Financial Investment and Deforestation

Debate between Barry Gardiner and Lord Grayling

1st reading
Monday 17th October 2022 Commons Chamber

[Chris Grayling (Epsom and Ewell) (Con)]

I beg to move,

That leave be given to bring in a Bill to require banks and investment institutions regulated in the UK to verify and certify that they do not provide any form of financial or investment support to businesses which derive income from forest risk commodities, or that relevant local laws were complied with in relation to such commodities; and for connected purposes.

Deforestation around the world is a critical issue for the future of our natural world and our planet. The loss of forest cover has made climate change worse, has pushed millions of species closer to extinction and continues to cause real damage to ecosystems. The threat to the three biggest forest areas, in the Amazon, the Congo basin and south-east Asia, is particularly acute, and I am very proud that the United Kingdom has taken such a lead in the Congo in particular to try to halt deforestation and protect the key habitats there. I know that Members on both sides of the House share my concern about the conduct of the Brazilian Government over deforestation in the Amazon, and I will continue to use opportunities in the House to push for change there, regardless of who wins power at the elections later this month.

The deforestation threats that remain around the world overwhelmingly result from commercial pressures driven by agriculture. Forests are being cut down to make way for palm oil plantations, for soya production or for cattle ranches. In some places, including Costa Rica and Gabon, Governments have put a brake on deforestation, which is hugely welcome, but in too many places illegal deforestation is still destroying the natural world.

I am proud that this country has been at the forefront of creating legislative frameworks to help to address the commercial exploitation of forest-risk products. The Environment Act 2021 creates the first real framework to require UK businesses to know where their supplies are coming from and whether they come from areas affected by illegal deforestation, although I would say to Ministers that they need to move faster in putting the necessary regulations in place to back up the Act. What we have done should make it much harder for UK retailers to end up selling products from areas where illegal deforestation has taken place, but more needs to be done and that is what this Bill seeks to achieve. Solving the problem of illegal deforestation is not just about identifying where agricultural products originate from, or the sustainability, or otherwise, of supplies of commodities such as timber; it is vital to follow the money as well and that is where we need another round of change.

We should all be proud that the UK has one of the tiny number of major financial centres around the world. The City of London is probably the most important part of our economy today, generating profits that bring taxes to the Exchequer and help to pay for things such as the NHS. But the City is also a place where deals are done that affect countries around the world, so it is a place where corporate responsibility is of exceptional importance. I want the City to provide financial resource and advice to investment projects and to corporations around the world—that is a given, and the City does a good job of it. In doing so, however, the institutions offering those services from the UK also need to be mindful of the impact the finance they provide has on the communities, countries and environments they work with. Although the clearance of an area of rainforest is often carried out at a local level by people creating a new farmland area, rather than by big corporations, it is the corporations that then arrive to buy the products of that illegal land clearance.

The Government are rightly requiring retailers to know where products such as soy and palm oil come from, and that they do not sell products that are sourced from illegally deforested areas, but it has to be right that the financial institutions that bankroll those big corporations also apply a similar standard to the investments that they make, to the banking services that they supply, and to the shares that they purchase.

Over the past couple of years, the Government’s global resource initiative taskforce has looked carefully at this issue and I commend the Ministers involved in setting up that initiative. However, it found that the UK finance sector lends and invests, directly and indirectly, in forest product supply chains where issues genuinely exist. Although it found that there is no overall figure for the UK finance sector’s exposure to forest-risk ventures, it clearly identified that the financial support and investment being provided to companies, sectors and financial institutions with high deforestation risk amounts to hundreds of billions of pounds. It also found that, although a handful of the biggest institutions internationally are working to try to address the issue, the majority of financial institutions have not taken steps to actively assess or manage deforestation risks.

The majority of institutions do not have deforestation policies. Many of these are headquartered in the UK. Many others also operate local branches in the City of London.

[Barry Gardiner (Brent North) (Lab)]

Will the right hon. Member give way?

[Chris Grayling]

If I am allowed to. Am I? No.

Protecting and Restoring Nature: COP15 and Beyond

Debate between Barry Gardiner and Lord Grayling

Thursday 14th July 2022 Commons Chamber

[Chris Grayling]

This is why my argument is around a real focus on the restoration of degraded land. Semi-desert subsistence farmland will never deliver anything for anyone except an impoverished lifestyle and poor biodiversity, but the restoration of land is a tangible that can be addressed in the COP because it can be measured and tracked.

[Barry Gardiner]

I welcome the right hon. Gentleman’s intervention. He is right that we need to look at land restoration as one of the key indicators. It is particularly the case in sub-Saharan African countries, which are facing an increasing challenge of desertification from climate change, which they are having to fight against, rather than just looking at the land that is already semi-desert and trying to see how to restore that. It is a huge problem. The NBSAPs must be living documents, which is why they need to be ratcheted up, as the hon. Member for Brighton, Pavilion said, every five years between major COPs.

Let me turn to finance. I pay tribute to Mia Mottley, the Prime Minister of Barbados, who spoke at the beginning of COP26. For my money, she was the most powerful speaker at the whole event. She pointed out to the politicians assembled for the launch of COP26 that the promise we had given was for $100 billion a year to be put into the global planet fund to help the global south to cope with climate change and to take effective mitigation efforts. We have not delivered that, and we are nowhere near delivering it. She pointed out that it was not because we could not afford it, because we had just spent $9 trillion—trillions, not billions—bailing ourselves out over the covid pandemic. The funds are available and they must be made available.

The extent of quantitative easing that the global north has allowed itself since the 2008 global financial crisis has been more than $36 trillion. What is COP15 asking for? It is asking for the same as was promised at COP26: $100 billion a year, rising to $700 billion a year. That is essential. If we are to enable those developing countries in the global south to do exactly what the right hon. Member for Epsom and Ewell was talking about with regard to the restoration of degraded land, and if we are to deal with these problems, we have to be serious. As the human species, we do not have the right not to be.