to the Bill’s stipulations around reporting requirements for companies whose income exceeds a certain level as a welcome adjustment to the current regime. The requirement that they must be both backward-looking and forward-looking is essential if they are to mean anything. Too often, reporting under the current regime involves an annual compilation of aspirations in respect of the environment and modern slavery, with far too little, if any, accountability in terms of their translation into reality.
In adopting the measures in the Bill, we would not blunt our attractiveness to inward investment or stultify our economy but ensure future regulatory alignment with France, Germany, the wider EU and south-east Asian economies that are working on similar provisions. Of course, I understand the need to avoid stultifying regulation, but in many cases it is the companies themselves that have asked for the promulgation of these measures. These include Jupiter Asset Management, Tesco, Charles Stanley plc, Legal & General, Investec Wealth & Investment, and Microsoft. If these are agents of what the current Prime Minister’s predecessor enjoys referring to as the “anti-growth coalition”, its parameters must be much wider than even she has suggested.
In 2022 the noble Lord, Lord Callanan, sent a letter to Darren Jones, now the shadow Chief Secretary to the Treasury, explaining why the Government are not minded to introduce a comprehensive due diligence framework like that proposed in the Bill. In it, he asserts that any attempt to mandate due diligence in law must be “practical” and “proportionate”, and must
“deliver tangible improvements to human rights and the environment”.
He goes on to outline the Government’s preference for “voluntary due diligence approaches” and voluntary compliance with the UN guiding principles on business and human rights and the OECD guidelines on multinational enterprises. What severe punishment awaits businesses that fail to meet this test of voluntary compliance? It is the grim prospect of the national contact point for businesses making “voluntary recommendations” and following up with businesses to implement these. Where companies or public bodies are indifferent to environmental and humanitarian concerns, or where they are an afterthought, it seems unlikely that these powers of the national contact point will be a stimulus to action.
Although I understand that there are supply chain transparency requirements in place for large UK companies under the Modern Slavery Act and some due diligence requirements because of the Environment Act, it is increasingly clear that we will be an international outlier in failing to adopt mandatory, as opposed to optional or anaemic, due diligence. We have been told of the possible unintended consequences of a more robust regulatory regime, but equally we must examine the conspicuous failures of the current approach.
Mindful of time, I will remind your Lordships’ House of just one notable public procurement failure that this legislation would have prevented. In 2015, a UK subsidiary of the Malaysian Supermax Corporation received a contract of around £350 million from the NHS. As the pandemic loomed, the NHS bought a further £311 million of PPE from a Supermax healthcare brand. By December 2021, the UK Government, in the shape of NHS Supply Chain, had named Supermax as an approved supplier, entitled to pitch for contracts worth £6 billion of UK taxpayers’ money. This was even though, three months earlier, the US Government had decided to institute a ban on Supermax products, owing to concerns around forced labour, detention, inhumane living conditions and passport confiscation. It was a further year before a High Court challenge compelled NHS Supply Chain to place a ban on Supermax products and to review their procurement processes. That is but one consequence of our current regime.
YouGov polling suggests that four-fifths of UK adults support mandatory—and active rather than passive—due diligence in terms of human rights and environmental concerns. Many of the companies upon which these obligations would devolve have requested rigour and certainty. Why do the Government neither accept this Bill nor seek constructively to amend it? In so doing they could provide far greater reassurance that neither British companies nor, more seriously still, British taxpayers’ money can ever inadvertently support the destruction of our planet or the exploitation of workers. I look forward to supporting this Bill as it makes its way through your Lordships’ House.
Baroness Coussins (CB)
My Lords, I am very pleased to offer my strong support for this Bill, introduced by my noble friend Lady Young of Hornsey.
In preparing for this debate, I looked back in Hansard at what I tried but failed to achieve 12 years ago during the passage of the Legal Aid, Sentencing and Punishment of Offenders Act 2012, when I was unable to persuade the then coalition Government to accept an amendment to make it easier for victims of corporate human rights and environmental abuse in developing countries to take legal action in the UK against UK-listed companies. It was already possible to take action in principle, but in practice it was out of the question because of financial and other obstacles. I therefore sincerely hope that my noble friend will have more success with her Bill, which is much more comprehensive and coherent than anything that I proposed then.
The passage of 12 years since my lesser efforts has seen significant developments in the global consensus for the provisions in this Bill for a due diligence duty, liability and accountability. On top of that, His Majesty’s Government have also been a prominent and leading supporter at the United Nations of the Guiding Principles on Business and Human Rights, sometimes referred to as the Ruggie principles. This Bill is a logical next step and should by rights be a no-brainer for the Government to adopt.
