Financial Services Bill

Baroness Sheehan Excerpts

2nd reading & 2nd reading (Hansard) & 2nd reading (Hansard): House of Lords
Thursday 28th January 2021 Lords Chamber

[Baroness Sheehan (LD) [V]]

My Lords, I congratulate the noble Lord, Lord Hammond, and the noble Baroness, Lady Shafik, on two of the most enjoyable maiden speeches that I have heard. I look forward to their future contributions in the House.

My contribution to today’s debate will very much reflect the views of the noble Baroness, Lady Hayman, my noble friend Lord Oates and a couple of other noble Lords who have mentioned climate change. Just yesterday we heard of an ingenious global survey carried out by a UN agency, the UNDP, to gauge opinion from around the world on climate change. The findings were really quite fascinating. The first thing to note is that by placing polls in mobile gaming networks the UNDP was able to get over 500,000 youngsters under 18 to take part. They are the ones who will have to live with the consequences of our action—or indeed inaction—today, and therefore their voices and opinions must be heard, especially by us here in the UK, who, at this crucial juncture of make-or-break climate policy, hold the leadership of the biggest opportunity, in COP 26, to steer the global tanker towards a clearer, greener horizon.

In this biggest-ever climate poll, almost two-thirds of the over 1.2 million people surveyed worldwide said that climate change is a global emergency and urged our leaders to greater action to address the crisis in all sectors. For instance, in eight of the 10 surveyed countries with the highest emissions from the power sector, the majority backed more renewable energy; in four of the five countries with the highest emissions from land use change, the majority supported conserving forests and land; and nine out of 10 of the countries with the most urbanised populations backed more use of clean electric cars and buses and bicycles.

Britain, as it reshapes its investment and legislative landscape post Brexit, in the same year in which it hosts the seminal COP 26 climate summit, must embrace its mantle of climate leadership. Therefore every Act of Parliament dated 2021 must acknowledge somewhere within its makeup that we recognise the importance of our actions today for the generations that will follow us. Environmental, social and governance—ESG— considerations must be pervasive through all Bills, especially the one that underpins our economic and financial well-being and stability and which will define the big future investment decisions that will affect us all for decades to come.

The sad fact is that, despite an ever-increasing number of commitments from banks and other financial sector actors to align their activities with the Paris agreement, recent research has found that, for example, lending to fossil-fuel-linked investments by 35 of the biggest global banks continues to rise: $736 billion in 2019, up from $700 billion the year before. The movement is in the wrong direction.

Part of the reason why financial institutions are not moving fast enough to help to prevent catastrophic climate change is that regulators and policy-making departments do not sufficiently consider climate and environmental impacts. For example, in the Treasury’s impact assessment for the Bill before us today, greenhouse gas impacts are listed as “not applicable” even though significant changes to how investment funds behave, the centrepiece of the Bill, are bound to have such impacts. That is unacceptable.

I will be lending my support to amendments working towards ensuring that regulations and financial sector policy-makers take climate change, our natural capital and the UK’s international commitments on these issues into account when setting regulations and making policy. Of course a stronger indication of government policy intent towards meeting their net-zero target would be the imposition of a green capital requirement, a move that I would welcome, as I would a requirement for the Government to review the impact of the Bill on meeting the Paris agreement commitments. I look forward to seeing those amendments.

Financial Services Bill

Baroness Sheehan Excerpts

Committee stage & Committee: 2nd sitting (Hansard) & Committee: 2nd sitting (Hansard): House of Lords
Wednesday 24th February 2021 Grand Committee

[Baroness Sheehan (LD) [V]]

My Lords, it is always a pleasure to speak after the noble Baroness, Lady McIntosh. We are often in agreement. The point that she raises about ESG is pertinent and, sadly, it is not mandatory. We are seeing a continued increase in the billions of pounds and dollars being spent on fossil fuel infrastructure.

The young people whose futures will be mostly affected by what we do today are increasingly calling for action across all sectors, as demonstrated by the worldwide UNDP poll of 1.2 million people that I cited at Second Reading. I should also put on record that the poll carried out by YouGov last October at the behest of Global Witness showed that two-thirds of the British public want the UK to be a world leader on climate change. In fact, the highest percentage of those was recorded in Scotland at 69%.

