Economic Activity of Public Bodies (Overseas Matters) Bill

Lord Collins of Highbury Excerpts

Wednesday 17th April 2024 Lords Chamber

[Lord Collins of Highbury (Lab)]

Let me start by making it clear, if it is necessary, that the Opposition do not support BDS—we made that clear at Second Reading—so my contribution tonight on this group of amendments is about the environment and the exceptions to it. Of course, currently the Bill does not prevent a decision-maker taking environmental misconduct into account. Environmental misconduct is defined as

“conduct that … amounts to an offence”

that causes

“significant harm to the environment”.

As the noble Baroness, Lady Jones, said in introducing her amendment, this is quite a narrow exemption. It relies on UK decision-makers being able to be confident as to whether an environmental practice constitutes an offence in the UK or another country. There is no mention of climate change or the need to invest and to make procurement decisions proactively to protect the environment. Unfortunately, my noble friend Lord Dubs, who I know was very keen to address this point, cannot be with us.

Amendment 32C would provide that the Bill does not prevent a decision-maker taking into account the climate crisis and the need to achieve the Paris agreement goal or other climate change goals when making decisions. The Paris agreement goal is to hold the increase in the average global temperature to below 2 degrees Celsius above pre-industrial levels, which is a critical threshold. The amendment mirrors the language that is already in statute in the Pensions Schemes Act 2021. The Government included climate change provisions in that Act to require, as the Minister said at the time,

“occupational pension scheme trustees and managers to secure effective governance on the effect of climate change on the scheme”.—[Official Report, 26/2/20; col. GC 156.]

During the debates on those matters, Members of this House spoke of the need for pension schemes not only to consider the financial risks of climate change but to play an active part in combating climate change and achieving the shared international goals, so it is a proactive approach.

One of the fundamental problems we have constantly been addressing in this Bill is whether people will be too cautious: will the Bill have a chilling effect on investment and procurement decisions that we proactively want people to take? We have, on the one hand, legislation that requires pension scheme managers to consider the financial implications of climate change and the transition to a low carbon economy; on the other hand, we have this Bill, which makes no mention of climate change and which, through overly broad drafting, risks limiting what public bodies and local government pension schemes are able to take into account when making decisions.

Sadly, the noble Lord, Lord Willetts, is not in his place. What we have to be clear about is the unintended consequences of this legislation. We have to be careful about where it could lead, because future Governments may not be so proactive in supporting efforts on climate change. We have to be careful because this legislation, which empowers the Secretary of State, could be incredibly dangerous.

The Local Government Association has raised questions about how this Bill sits with local government’s existing procurement practices and its ability to take environmental, social and governance issues into account. I hope the Minister will agree that combating climate change, including considering a country’s environmental policies, conduct and record, should be a crucial part of decision-making on public procurement.

In her introduction, the noble Baroness, Lady Jones, also raised the key issue of the ability of public bodies to be free to avoid investment in fossil fuels. That is a critical area, as extraction of coal and other fossil fuels is often part of government strategy and often controlled by Governments. Could this Bill be interpreted in a way that will stop those sorts of proactive, positive investments that the Government, the Opposition and most people in this country think are right? That is the problem I hope the Minister will be able to address. Fossil fuels are a controversial issue that people have taken very polarised views about; we need to be clear about the consequences of this legislation.

I did not see this group of amendments as being about BDS, but about how we support positive policies on the environment and how the Government intend to ensure that this legislation does not have a chilling effect on the very things they seek public authorities and public bodies to do. I hope the noble Lord will be able to address these specific points.

[Baroness Altmann (Con)]

My Lords, may I make a brief intervention? I did not realise that Back Benchers were not continuing to debate, so please forgive me. I have a brief point on this group of amendments and, in particular, the speech from the noble Lord, Lord Hain, on his Amendment 15. I have enormous respect and admiration for the noble Lord, but I suggest that this debate, in a way, encapsulates why it is important to consider the Bill very carefully. It also suggests the one- sided and sometimes very difficult debate that surrounds Israel and the BDS question.

For example, the noble Lord described the environmental damage involved in taking away olive trees from Palestinian land as some kind of environmental crime, but historically one of the big criticisms of Israel has been that it uses forestation projects to push Palestinians off their land, so the environmental issue can be argued in different ways for different purposes. Israel has planted over 200 million trees since it was founded, so it does take care of the environment.

On some of the arguments that the noble Lord, Lord Hain, was using, one might suggest that one wants to boycott Israel or protect the environment in the opposite way from that which is often argued, and the double standards that have been applied to this debate. I urge my noble friend the Minister carefully to consider the unintended consequences of well-meaning environmental protection. I am, of course, very keen to protect the environment and support the comments made so excellently by my noble friend about the detail of Amendment 15. I thank noble Lords for their indulgence in allowing me to make these points.

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I hope that I have been able to reassure the Committee on this matter and I trust that this response addresses the concerns of the Committee. I am also grateful for the many well-informed and passionate contributions. I respectfully ask that the noble Lord withdraws his amendment.

[Lord Collins of Highbury (Lab)]

The Minister mentioned the Environment Act. During the passage of that Act, the limitations of due diligence measures to only significant targeted illegal deforestation were made clear because, for example, a significant proportion of deforestation due to soy in Brazil or palm oil in Indonesia could take place legally. It would be extremely difficult to distinguish between legal and illegal activity. I do not think the Minister is correct in saying that there would not be a chilling effect. Certainly, the evidence is backed up by a lot of pension experts who have presented evidence to Members of this Committee in their briefings that that is exactly what will happen: public bodies will not be pushing their ESG duties. I hope that he will understand why I have specifically raised that point.

[Lord Roborough (Con)]

I am grateful to the noble Lord for the intervention. I should declare an interest, as set out in the register, in various investments in companies around the world, including in Brazil and Indonesia. I am familiar with the points he raised. I think I answered as well as I can with reference to the Procurement Act and consistency with that, but I would like to write to the noble Lord, if that is helpful, to clarify further.

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[Baroness Noakes (Con)]

Whether that is relevant is another matter, because the boycotting of the Occupied Territories would also cause a problem under this Bill if Wales and Scotland were allowed to, in effect, opt out of the Bill.

[Lord Collins of Highbury (Lab)]

I am sorry to interrupt again, but has the noble Baroness had the opportunity to read the FCDO’s advice on the Occupied Territories?

[Baroness Noakes (Con)]

The noble Lord has the advantage of me, because the straight answer to that is no. However, if he points me to it, I shall certainly read it before we consider that again. I believe that trying to boycott the Occupied Territories is the same as trying to boycott Israel. Certainly, the intent is the same, and they are covered by the Foreign Office.

[Lord Collins of Highbury (Lab)]

I am sorry to labour the point. The noble Baroness keeps using the word “boycott”. We are also talking about decisions on procurement and investment, and there is advice from the FCDO about investing in occupied territories.

[Baroness Noakes (Con)]

I was referring largely to procurement because those were the decisions that were made by the two devolved Administrations that I cited. I would be very surprised if the FCDO had advice that boycotting procurement decisions relating to the Occupied Territories was something that it approved of, and therefore it was something that it thought the devolved Administrations could do. However, in any event, that is for the Foreign Office, not the devolved Administrations, to determine. I do not think we can get away from the fact that the current devolution settlements give foreign policy autonomy to the UK Government.