Sadly, although support for these measures has grown substantially across business sectors and resulted in equivalent legislation in a number of other jurisdictions, the kind of abuses that the Bill is designed to prevent have persisted. This Bill is a perfect opportunity not just to provide for accountability and remedy after the fact of abuse but to be proactive and preventive.
We should be doing all we can to prevent the kind of cases that I was referring to in 2012, such as the one against Trafigura on behalf of 30,000 residents of Côte d’Ivoire who were affected by the dumping of toxic waste, or the one against Monterrico Metals in Peru, where 28 people who objected to the mining company’s development plans were detained and tortured. Other cases have involved asbestos miners in South Africa and campesinos in Colombia and Peru.
The situations that I am most familiar with, and which provide a good and helpful illustration of what this Bill could help to prevent, are from my engagement with NGOs working on human and environmental rights in Colombia. Groups such as ABColombia and the Corporate Justice Coalition have provided clear evidence of persistent abuses linked to UK companies in the extractive and other industries. These harms affect indigenous and local communities, workers and important ecosystems.
Business activities such as Glencore’s Cerrejón mine in Colombia can lead directly to widespread environmental destruction, with the consequent loss of peoples’ ability to enjoy a clean, healthy and sustainable environment. In 2020, Cerrejón’s activities were denounced by no fewer than seven UN special rapporteurs, who are independent experts assisting the Human Rights Council. One said that the company’s operations in what is Latin America’s largest open-pit coal mine had an impact on the Wayúu indigenous people, Afro-Colombians and campesinos and was one of the most disturbing situations he had ever witnessed as special rapporteur on human rights. For example, air pollution far exceeded WHO defined limits, increasing the risk of cancer and DNA damage. His Majesty’s Government should take the opportunity provided by this Bill to do something about the impact of this UK-listed company.
In addition, in Colombia community leaders and human rights and environmental defenders face immense risks when reporting human rights abuses. According to Global Witness, Colombia is the worst country in the world for killing these human rights defenders, with 60 killings in 2022.
This Bill could make a real difference, and it has the advantage of strong, widespread multisector support. UK businesses such as John Lewis, Tesco, Sainsbury’s and Twining have called on the Government to be ambitious in bringing forward urgent legislation to mandate the kind of due diligence described in the Bill. As my noble friend has said, businesses want clarity and a level playing field, and their support is echoed by investors such as Legal & General. Our own Joint Committee on Human Rights has recommended the measures before us, which crucially include subsidiaries and the whole supply chain. There is public support too: a YouGov poll showed four out of five adults in the UK backing a new law requiring this sort of proactive, preventative action by UK companies.
The Bill, as we have heard, would also align the UK with legal developments in other countries, such as France and Germany, and show that when it comes to the UN guiding principles, the UK is willing to walk the walk as well as talk the talk. The Bill is a logical extension to our innovative and world-leading failure to prevent model of the Bribery Act and builds on the ground-breaking Modern Slavery Act, which still excludes the public sector.
There is an overwhelming case for His Majesty’s Government to close the legislative gap that currently allows human rights-abusing companies to evade liability. My noble friend Lady Young’s Bill has done the heavy lifting for the Government, and I hope the Minister will be able to tell the House that the Government will now grasp this opportunity and give the Bill their full and speedy support.
Lord Prentis of Leeds (Lab)
My Lords, the Bill before us is not a panacea for all the harms caused by our global economic system, but if passed it will be a significant milestone in the continuing work to offset the negative impacts of some companies on communities, the environment and human rights. It will create a level playing field. It seeks to tackle forced labour, child labour, sexual abuse and union busting, so endemic in global supply chains. But it is not just about corporate responsibility; it is also about access to justice for the victims.
This new UK legislation, modelled on the failure to prevent provisions of the UK Bribery Act 2010 and recommended by Parliament’s Joint Committee on Human Rights, would give teeth to the Modern Slavery Act, which we now know places few sanctions on employers who fail to comply. As Parliament’s BEIS Committee stated in 2021, in reference to Xinjiang, the Modern Slavery Act is “not fit for purpose” in ensuring that supply chains are free from forced labour.