The Bill depicts the landscape that will drive the investment of billions of pounds at a crucial juncture in our country’s history to reshape our future financial services post Brexit. The legislation will form the basis of how investment decisions will be regulated as we spend massive amounts of taxpayer money to build back better post Covid. Serendipitously, the Bill also comes at a time when we will be in pole position to provide global leadership through COP 26 and the G7. Italy, our co-host for COP 26, will then host the G20. We have an opportunity to showcase the route map presented to us by the Climate Change Committee’s recent report to get us to net zero by 2050, while steering a course to meeting the Paris goals. What an opportunity.

The Covid-19 pandemic has focused minds on what can happen when we push natural ecosystems too far, and I agree with every word of the contributions of the noble Baroness, Lady Bennett. However, the timeframes to get innovative technological solutions engineered to scale to tackle climate change are substantially longer than those needed for vaccines—and they were long enough and overturned by human endeavour, hopefully just in time. Decisions have to be taken now if we are to reach net zero by 2050, and we have to get it right because we are in the last chance saloon.

Governments do not have the sums that will be needed, so we need private sector money too, and pots of it. However, business needs certainty and absolute clarity about which way the wind is blowing politically.

It is getting clarity from one quarter. Here is an extract from the letter sent by BlackRock CEO Larry Fink in 2021 to client CEOs. I remind the Committee that BlackRock’s assets under management come to, give or take, $7 trillion. This is what he said:

“BlackRock is a fiduciary to our clients … This is why I write to you each year, seeking to highlight issues that are pivotal to creating durable value—issues such as capital management, long-term strategy, purpose, and climate change.”


He went on to remind client CEOs:

“In January of last year, I wrote that climate risk is investment risk.”


I repeat: climate risk is investment risk, says the CEO of BlackRock. He went on to issue what can only amount to a stark warning: if you risk saddling your investors with stranded assets, with no demonstration of how you are moving to de-climate risk your operations, there will be consequences.

The writing is on the wall. The Prime Minister knows this. Here are his words from last November:

“This 10-point plan will turn the UK into the world’s number one centre for green technology and finance, creating the foundations for decades of economic growth.”


He went on to describe his 10-point plan as

“a global template for delivering net zero emissions”,

ahead of the UK hosting the COP 26 climate summit in Glasgow this year. Someone should tell the Prime Minister that his Government are attempting to put through a Financial Services Bill, in 2021, which is devoid of the words “green”, “net zero” or “climate”.

I was delighted last December when the Prime Minister announced that the UK will end all support to overseas fossil fuels projects. How could I not be, when it is one of the asks in my Private Member’s Bill, the Petroleum (Amendment) Bill? The Prime Minister should know that then to allow 17 fossil fuel projects to be railroaded through to beat an arbitrary deadline before COP 26 is not really showing that he gets it. For example, there was a headline in the Telegraph on 6 February this year:

“Major Brazilian oil and gas project could get UK backing despite promised end to fossil fuel funding”.


Are we really going to allow UK Export Finance support for the east Africa crude oil pipeline? These investments, using UK taxpayers’ money today to fund what will amount to stranded assets tomorrow, are nothing short of immoral.

As if those examples of the abuse of UK taxpayers’ money on fossil fuel projects abroad were not bad enough, we still have the threat of the go-ahead for the first deep coal mine in the UK for 30 years, in Cumbria. How is that “powering past coal”? These examples alone, if they are allowed to go ahead, show a deplorable lack of fiduciary duty on the part of our Government. These amendments, which refer to climate risk, are sorely needed.

A good number of them are about mandating the FCA and the PRA, and strengthening their structures to ensure that all investment organisations that fall under their jurisdiction have regard to climate-related financial risk and protect Britain’s international reputation by having regard to her international and domestic commitments. I support the intent behind them and look forward to the movers bringing them back on Report, in amalgamated form. There is cross-party support for many of these amendments.

I single out Amendment 48, in the name of my noble friend Lord Oates and the noble Baronesses, Lady Hayman, Lady Jones of Whitchurch and Lady Altmann, as important. Bringing forward by two years the date by when the recommendations of the final report of the task force on climate-related financial disclosures come into force, to 2023, will send the right signals.

