Co-operative and Community Benefit Societies (Environmentally Sustainable Investment) Bill

Marco Longhi Excerpts

2nd reading & 2nd reading: House of Commons
Friday 11th September 2020 Commons Chamber

[Chris Green (Bolton West) (Con)]

It is an absolute pleasure to follow my hon. Friend the Member for Rushcliffe (Ruth Edwards), who made the important point that we need to have more than just good intentions in what we are doing. I think that the hon. Member for Cardiff North (Anna McMorrin), who secured this debate on this Co-operative and Community Benefit Societies (Environmentally Sustainable Investment) Bill, is going way beyond good intentions. However, I also reflect on the words of my hon. Friend the Member for Christchurch (Sir Christopher Chope), who is still in the Chamber. I think there is significant scope for a coalition, or for work to be taken forward, to bring this back in another form. Much that has been said, by so many colleagues, captures the spirit, intent, ideas and values of the co-operative and community benefit societies. These are values that I think we all share right across the House.

There is a significant focus in the Bill on dealing with the global warming and climate change agenda, which is incredibly important. We only have to see the protests outside to realise how many people are engaged in that, both here in London and across the country. This is therefore an important area that we need to look at, to see how we can support funding and investment in the sector, as well as supporting societies and co-operatives.

One of my concerns with the Bill at present is how we define and understand environmentally sustainable investment. No doubt guidance will be provided at the beginning, but many organisations around the country will draw their own conclusions, think their own way and draw up their own plans. In many ways that is what we would want to happen, because that is the nature of those organisations, but an incredibly broad range of organisations could be included or excluded. For example, I would generally expect many environmental organisations to be 100% against the nuclear industry. However, nuclear is a zero-carbon source of energy, so excluding this important sector from such investment would be problematic.

Let me touch on a couple of other issues. One of the things we want in these mutual organisations—these societies—is cohesion. They ought to be able to work together. What divisions will we create if we bring too many difficult and contentious issues into them?

I reflect on an issue from the United States of America. The US has seen a significant reduction in its carbon emissions. At the same time, because of the reduction in the cost of energy, we have seen significant reshoring of industry from countries around the world to the United States, creating manufacturing jobs there. We would all want more of that here in the United Kingdom, but that was achieved in the US in part because of the fracking industry.

Fracking is a very controversial technology—a very controversial source of energy—in the United Kingdom. In fact, it is very controversial in the United States of America, where it is happening and it has achieved those results. We ought to be very careful about that, or we could see arguments in mutual societies, with some saying, “We ought to be investing in hydraulic fracturing,” and others making robust arguments against it. We must be very careful about how we define and understand the motivation in this area and on this agenda.

Let me take another example. I quote from the Bill itself:

“The environmental sustainability goals are—

(a) to create an innovative, productive and low carbon society which recognises the limits of the global environment and therefore uses resources efficiently and proportionately (including acting on climate change); and

(b) to maintain and enhance a biodiverse natural environment with healthy functioning ecosystems that support social, economic and ecological resilience and the capacity to adapt to change”.

I think that we can all agree with the values behind that. There is so much agreement in society and industry more broadly; we have only to look at BP, or pretty much any corporate organisation with a corporate responsibility statement. I have here one such statement from BP. No doubt, there are many other things that BP would say, but it states:

“Our purpose is reimagining energy for people and our planet. We want to help the world reach net zero and improve people’s lives.

We will aim to dramatically reduce carbon in our operations and in our production, and grow new low carbon businesses, products and services.

We will advocate for fundamental and rapid progress towards Paris and strive to be a leader in transparency.

We know we don’t have all the answers and will listen and work with others.

We want to be an energy company with purpose; one that is trusted by society, valued by shareholders and motivating for everyone who works at bp.

We believe we have the experience and expertise, the relationships and the reach, the skill and the will, to do this.”

On my reading of what is in the Bill and of where BP and many other organisations stand, I see significant compatibility between the two. I therefore look for clarification on whether the nuclear industry, the fracking industry and big oil ought to be included in the scope of the mutual organisations and societies covered by the Bill. At the moment, on my reading, all those organisations would be included, but I feel that that is not the intention.

[Marco Longhi (Dudley North) (Con)]

Does my hon. Friend agree that some of the plethora of green investment opportunities may have unintended consequences and that the Bill does not contain a strategic framework for risk-assessing these investments and therefore informing investment decision making?

[Chris Green]

That is an excellent point. This debate has been very well informed on both sides of the House; we have heard my hon. Friend the Member for Clwyd South (Simon Baynes) and others use their expertise in highlighting their concerns. I think that means that the Bill ought to come back in one form or another. I think that so many people want it to come back because there is so much progress that we can make in this area.