This Bill is about having new legislation which reflects the calls for action, as we have heard from my noble friend, from so many UK businesses—from the British Retail Consortium and the John Lewis Partnership through to Sainsbury’s and Tesco—and it mirrors developments in Germany, France, Norway and the United States. Most importantly, it would place a requirement on not just commercial organisations but public authorities to conduct due diligence on their own operations, their subsidiaries and their supply chains. The public sector procured almost £400 billion-worth of goods and services in 2022 and 2023, but public service contracts are often weak, with the wrong priorities at the tender stage, poor contract management and limited knowledge of the exploitation that is happening. If public authorities are excluded, as they still are, from the Modern Slavery Act, they themselves become part of the problem.
An intensive care nurse in our health service may use electronic goods made by forced labour in Malaysia, possibly powered by solar panels made with the forced labour of Uighurs in Xinjiang province. She may be using cannulas made by child labour in Sialkot, Pakistan. Maybe her patient is then referred to a private care home, commissioned by a local authority and staffed by care workers and nurses from the Philippines who have had their passports taken by their UK employer. It is all too easy to see how public authorities have become part of the problem. That is why this Bill is so important, in ensuring that the requirement of due diligence is extended to the public sector.
I support this Bill, but with hindsight there are a couple of sections where the role of trade unions, especially public service unions across the world, could have more emphasis. Clause 3 could reinforce trade unions as key stakeholders to be consulted and Clauses 7 and 8 could include provisions to make it clear that trade unions can take the complaints of affected workers. I mention this to my noble friend only because it is unlikely that vulnerable workers in the supply chains of large companies will be aware of the new legislation or have the resources to bring a claim. Vulnerable workers in overseas jurisdictions may find it exceptionally difficult to lodge a claim with a UK regulator or court.
We urgently need new UK legislation to hold companies and public authorities to account if they fail to prevent human rights abuses and environmental harms in their operations and global supply chains. We urgently need clear and comprehensive legislation, which is vastly preferable to delaying the inevitable under the mistaken impression that inaction is more business friendly. Nothing could be further from the truth. That is why I ask this House to support the Bill.
Lord Deben (Con)
My Lords, I refer to my declaration of interests, not least that I spend much of my life working with firms to help them deliver the kinds of things that are in this Bill. I must underline the fact that very large numbers of great companies want legislation of this kind, because otherwise they are undermined by people who do not take these things seriously.
However, I would not fail to support the Bill even if they did not want it, because it seems to me that there are some things that are right and some things that are wrong. This is right. It is not proper for rich people to live off poor people, or to use exploitation as a means of improving their own lives. Therefore, for me, this is the kind of Bill we in this House ought to be supporting and pressing.
Secondly, I say to the Minister that I hope he realises we will want an answer on whether the legislation now going through Parliament—which restricts the ability of public authorities to invest and procure, with these matters in mind—is going to have an exception to make sure that at least we do not make the situation worse. I am seriously concerned about that. I think it is likely that the present legislation will make the whole system much worse. That is why I feel very strongly we should support the Bill. The situation in Britain is not getting better. At this moment, we are actually legislating to restrict the proper decisions of public bodies in the way they procure and invest. So I hope my noble friend the Minister will confirm that the Bill will exclude matters of human rights so that we do not find ourselves worsening the situation.
Thirdly, I rise to point out that we are now in a community of nations which is beginning to understand the responsibility of the rich to the poor and it would be very peculiar if Britain were behind the others. We did not “take back control” in order to get worse. We would have been better had we not “taken back control”, because it turns out that that is the opposite of what has happened. But, having done so, to then make our standards worse than those of our fellows in the European Union would surely be a terrible denial of our duties.
Fourthly, I believe that this is the moment to say to the world that we are no longer going to live off others. We are going to live with others and help them to solve the global problems that are now our common problems. I refer particularly to climate change, which the noble Baroness mentioned. Things are going to get worse because of climate change; we need the legislation now, because of climate change.
Lord McNicol of West Kilbride (Lab)
My Lords, I start by thanking the noble Baroness, Lady Young of Hornsey, for bringing such an important Bill before the House and for giving all of us an opportunity to debate this significant topic. I also thank the many trade unions—particularly Unison and the TUC—who have campaigned so strongly in this area.
I echo the concerns raised, and that is why I am proud that Labour wants to see our businesses do all they can to make sure that they are not profiteering from the misery of others or the degradation of our environment. It is why we work both at home and internationally on this. It is why it is so important that we not only keep pace with but lead on human rights, the environment and ESG, with nations not just in Europe but across the globe.