Amendment 17 in the name of the noble Baroness, Lady Bennett, amends Amendment 16 to include the United Nations Convention on Biological Diversity. I have every sympathy with the intent behind the amendment, especially in light of the recent excellent Dasgupta review, The Economics of Biodiversity, but I agree with the noble Baroness, Lady Bennett, that this is such an important issue that it might be better tabled as a stand-alone amendment.

In conclusion, if one looks at the first page of NASA’s “Vital Signs of the Planet” fact page—and I urge noble Lords to have a look at it—it tells us that we are hurtling towards disaster unless we transition away from burning fossil fuels to power our way of life. Vulnerable communities and developing nations, many of them already exposed to the worst physical impacts of climate change, can least afford the economic shocks of a poorly implemented transition. We must implement the changes we need in a way that delivers the urgent change that these communities need without worsening their dual burden. We have alternatives proven to deliver at scale, so let us use the opportunity presented by the Bill to address the urgent need to unlock private sector finance and give the actors therein the confidence to accelerate the investment needed to deliver net zero by 2050.

[Lord Sharpe of Epsom (Con)]

My Lords, I draw attention to my interests in the register, specifically the directorship of a research company that has published extensively on environmental, social and governance matters. I am also chairman of the Conservative Party’s investment committee. We are currently shortlisting fund managers for our long-term funds, and I reassure noble Lords that ESG rigour will be a key factor in our decision-making.

This is my first outing in Grand Committee, so I crave a little forbearance. I will make a few general points before turning to the specific. First, as regards climate change and full disclosure, the industry is moving in the right direction anyway, and I think that that needs to be acknowledged. For example, I read that the Investment Association, which represents 250 members managing £8.5 trillion, intends to quiz companies at their AGMs on the quality of their climate-related reporting and will relate any of those inadequacies to their members. This is partly a commercial imperative: customer attitudes have shifted materially and will no doubt continue to do so. For example, assets under management at ESG ETFs—that is, exchange traded funds—rose from $54 billion in November 2019 to $174 billion a year later. Those are not large amounts of money in the broad investment sphere, but they show the direction of travel.

Therefore, I was very pleased that this Government have committed to the highest of standards. On 9 November last year, the Chancellor of the Exchequer was unequivocal on this. He said that he wants

“an open, attractive and well-regulated market”

which will continue

“to lead the world in pioneering new technologies and shifting finance towards a net zero future.”

I welcome that and, referring back to some of the work that my company has done in areas such as fast fashion and marshalling scarce water resources—and here I echo the noble Baroness, Lady McIntosh—I believe that these standards should be applied not just to carbon emissions but across the ESG piece.

I also agree with the noble Lord, Lord Oates, and his quote from Jes Staley that the industry absolutely should push the climate agenda. However, in order to build the open, attractive and well-regulated market that the Chancellor described, I believe that we need to be very careful with some of the proposed climate change-related amendments at this stage. I have considerable sympathy with the argument of the noble Baroness, Lady Hayman, about embedding the principles into the Bill, particularly those amendments that the noble Lord, Lord Oates, grouped together in his second group, including Amendment 14. A series of well-meaning amendments at the margin perhaps do not seem individually onerous, but they may end up being counterproductive, and I would like to try to explain why.

The worry we should have is that, if we overcomplicate this at this stage, the rules are more likely to be honoured in the breach than in the observance and/or work to the benefit of other regulatory regimes. I would not like to see the difficult issues we are debating here shifted into other jurisdictions. As always, the main beneficiaries of that would be compliance departments; it would naturally favour larger players and ultimately, as I said earlier, end up being counterproductive, partly by stifling innovation. This is also an important consideration in the context of equivalent discussions with the EU.

Financial Services Bill

Baroness Sheehan Excerpts

Committee stage
Monday 1st March 2021 Grand Committee

[Baroness Sheehan (LD) [V]]

My Lords, it is a pleasure to follow the noble Baroness, Lady Ritchie of Downpatrick. I found myself nodding at her every point. I pay wholesome tribute to my noble friend Lord Oates for the manner in which he introduced this series of amendments and the comprehensive nature of his speech. These amendments get to the nub of the issue.

In 1989, I left a comfortable job in advertising and went back to university, to bolster my chemistry degree and get a better understanding of the scientific evidence and facts behind the litany of dreadful things that seemed to be happening to the planet. The main issues of concern in those days were acid rain, the ozone hole, species loss and radiation in the environment, especially following the Chernobyl disaster in 1986. Another issue causing grave concern was what was then referred to as global warming. I wanted the facts. Specifically, I wanted to know to what extent climate change was anthropogenic.

