Human Rights Due Diligence

Lord Callanan Excerpts

Tuesday 20th July 2021 Lords Chamber

[Baroness Sheehan]

To ask Her Majesty’s Government what plans they have to make human rights due diligence mandatory for businesses, in particular those engaged in forest risk commodities.

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)]

My Lords, the Government expect businesses to target their human rights due diligence approaches according to the UN Guiding Principles on Business and Human Rights. We currently have no plans to make this mandatory because there is existing legislation which holds businesses to account on human rights. All UK quoted companies are required to report on relevant human rights issues in their annual reports, and large businesses must publish supply chain transparency statements on steps they take to prevent modern slavery.

[Baroness Sheehan (LD) [V]]

My Lords, I thank the Minister for his reply. The European Commission plans to publish its sustainable corporate governance proposal this autumn, and UK companies operating in the single market would fall into its scope. I hear what the Minister says about the Government having no plans, but what consideration are they giving to keeping pace with the European Commission? Does he really believe that the current law is satisfactory to enable business practices to ensure that all commodities and services are subject to human rights and environmental due diligence processes?

[Lord Callanan (Con)]

Of course, we will keep these matters under review, but we believe that mandating compliance presents some practical challenges in definition, enforcement and so on. However, we will of course keep it under review.

[The Lord Bishop of Southwark]

My Lords, I draw the Minister’s attention to the policy of the National Investing Bodies of the Church of England on extractive industries, which has an explicit commitment drawn from the UN Declaration on the Rights of Indigenous Peoples to the

“free, prior and informed consent”

of indigenous communities on major projects. Indeed, the Church Commissioners and other Church of England investment bodies engage with investment partners across a range of industries, including where forest clearance is involved. Will Her Majesty’s Government consider the principle of the free, prior and informed consent of indigenous communities as a legislative requirement for companies incorporated in the United Kingdom but operating overseas?

[Lord Callanan (Con)]

I thank the right reverend Prelate for sharing that research. The UK is committed to supporting indigenous peoples and local communities, who play a vital role in protecting forests. Our proposals in the Environment Bill will require UK companies to conduct due diligence based on the laws of producer countries, in particular those laws that relate to land use and land ownership.

[Lord Moynihan (Con)]

I declare my interests as set out in the register. Does my noble friend the Minister agree that human rights due diligence should not be mandatory for businesses given the modern slavery and supply chain requirements, the welcome shareholder demands for ESG transparency, and the widespread adherence in this country to the UN Guiding Principles on Business and Human Rights?

[Lord Callanan (Con)]

As I said in my initial Answer, I agree with my noble friend. Human rights abuses are a wide and varied issue, which is why the UK Government prefer the approach of encouraging businesses to follow the voluntary framework of the UN Guiding Principles on Business and Human Rights.

[The Earl of Sandwich (CB) [V]]

My Lords, the rainforest needs urgent protection—we all know that, as does the Minister. The Government have already made good progress with the Environment Bill, but how will they enforce compliance; for example, on companies which are not in the Retail Soy Group or which do not intend to convert to sustainable products? Does the Minister agree that any UK financial services which clearly support the production or trading of forest risk commodities would be acting illegally and should be caught by Schedule 16 to the Bill?

[Lord Callanan (Con)]

The noble Earl is perhaps getting a bit ahead of himself, as we are still considering the Environment Bill—it is not in law yet. When it is, as I hope it will be, details on the enforcement regime will be subject to further consultation and regulations will be subject to the affirmative procedure so that the House can debate them fully.

[Baroness Goudie (Lab) [V]]

Given the complexity of supply chains and the way business with indigenous populations is conducted, will the Government give an undertaking that human rights should be written into the contracts of the small companies that then sell to larger companies, as well as the need for satisfactory equal pay and the gender lens? This is a complex situation and we need to get a grip of it and have it written into contracts.

[Lord Callanan (Con)]

The noble Baroness is right; this is indeed a complicated subject with a lot of different areas for consideration. We need to be careful not to impose undue burdens, particularly on small businesses.