As the noble Baroness, Lady Young of Hornsey, and my noble friend Lord Browne of Ladyton pointed out, many other nations—France, Norway, Germany and recently the EU—have been developing policy within this area. It is important that we look at the lessons they are learning and their experiences from the implementation of similar policies. We must, as the noble Lord, Lord Deben, said, be a champion for justice on the global stage, promoting human rights and environmental sustainability in everything that we do.
That is why, looking wider, Labour is committed to protecting and embedding workers’ rights in future FTAs and trade deals, including by using human rights protection clauses to tackle the use of modern slavery. The next Labour Government’s trade strategy will deliver economic growth at home, while building security and resilience into global supply chains and driving progress on fundamental issues such as climate change, anti-trafficking and workers’ rights. In line with international standards, we will assess the best ways to prevent environmental harms, modern slavery, and human and labour rights abuses in both private and public sector supply chains, including the use of due diligence rules.
As such, we are supportive of the principles of this Bill. In recent discussions on the CPTPP and other free trade agreements, we have been arguing to include them within those trade deals. Nevertheless, we have some concerns around the potential burden that this Bill could place on both businesses and public bodies, without full and proper consideration. That is why we want to properly assess the best ways to prevent these harms, while ensuring new legislation is not overly burdensome.
On the specifics of the Bill, I am keen to seek clarification from the noble Baroness, Lady Young of Hornsey, on what kind of annual worldwide turnover thresholds she envisaged for the regulations mentioned in Clause 5(1). Would it follow something like the Modern Slavery Act’s £36 million figure, for example, or would the duty be placed on a broader number of businesses? It is in no one’s interest to overly burden our SMEs or smaller organisations, which often lack the capacity to report under this or a similar duty. We must ensure that reporting mechanisms are as straightforward as possible. Currently, supply chain and scope 3 reporting is often nothing more than a guesstimate, and, as the noble Baroness, Lady Young, mentioned, there are no standards for auditing or reporting. We must look to deliver on this.
We would like to see more work done within this area, and I want to see further consultation with trade unions, businesses, NGOs and other organisations to review how best to bring this policy into action in a timely and considered manner. We want to balance the needs of these regulations with the need to minimise the burden on businesses. Although at this stage we will not be supporting the Bill, we support the principles of it. I am sure we will be back here—sooner rather than later, I hope—to put these principles into action.
The Parliamentary Under-Secretary of State, Department for Business and Trade (Lord Offord of Garvel) (Con)
My Lords, I join your Lordships in thanking the noble Baroness, Lady Young, for tabling the Bill, and I thank all noble Lords for their valuable contributions today. This debate is timely given recent developments in the European Union, and I share noble Lords’ views on the abhorrent practice of slave labour. I therefore welcome the opportunity to explain the Government’s current thinking on mandatory due diligence and why I am unable to support the Bill today.
I begin by noting that the Government are committed to tackling human rights and environmental abuses. The Government have consistently supported the UN guiding principles on business and human rights, which the noble Baroness referred to in her opening remarks. We are a signatory to the OECD guidelines on responsible business conduct for multinational enterprises, and for some time we have encouraged businesses to conduct due diligence voluntarily. Importantly, as the noble Lord, Lord Browne, mentioned, the UK also operates the national contact point, which provides a non-judicial mechanism for cases to be brought to when a company contravenes the OECD guidelines. The national contact point does important work and many of the cases that it mediates result in positive change.
Although the contact point does valuable work, the Government recognise that it is a non-binding mechanism and that harder legislative requirements also have a role to play. Some 13,000 statements have been submitted to the modern slavery statement registry under the Modern Slavery Act 2015, but the Government recognise that there is more to do. The Government have therefore committed to take forward an ambitious package to strengthen the Modern Slavery Act, which includes a proposal to mandate the topics covered in the modern slavery statement. This would mean that a company must publish details of its due diligence processes in cases where it has them.
Pressures on parliamentary time mean that these new measures have not been taken forward as quickly as many in this House would like. I understand that frustration, although I note that the Home Office has recently taken steps to update the modern slavery registry. I also urge noble Lords to consider that the Modern Slavery Act sits alongside a wider set of initiatives that are designed to tackle environmental harms and human rights abuses. Specifically, three initiatives are pertinent to this debate.
First, the 2013 timber regulations already require due diligence from organisations that place timber products on the market. Defra is building on these by taking forward new due diligence legislation in relation to specific commodities at risk of being produced following illegal land use and illegal deforestation. These regulations will be published shortly, and I encourage noble Lords to review them when they are available.
