Skip to main content

Forest Risk Commodity Regulations

Volume 836: debated on Tuesday 12 March 2024


Asked by

To ask His Majesty’s Government when they will lay the forest risk commodity regulations under Schedule 17 to the Environment Act 2021 to prevent the importing of goods responsible for illegal deforestation, and what consideration they have given to the merits of widening the scope in include all deforestation.

My Lords, secondary legislation will be laid in the near future that will make it illegal for larger organisations and their subsidiaries to use regulated commodities and their derivatives in the UK if produced on illegally occupied or used land. Around 70% of tropical deforestation for agriculture is illegal. Therefore, the Government believe that is the most effective approach to halt and reverse deforestation. It is the most important way of supporting producer Governments to strengthen their forest governance and domestic laws.

My Lords, we understand the importance of getting these measures right and of working with partners to ensure they have the greatest possible impact. However, waiting more than two years after the passage of the Environment Act is a choice. The Minister knows there is appetite for regulation, including in the financial services industry, where separate commitments have been made. What does “near future” mean? Can he guarantee today that these important provisions will be in force by 2025? If not, other than grabbing some headlines during COP 26, what are the Government actually doing to prevent deforestation?

The Government are doing a lot to prevent deforestation in addition to this measure, which, as she knows, came from the Glasgow leaders’ declaration we led on at COP 26 to put an end to deforestation and land degradation by 2030. We are putting this in place. The noble Baroness asked for the date on which it will be laid. We have a few tweaks to make, because we are in negotiation with the EU to make sure that we are getting this right for Northern Ireland. We are working with the EU. With products that come from other countries and are then processed and exported to the EU, we will be working under two systems, and we want to make sure we are getting that right.

In addition, we are doing a range of different activities, including our investments in forests and sustainable land use. Our Partnership for Forests has mobilised £1 billion in private investment and has brought 4.1 million hectares of land under sustainable management and benefited over 250,000 people. I could go on. We are doing a lot in addition to this measure.

My Lords, while we welcome these measures, we note that Defra consulted on them in December 2021. They only cover illegal goods and apply to businesses that have a global turnover of over £50 million per year and use over 500 tonnes of beef, leather, cocoa, palm or soya oil per year. Will the Government commit to full alignment with the EU’s deforestation regulations, which cover all forest commodities sourced from both illegal and legal deforestation?

The EU’s deforestation regulation is far from settled and it is causing great concern. I have had meetings with representatives from a number of producer countries. On trips to countries such as Costa Rica, I met many others. It is not right to say that the EU system is done and dusted. There are great concerns among producer countries that it could mitigate against precisely the people who are living sustainably close to or in forest environments. We have started with these four and we will have a very fast—for these sorts of measures—review in two years’ time, which will see possible additions. That may comply with what the EU is doing, but we have no idea whether the EU is going ahead with all six or will go ahead with the same four that we are.

My Lords, in a recent investigation by Global Witness, it was found that both HSBC and Barclays are financing companies that are purchasing product made on illegally deforested land, particularly in the Cerrado. This is a complex ecosystem that is not covered as tropical rainforest. It has fallen between two stools, but it is producing an enormous amount of meat. Schedule 17 is meant to cover it, but it has weak definitions. The beef produced as a result of deforestation does not necessarily end up here in the UK, so we cannot just focus on the trade alone to stop it; we have to look at the money and where it is flowing. Do the Government remain committed to developing “clear due diligence standards” for the financial sector through the Treasury’s review of deforestation finance, which was commissioned in the Financial Services and Markets Act and committed to in the other place by the then Economic Secretary to the Treasury, Andrew Griffiths?

Yes, we do. The Treasury is proceeding with its review. Alongside that, we have the Taskforce on Nature-related Financial Disclosures. It is not just for financial institutions in this country but has become the international byword on making sure that financial institutions are themselves regulated and making it clear to other investors and shareholders that the supply chains they are investing in are in accordance with the Glasgow leaders’ declaration.

My Lords, I congratulate my noble friend. I know he shares a great and deep concern on this issue. He is probably as impatient as many of us to get this, but we know it is not always that easy. Will the Government require commodities and products that are in scope to be traced back to farm level?

I thank my noble friend. We are indeed working as quickly as we can to get this on the statute book. We want to make sure that those companies that are in scope, as the noble Earl on the Liberal Democrat Benches described, are able to say from their supply chains right back to where the project came from in the first place, that they are in accordance with these regulations. If not, we have a very clear sanctions programme that we will bring forward in the statutory instrument, which will hold them to account.

My Lords, we know that we have fewer trees in this country than most countries in Europe, yet we also know that trees capture CO2 and other noxious gases. If we are to meet our national obligations to try to reduce global warming, we will have to step up our planting of trees; there is no other way we are going to be able to do it.

The noble Lord is absolutely right: we have to practise what we preach domestically, which is why we have put an enormous amount of money through the Nature for Climate fund to promote that and through other schemes. We are encouraging land managers to look at tree planting and are seeing an increased number being planted. The supply chain to support that is so important. I have just come back from Costa Rica, which has doubled its tree cover in recent years, and we want to increase ours significantly in the UK.

My Lords, do we have to continue with biomass subsidies after 2027? I would like some confirmation on that. Secondly, ancient forests in Canada are still being cut down to make wood pellets to supply companies such as Drax, which has had billions in subsidies. It is not clean energy, it is highly polluting and it is not economical, so why are the Government still doing that?

I will write to the noble Baroness about Drax, because it is a very complicated issue. It fits into the UK’s net zero balance sheet in terms of what Canada is doing, where the woodchip comes from. I want to be absolutely right in my answer, so I will write to her.

My Lords, further to the question from the noble Baroness, I entirely agree with her. What are the Government doing spending hundreds of millions of pounds in subsidies to Drax in order to have trees cut down in America and then brought across the Atlantic? All of this is because somebody has designated “burning wood” as ticking the box for “saving the planet”, which it clearly is not.

Biomass is a perfectly legitimate renewable energy source if the wood that is being used is a renewable and sustainable harvest. My noble friend and the noble Baroness are absolutely right that if the wrong sort of timber is used and being shipped to this country at huge carbon cost, taxpayers, shareholders and investors need to know the precise and genuine cost to our net zero commitments that that poses.

My Lords, in my capacity as chair of the Environment and Climate Change Committee, I wrote to the Secretary of State for Defra, Steve Barclay, on this issue on 14 February. As yet, I have not had a reply and nor has the chair of the Environmental Audit Committee in the other place, who wrote to him earlier than I did. Will the Minister use his good offices to ask when a reply might be forthcoming?

I am not clear what the letter was about—whether it was about Drax or the forest risk commodities. Whatever it is, I will chase it and make sure that the noble Baroness gets her answer.