When I left Imperial, I was in no doubt that the warming planet was due to the accumulation in the upper atmosphere of greenhouse gases, caused by the burning of fossil fuels since the start of the industrial age. The science was incontrovertible then, 30 years ago, and the ball was firmly in the political court. Over three decades later, to my utter frustration, when push comes to shove—and actions not words are needed—the political will appears lacking. I therefore welcome these amendments, especially Amendments 31 and 32, for their clarity of purpose.

I will say a few words about Amendment 28 in the names of my noble friends Lord Oates and Lady Kramer, and the noble Baroness, Lady Bennett of Manor Castle, the purpose of which is to place a requirement on the PRA, when setting the capital adequacy requirements of a credit institution, to have regard to its exposure to climate-related financial risk. It invokes the Task Force on Climate-Related Financial Disclosure and our domestic commitments through the Climate Change Act 2008, as amended in 2019. In my view, the amendment is pretty uncontroversial if you think that we are facing a climate emergency and I hope that the Minister will sympathise with its aims.

In Committee last Wednesday, the noble Lord, Lord Sharpe of Epsom, took me to task when I welcomed Amendment 48’s aim to bring forward the TCFD’s implementation by two years. He rightly said that the methodology to quantify the metrics was complicated and not yet in place. However, a huge amount of work is being done on the issue by UN agencies, EU agencies and the OECD, to name but a few.

I am heartened by the way that we met the challenge of developing and deploying not one but myriad vaccines in the space of a year. It is not much short of a miracle. That was made possible by global collaboration and working at speed, putting aside some artificial barriers to manufacturing by paying upfront to cover the risk of failure. In short, huge challenges were overcome because we faced a global crisis of mammoth proportions. Of course, the issue of scaling up manufacturing capacity to meet global demand remains, not least in developing countries, but that is now an issue of political will. With climate change, we are dealing with a global emergency that has the potential to dwarf the pandemic, so I say to the noble Lord, Lord Sharpe of Epsom, that necessity is the mother of invention. We can do this if there is a will.

I welcome the intentions of Amendment 136A, but it is a little broad and detracts from the central theme of tackling the climate crisis. ESGs are now pretty well established and cover a range of factors that move companies in the right direction, which is to be welcomed. But it is a slow process—it is not compulsory—and they do not explicitly signal climate-related financial risk, which I would like to see.

In conclusion I will say a few words about Amendments 31 and 32. The question to which I would like an answer is: who will pay the cost to society of climate change? The answer is that we as society will pay these costs. But such social costs are not built into the price of oil, gas, coal, gas fires, electricity, natural gas heating, petrol or diesel. As a result, the corporations most responsible do not pay directly for their pollution. That also leaves few incentives to limit greenhouse gas emissions, so problems such as climate change go unabated. I support these amendments as they not only are a shorthand way of building the massive social cost of carbon into investment decisions but also recognise climate-related investment risk.

[Baroness Bennett of Manor Castle (GP) [V]]

My Lords, it is a great pleasure to follow the noble Baroness, Lady Sheehan, who has made powerful points. A little more than a year ago, we faced the Covid emergency and the Government moved very fast with multiple rules and regulations. The world has moved very fast and science has moved very fast. That is a demonstration of how fast the world can change in an emergency—and we are all in agreement that we are in a climate emergency.

Given that I agree with many of the comments already made on this group of amendments, I aim not to repeat them all but perhaps to take us a little bit forward. To briefly outline, I am speaking on Amendments 28 and 42 in the names of the noble Lord, Lord Oates, and the noble Baroness, Lady Kramer, as well as my name. I also express my support for the principles and direction of Amendments 31 and 32 in the name of the noble Lord, Lord Oates. In his expansive and effective introduction, the noble Lord presented a strong case for the detail contained in these amendments.

With Amendment 136A, the noble Lord, Lord Holmes of Richmond, is heading in the direction of an amendment of mine discussed last week. I spoke about introducing acknowledgment of our international obligations on biodiversity. This amendment heads in the direction of thinking in terms of the sustainable development goals, and that kind of system thinking is very much what we need. It goes a lot further than simply looking at the climate emergency. I would like to see us go further than where we are at. The full SDGs are a big step that we need to take at some point very soon.