[Lord Oates (LD) [V]]

My Lords, I hope the Minister will agree that Governments as well as businesses have a moral duty of due diligence on human rights. Can he therefore tell the House what due diligence the Government conducted prior to chartering a flight to deport Zimbabwe nationals tomorrow to a country where human rights are consistently violated? Will the Government now halt that flight and place a moratorium on further deportations until the Zimbabwean Government can demonstrate that they respect the human rights of their citizens and the rule of law?

[Lord Callanan (Con)]

I admire the noble Lord’s ingenuity in getting a question on deportation flights into one considering forest communities. I do not have the information about that particular flight—I was not aware of it—so I will write to him.

[Baroness Sugg (Con)]

My Lords, local indigenous communities are the best custodians of the forest, yet they are often not considered, consulted or listened to. Looking ahead to COP 26, how will the Government ensure that the voices of indigenous groups are heard?

[Lord Callanan (Con)]

My noble friend makes a very good point. The UK is working closely with the International Indigenous Peoples’ Forum on Climate Change and the UNFCCC Local Communities and Indigenous Peoples Platform to champion engagement and participation by indigenous groups in COP 26.

[Lord Bassam of Brighton (Lab) [V]]

A recent G7 communiqué said that the G7 was

“concerned by the use of all forms of forced labour in global supply chains”,

and G7 Ministers have been tasked

“to identify areas for strengthened cooperation and collective efforts towards eradicating the use of all forms of forced labour in global supply chains”.

Can the Minister clearly outline how this engagement will work ahead of the G7 ministerial meeting in October, and what do the Government want to achieve through this process?

[Lord Callanan (Con)]

The UK was the first state to produce a national action plan to respond to the guiding principles. We have continued to develop our approach, particularly with the Modern Slavery Act. We are working across the UK Government on this, and involving the devolved Governments in proper enforcement of the provisions.

[Lord Sarfraz (Con)]

My Lords, Eid Mubarak to all those celebrating. While we are very efficient in detailing the human rights abuses in overseas supply chains that we source from, we do not demonstrate the same enthusiasm when we export our trash to those same countries. What about the environmental and human rights abuses that happen in the global waste trade in which we participate? Can my noble friend see how this sends mixed messages internationally?

[Lord Callanan (Con)]

Businesses involved in the export of waste are required to take all necessary steps to ensure that the waste they ship is managed in an environmentally sound manner, throughout its shipment and during its recycling. Current penalties for breaching the legislation are a two-year jail term and an unlimited fine. My noble friend will be aware that the Environment Bill will introduce even tougher controls on illegal waste exports, including powers to make it harder for criminals to obtain and export waste illegally.

[Lord McNicol of West Kilbride (Lab)]

My Lords, I am supporting a project with Rewired.Earth, which aims to deliver full and proper ESG audits, including through the supply chains. If achieved, this would provide a huge step forward in delivering environmental, social and governance oversight, going a long way to answer the Question of the noble Baroness, Lady Sheehan.

With $110 trillion of worldwide investment already being directed through ethical investing, this would be a great opportunity for the UK. Do Her Majesty’s Government support the premise of ESG audits as a way for the UK financial sector to lead the way across the globe, both in financial investing and by creating a vehicle that can help save the planet?

[Lord Callanan (Con)]

As the noble Lord will be aware, we have just finished a consultation on the audit reform proposals, which include extending audit to some non-financial matters such as climate change. Of course, we will be very happy to consider all other proposals.

[Lord Sikka (Lab) [V]]

My Lords, in an earlier reply, the Minister said that he is considering enforcement issues. Given that the UK has no central enforcer of company law or regulator of corporations, and that auditors, just mentioned by him, have absolutely no expertise in human rights, how will the Government monitor compliance with and enforcement of any proposed legislation?

[Lord Callanan (Con)]

We are considering the issue of enforcement in the audit reform consultation that I mentioned in my previous answer. We are extending the powers of the FRC, creating a new audit reform regulator in ARGA and we will be issuing our response to the audit reform consultation later in the year.

[The Lord Speaker (Lord McFall of Alcluith)]

My Lords, all supplementary questions have been asked and we now move to the third Oral Question.