Secondly, noble Lords will be aware of significant reforms occurring in relation to public procurement and supply chains. Following a review of NHS supply chains, the Department of Health will be introducing regulations in relation to them. I note that the noble Lord, Lord Browne, drew attention to the case of Supermax, which the Government investigated. Since then, steps have been taken through the Procurement Act 2023 to strengthen the rules on modern slavery and environmental misconduct in relation to those supplying public authorities. Among other things, the Act will allow procuring authorities to exclude suppliers where there is evidence of modern slavery, even in cases where a conviction has not taken place. I appreciate, given his speech, that my noble friend Lord Deben has some concerns about this Act, and I will be happy to ask my colleagues in the Cabinet Office to take this up with him further.
Finally, the Government recognise that corporate transparency can be a powerful tool, and we are taking forward a process to assess the suitability for use in the UK of the IFRS Foundation’s recently published international sustainability disclosure standards. The IFRS Foundation’s initial standards focus on climate issues, but companies that choose to use the standards would also report on nature-related risks where they are material to their business, thereby raising greater awareness of potential environmental harms.
These initiatives demonstrate that the proposed Bill enters a crowded landscape, interacting with a wide range of existing and forthcoming legislation. I therefore worry that it would create confusion and cost for businesses, which would need to wrestle with multiple requirements articulated in competing ways. That is at odds with this House’s desire for a coherent legislative framework.
Turning to the proposed Bill, I start by observing that the evidence base for the success of mandatory due diligence remains extremely limited. A small number of jurisdictions have enacted similar legislation to the proposed Bill, but those pieces of legislation are relatively recent and their complexity can make them hard to implement, partially due the global nature of the supply chains that noble Lords have referred to.
Rather than introducing legislation to tackle both environmental harm and human rights abuses, the Government intend instead to observe how new developments unfold while taking targeted due diligence measures in relation to forest risk commodities and testing their effectiveness following implementation. For instance, Defra’s legislation will focus on a specific list of products that are connected to illegal deforestation. By contrast, the proposed Bill would require companies to make complex assessments for a potentially unlimited range of goods and services.
Moving on to the detail, I have several concerns about the Bill’s contents and I share many of the sentiments expressed on the Benches opposite by the noble Lord, Lord McNicol. Unlike the EU and German legislation, which applies only to the largest businesses, this Bill would apply to all 5.5 million companies in the UK. This would include 3 million sole traders and 2.5 million SMEs, many of which will lack the resources of the 8,000 larger organisations in our country to undertake the required checks. As a result, it runs a very real risk of creating an unlevel playing field in the UK economy, as well as creating real difficulties for suppliers in developing nations, which might struggle to provide the data required by companies in developed nations. I understand this all too well, having observed some of these difficulties just four weeks ago while undertaking—
Lord Browne of Ladyton (Lab)
I am concerned that the Minister or his officials have perhaps misunderstood this legislation’s provisions. It proposes that the threshold for these obligations will be set by regulations, which will emanate from a Secretary of State in government and be approved by this Parliament. You cannot just aggregate all the businesses in the country and say that they will all be subject to this, when the Government themselves will have the ability to make it cut at a particular point.
Lord Offord of Garvel (Con)
I thank the noble Lord for that point. I think that proves the point that there is complexity here. We have a very wide matrix of businesses in this country, which need to be legislated on quite separately. That is not what is currently in the Bill.
As I was saying, there is also the issue of suppliers in the developing nations having to provide data to developed nations. I saw that myself in Colombia and Bolivia recently, in the context of discussions on climate change and sustainable development.
The Bill would also impose an obligation to conduct reasonable due diligence, with Clause 3(3) listing a series of contextual factors that are relevant when determining what can be considered “reasonable”. As drafted, this list means that companies would find it incredibly difficult to know whether they have complied with the Bill. In practice, the application of the term “reasonable” could be debated in the courts for years, leading to an unsatisfactory situation in which companies within the Bill’s scope face significant legal uncertainty. When combined with the fact that criminal offences and substantial fines rest on this term, this undermines the goals the noble Baroness seeks to achieve, as it may incentivise well-run but risk-averse companies to terminate commercial relationships entirely rather than seek to remediate issues when they find them.