The noble Lord, Lord Sharpe of Epsom, noted that there are other uses for fossil fuels than energy generation or transport. Many of those uses are, of course, the production of plastics, which are creating a whole different set of crises in our plastic-choked world: a pollution crisis and a crisis in the impact on animal life and quite possibly on human health.

It is pretty clear that we are already in a carbon bubble. We know from an organisation as radical as the International Energy Agency that we have to leave at least three-quarters of our known fossil fuel reserves in the ground to avoid catastrophic runaway climate change. Yet we still see money being lent, sometimes by the UK Government—the chair of COP 26—to develop and even explore new reserves. This clearly is not the way forward.

To build on what others have said, rather than simply repeat it, I refer noble Lords to an article by Semieniuk et al in volume 12, issue 1 of the journal WIREs Climate Change, published in January/February 2021, entitled “Low-carbon Transition Risks for Finance”. In the conclusion of that article, the authors say:

“Asset stranding combines with other transition costs, notably unemployment, losses in profits, and reductions in real incomes from price changes that generate significant risks for portfolio losses and debt default. Financial actors might become unable to service their own debt and obligations, creating loss propagation within the financial network. The adverse impacts of credit tightening and lack of confidence as well as the direct impact of transition costs to the macroeconomy, could lead to a general economic crisis with further risks for finance.”


They continue:

“Targeted financial policies, however, can dampen some transition risks by direct regulation of the financial sector.”


This element of the conclusion relates in some ways very closely to the debate we will be having tomorrow on the National Security and Investment Bill, but it is worth noting that, with a different cause at its base, it could be taken as a pretty fair description of what happened in the 2007-08 global financial crash.

I referred to that article, at least initially, not primarily for its conclusion but for the detailed calculations and models in its body. I suspect that one answer that we might hear from the Minister in responding to this group is that something needs to be done, but not quite yet—the Augustinian approach mentioned by the noble Baroness, Lady Hayman, in our debates last week. However, the article demonstrates that thorough work has been done and is available to the department to act now. As the noble Lord, Lord Oates, and the noble Baronesses, Lady Hayman and Lady Sheehan, all referenced, we are in a state of extreme urgency—a climate emergency.

However, the noble Baroness, Lady Noakes, gave me a further reason to draw on that conclusion. She said that she relies on the banks in calculating and pricing risk. She said, “Banks do not lend in situations where default is likely.” Well, we all know how that worked out in 2007 and 2008. The noble Baroness also said, “Carbon debt financing could be driven out of the City of London.” If we look at the costs we bore from risky lending and risky actions by the financial sector in 2007 and 2008, we see that that could indeed be a very good thing for our financial security. I do not believe that we would see a direct migration of financing shifting out of the City of London and going to other places. If the British Government were to take this action and become world-leading, as they so often tell us they want to be, that would have an impact on other financial markets around the world. Other people would say, “Well, if London is doing that, perhaps we should have a look at it, too.”

Let us look at the best possible outcome: we entirely prevent a carbon bubble financial crash. One problem, of course, is that you do not get credit for stopping things that never happened, but perhaps we would know that we had done the right thing. Even if we managed only to significantly reduce the size of that carbon bubble crash, we would indeed be world-leading. We are ready to take action: this is an emergency and so we have to take action. I commend these amendments to the Committee.

Financial Services Bill

Baroness Sheehan Excerpts

Report stage
Wednesday 24th March 2021 Lords Chamber

[Baroness McIntosh of Pickering (Con) [V]]

My Lords, I am delighted to follow the noble Baroness and to contribute to this debate. I very much welcome the amendments in the name of the Minister, my noble friend Lord Howe, in this group, particularly Amendments 43, 46 and 47 onwards, requiring the FCA to have regard to the carbon target for 2050 when making part 9C rules, as set out.

I always listen to what the noble Lord, Lord Oates, says—we entered the House on the same day and are of the same vintage, so to speak—but I welcome the fact that the Government recognise the risks arising from climate change. The Minister addressed the issue of stranded assets, an issue on which I share his concern, and the transition plan out of them. I think that was addressed in Committee in so far as my noble friend said then that

“the point of the Bill is to support a flexible regulatory system that can respond to changing circumstances and developments as they arise.”— [Official Report, 1/3/21; col. 258GC.]