Let me touch on a second aspect. As we see climate change and the activism that goes with it reach the peak of our political agenda—it has been there for a long time and we have no expectation that it will leave the agenda in the near future—we must be concerned to some degree about how political activism can impact mutual societies, co-ops and other membership organisations. I was alerted by what my hon. Friend the Member for Berwickshire, Roxburgh and Selkirk (John Lamont) said. In fact, he was highlighting a point about the protection of these organisations, because he would not want an outside player to invest a significant sum and have a proportionate voice according to how much they are investing in the organisation.

This is about keeping the community voice just as relevant. The flip side of that is that if there is one-vote per investment, that lends itself to political activism. With a small investment, someone can have a significantly disproportionate say in the organisation. We all appreciate that many people involved in different organisations, of all sorts, are not politically active or politically engaged all the time; they make an investment and they want to leave it alone, and they want other people to make these decisions. So where an activist organisation is engaging and making these investments, they might be able to skew the views and values of the mutual organisation. We ought to be cautious about this and very much aware of it.

--- Later in debate ---

[Peter Gibson (Darlington) (Con)]

It is a pleasure to follow my neighbour and dear friend, my hon. Friend the Member for Sedgefield (Paul Howell).

I am grateful to be given the chance to speak in this debate. I share the passion of the hon. Member for Cardiff North (Anna McMorrin) and her commitment to ensuring that our green development is beneficial to our society, communities and constituents. Redeemable green shares to external investors are certainly an interesting prospect. In principle, I share the hon. Lady’s desire to support the mutual sector in the development of new green finance initiatives.

However, I remain unpersuaded about the merits of redeemable shares, and I am concerned that this Bill could open up risks for consumer protection and the integrity of the co-operative model. As we have heard from many on the Conservative Benches, green bonds have a tried and tested track record, and I pay tribute to the excellent insight provided my hon. Friend the Member for Grantham and Stamford (Gareth Davies). I cannot in good conscience support a Bill that risks undermining the phenomenal work that co-operatives and mutuals do in my constituency and in the north-east.

I want to reassure the House that I support the work of the co-operatives, which have a strong track record on delivering across the UK. I understand the all-party parliamentary group on mutuals has found that they generate over £130 billion of income each year, supporting community-owned pubs, high street retail and fan-owned football clubs, which is a truly phenomenal achievement.

If you will allow me, Mr Deputy Speaker, I will first focus on the financial aspects of the Bill, before moving on to its environmental concerns. It is wholly necessary for companies and co-operatives to have access to capital and credit as the lifeblood of their entity, but green bonds would provide a much better model. In my constituency of Darlington, many co-operatives are run on a mutual ethos that in part came through the town’s Quaker heritage. From the Harrogate Club in the north to the Hummersknott Allotment Association in the south, the benefits of local co-operatives are clear locally.

Recently, I have engaged with many of my constituents from Darlington FC supporters’ group, who have lobbied me on behalf of their much-loved fan-owned mutual club. I am glad that in that case I was able to work constructively on their behalf with the National League to assist the club with the uncertainty ahead of the new season, and I wish them well for this Saturday’s friendly away game in Scarborough.

Across the north-east, clubs and pubs remain at the heart of communities. With the unprecedented challenges the hospitality sector has faced over the past few months, I am all too aware that co-operative clubs in Darlington need support now more than ever. The phenomenal eat out to help out scheme and the unprecedented level of government support have allowed many of these clubs and pubs in Darlington to bounce back from the impact of the lockdown. It is vital that the Government do not take drastic action at this point that risks undermining the position of these clubs at the heart of my Darlington community.

I am concerned that, if the Bill were to pass, businesses in the mutual sector might unwittingly enter into a situation where they are exploited as investment businesses. Beyond this, many co-operatives might be lured into exploitative schemes where they are put at great risk because of the ethical implications attached to these complex shares. I am aware that the Bill intends to include safeguards to prevent such issues by amending the Co-operative and Community Benefit Societies Act 2014; by introducing limits on the voting rights of investors in the event of liquidation; by limiting the ability to vote for demutualisation; and by enabling societies to remove the right to vote for conversion into a company. While I acknowledge these safeguards, introduced following the hon. Lady’s work with Co-operatives UK, I believe that the risk remains too high.

I am confident that the Government have already provided a firm, pragmatic approach to tackling climate change while protecting businesses, jobs and communities, as outlined in the Government’s green finance strategy 2019. In my short time in Parliament, I have had the privilege to support this Government as they have taken steps to support sustainable, community-led green economic growth, including by granting greater power to local authorities in this matter.

[Marco Longhi]

Does my hon. Friend agree that the green bonds that my hon. Friend the Member for Grantham and Stamford (Gareth Davies) described would be a more targeted and risk-averse approach? Does he also agree that as we come out of this pandemic the House’s priority should be to do so in an inclusive and green way and that the plan that Andy Street, for example, has set out for the west midlands for inclusive growth with a green agenda is an example of that?

[Peter Gibson]

My hon. Friend raises an important point about the strength of communities represented by Conservative directly elected Mayors. I, too, represent a constituency that falls within a combined authority area that has an excellent Conservative Mayor leading the way on green initiatives.