Clause 8(1) would introduce civil liability for businesses that fail to prevent human rights abuses or environmental harms in their operations, subsidiaries or value chains. The Bill attempts to give businesses grounds for defence where they have conducted due diligence, but I am concerned that this provision, when applied in practice, would shift legal responsibility to UK companies, with cases being introduced against UK companies in UK courts in the first instance. It would be preferable for claims against individuals and companies that are directly responsible for harms to be brought in the jurisdiction in which they occur.
Lord Deben (Con)
The reason for that, of course, is that the jurisdictions we are talking about are very often complicit in what happens. Therefore, if cases cannot be brought here, they will not be brought at all. Surely, Britain ought to be the place where you can stand up for what is right.
Lord Offord of Garvel (Con)
I thank my noble friend for that. Indeed, talking to Ministers in Colombia and Bolivia, we were talking very much about how we strengthen their legal position, and they want help from us to do that, so that is ultimately the direction of travel.
This issue is one of many that demonstrate that mandatory due diligence legislation is incredibility complex and requires detailed consideration and consultation, as I am confident that there is a wider range of business opinion on this issue than the organisations mentioned by the noble Lord, Lord Browne, and the noble Baroness, Lady Coussins. I thank the noble Baroness for prompting this important debate, but I urge noble Lords to wait for the forthcoming legislation that I mentioned and to support the Government’s intention to review the success of due diligence requirements as they are implemented over time.
Baroness Young of Hornsey (CB)
My Lords, I thank all noble Lords who have spoken in this debate, particularly those who spoke in support of the Bill, which seems to be the majority. I shall draw attention to a few remarks that noble Lords made and then come back on some of the issues that the Minister raised in his final remarks.
The support from the noble Lord, Lord Browne, is very much welcomed. I appreciate and acknowledge that, in his view, it is a realistic endeavour. It strikes me that, whenever you want to bring in something progressive that aspires to make us better than we are now, there is always that pushback that says “Wait a minute. Hold on. It’s too complex. We can’t deal with this. We shouldn’t be so aspirational. It’s not going to work with this sector or that section”. I am not going to draw the obvious allusions to those that preceded this debate, but they continue. It is not just frustrating; it is incredibly annoying.
For example, to cut to some of the Minister’s remarks, when he talks about feeling frustrated about the delay in implementing the strengthening of the Modern Slavery Act, I am not trying to boast, but I introduced two Private Members’ Bills, one in 2017 and one in 2018. There has been an independent review of the Modern Slavery Act, which made a whole suite of recommendations. We were promised that Section 54 would be strengthened and that the list of suggested headings would become mandatory headings under which companies should report, and that was five years ago. Of course, we are frustrated and annoyed because nothing has happened. To say that is because there is not enough parliamentary time seems quite bizarre to me in terms of what we need to deal with in this House.
We may feel frustrated and annoyed, but meanwhile I am constantly reading reports that are sickening, distressing, depressing—whatever you would like to say—about numbers of suicides, women being forced, virtually, to have hysterectomies so that they do not have children or periods and can stand up and work all day, millions of children in child labour. And we are going to sit here and say that it is a bit complicated, it is a complex piece of legislation and there are flaws in it. Guess what? There are flaws in every piece of legislation that comes before this House and the other House, and we work through them if we have a will to do so. That is what strikes me.
Where is the real will to deal with these issues demonstrated? For how much longer are we going to go on saying that it is too much of a burden? Think of the burden on those families and on people who live in poverty, because they have no choice about the kind of employment they can seek and so are continually exploited so that we can wear cheap clothes, have nice cheap food and have a nice time as we swan around Westminster. It is just not acceptable.
On the Minister’s response, I am sorry if I am being rude or insulting, but I feel very strongly that we have had these kinds of proposals in the past, where people have sought to upgrade what we are doing, and we get the response: “Well, we can’t expect people to do this”. Actually, many SMEs have been consulted—I am quite happy to accept that it is a limited number—and have said that they want to do this.
Interestingly, when we did the consultation for the independent review of Section 54 of the Modern Slavery Act, it was businesses that were saying “Don’t have any threshold—£36 million is too high”. They wanted to acknowledge the fact that many of those sectors, particularly the fashion sector, are comprised of a huge number of SMEs. If you cut them out from the equation, you are not dealing with the problem. Of course, we are saying that these things should be proportionate and be determined by the Secretary of State, in consultation.
I had probably better finish here. I am very disappointed with the Government’s response. I am slightly encouraged by the Opposition’s response and happy to have any conversations—and to pass on contacts and networks, and so on—so that people can judge for themselves what is going on. I guess I ought to conclude now.