The noble Baroness, Lady Bennett, spoke about those technologies and forms of energy that can do harm. I am personally concerned that in Amendments 3, 22, 23 and 44, spoken to so eloquently by the noble Baronesses, Lady Hayman and Baroness Bennett, the focus is still very much on moving at the earliest possible opportunity and timetable away from fossil fuels. What worries me increasingly is our fixation on renewables, which on the face of it seem to be performing extremely well both onshore and offshore.

We on the EU Environment Sub-Committee have just completed our last piece of work, looking at the ecology of the North Sea. It is apparent from the evidence that we took that there is a lack of research on the impact of renewable energy offshore facilities on North Sea ecology, particularly marine life—dolphins, porpoises and whales—bird life and the whole sea biodiversity. A plea was made that the cumulative impact should be considered and that we should assess and value all the natural capital, not just the ability to create wind but what we are losing. In particular, it was put to us that we should consider the impact of these renewables, particularly offshore wind, on other users, such as, as in this case, fisheries and shipping.

Mention has also been made of the work going on in the Basel framework. I hope the Minister will give us an update on that. I am concerned that some of the amendments here, particularly Amendment 3, but others as well, may pre-empt and not have regard to the international work that will help us to understand how climate risk should be considered through the Basel framework and working with our international partners.

I pay very close regard to what those such as Mark Carney and the current deputy governor of the Bank of England say, but equally I was struck by the remarks of the noble Lord, Lord King of Lothbury, in the debate on the Budget Statement, where he expressed concern about the new remit requiring the Bank of England to

“reflect the importance of environmental sustainability and the transition to net zero”.—[Official Report, 12/3/21; col 1914.]

In the context of the Financial Services Bill we are seeking, as I understand it, to have a flexible regulatory system, as my noble friend explained, that will be able to respond to circumstances as they develop. I imagine that it is the role of the Government rather than the regulators to set the policy, but I stand to be corrected by my noble friend.

I welcome the opportunity to have this debate. When it comes to net zero, climate change and environmental sustainability, obviously there will be a move away from fossil fuels, but no one has yet explained to me how we are going to attempt to fulfil all our energy requirements in what will be virtually all electricity supplied to the market.

With those few remarks, I look forward to the Minister bringing together all the themes of this debate.

[Baroness Sheehan (LD) [V]]

My Lords, it is a pleasure to follow the noble Baroness, Lady McIntosh. I thank the Minister for some movement on this issue. His courtesy throughout has been an example to all of us. I thank him for his correspondence on the issues that I raised in Committee, some of which I will return to later in my contribution.

I congratulate the noble Lords who moved amendments on climate risk in Committee, without which we would not be where we are today. The amendments were cogently argued and evidently persuasive, if only partially so, which is why a number of them have been brought back, albeit slightly amended, on Report.

I support Amendment 3 in the name of my noble friend Lord Oates and the noble Baronesses, Lady Altmann, Lady Hayman and Lady Jones of Whitchurch. It makes a strong case, with support from across your Lordships’ House, for a PRA review of the risk weighting applied to investments in existing and new fossil fuel exploration, exploitation and production. Amendment 22, in the name of the noble Baroness, Lady Hayman, seeks to embed evaluation of climate-related financial risks, and consideration of the impact of such risks on the stability of the UK financial system, in the modus operandi of the FCA and the PRA. Amendment 23, also in the name of the noble Baroness, Lady Hayman, provides for the appointment of a senior manager within the FCA with responsibility for climate change—and movement on this by the regulator, as she outlined in her earlier contribution, is welcome. Amendment 44, in the name of the noble Baroness, Lady Bennett, makes huge sense in the context of the recent Dasgupta review. I hope that the Minister will give it sympathetic consideration.

I need say no more about the content of these amendments, as I would only be repeating the excellent contributions of those who tabled them. Suffice to say that, if adopted, all three would send the right policy signals that the Government mean what they say when they speak of a climate emergency. Those signals are sorely needed because the signals presently being received by investors and, indeed, by all sectors of society, are confusing and misleading. We have a Government leading on ending the use of coal for power generation—the Powering Past Coal Alliance—who then toy with the idea of granting a licence to a new deep coal mine in Cumbria. The Government announced in December last year that they would end UK support for fossil-fuel projects overseas. Will the Minister say whether UK Export Finance’s support for the controversial east African crude oil pipeline—EACOP—which extends from Uganda to Tanzania, will be a done deal before the new March deadline just announced?

Just today, we have a garbled press release on supporting vulnerable communities in the north-east and Scotland, which will be affected by the transition away from fossil fuels. This is justified in the press release by an unexplained decrease in emissions by the oil and gas sector. These communities deserve better. In the same press release, we are told that this decrease in emissions will be achieved by a new regime to hand out new licences to explore for and exploit as yet undiscovered fields. I am confused. Can the Minister shed some light?

Is the Minister also able to shed any light on whether the Government will bring forward legislation to align the Oil and Gas Authority’s remit to our net-zero target, thus drawing a line under the current policy of maximising economic revenue, or MER? That might serve to remove some of the confusion. How can new licences be justified when extraction of the oil and gas in our existing fields will take us over our share of emissions under the Paris agreement? Surely the Government, in a climate emergency which they themselves declared, are not relying on reducing emissions via carbon capture, usage and storage, a technology which is unproven at scale?

Meanwhile, back in the real world, the NASA website tells us that 2020 was the hottest year since records began, while the World Meteorological Organization states that 2011-20 was the warmest decade on record. The warmest six years have all been since 2015—2016, 2019 and 2020 being the top three. The World Meteorological Organization’s secretary-general, Professor Taalas, said:

“It is remarkable that temperatures in 2020 were virtually on a par with 2016, when we saw one of the strongest El Niño warming events on record. This is a clear indication that the global signal from human-induced climate change is now as powerful as the force of nature.”


That is a chilling thought.

I will end with one last thought: temperature is just one of the indicators of climate change. The others are greenhouse gas concentrations, ocean heat content, ocean pH, global mean sea level, glacial mass, sea ice extent and extreme events. All are moving in the wrong direction. I hope that the Minister will be able to give a satisfactory commitment that climate risk in the financial sector will be satisfactorily legislated for. In the absence of such assurances, I will support amendments on the issue that are put to a Division.

Financial Services Bill

Baroness Sheehan Excerpts

Report stage
Wednesday 14th April 2021 Lords Chamber

[The Deputy Speaker (Baroness Fookes) (Con)]

My Lords, the noble Lord, Lord Stevenson of Balmacara, has withdrawn so I call the noble Baroness, Lady Sheehan.

[Baroness Sheehan (LD)]

My Lords, I rise to speak in support of Amendment 15 in my name and those of my noble friends Lord Sharkey and Lady Kramer. I felt it only right and the very least that I could do, as the only Muslim speaking in debates on this Bill, to thank my noble friend Lord Sharkey for his determined resolve to ensure that all students, including devout Muslims, can access finance in order to go to university.

Parents who think that it is haram—forbidden—to take out an interest-bearing loan will try to save money to pay for their children to go to university. This has become inordinately expensive and, in many cases, unachievable now, in these financially straitened times. An important point to raise here is that boys will be favoured over girls when money is tight. Access to sharia-compliant student finance will make it easier for all bright boys, and girls, to access higher education.

I note the 2014 BIS consultation—which, as my noble friend Lord Sharkey said, had a remarkable 20,000 responses—and the subsequent report, which identified takaful as a suitable, frequently used non-interest-bearing sharia-compliant financial product. In its response to the report, the Government accepted its findings and put forward an alternative finance product based on the takaful model, which would, in the interests of equity, be available to everyone. It was designed so that repayment after graduation and debt levels must be identical to those of a traditional loan, with all repayments to be made directly through the UK tax system. In addition, the alternative finance product must be applied for in the same way as a traditional loan, through the Student Loans Company.

That was six and a half years ago. The enabling legislation has been implemented in the Higher Education and Research Act 2017, but, since then, there has been no further action. In the meantime, a sharia-compliant version of Help to Buy took only five or six months to launch, from start to finish—so the delay in offering a similar scheme to students is quite inexplicable. I hope that the Minister will be able to give categoric assurance that there will be no further delay. In the absence of such assurance, I would be pleased to support my noble friend Lord Sharkey, should he seek a Division.