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Company Transparency (Carbon in Supply Chains) Bill

Volume 682: debated on Friday 16 October 2020

Second Reading

I beg to move, That the Bill be now read a Second time.

This takes me back to my days of being a Whip on the Treasury Bench. It is a great honour to speak to this Bill, which I introduced back in March. It was the very last thing that I was able to speak on before we went into a new normal, which we are still continuing to get used to, with covid. At the time of the debate, I recall the Minister for Business, Energy and Clean Growth saying to me that we need to have more debates about such matters—Westminster Hall debates, Adjournment debates and so on. I had genuinely hoped that before I got to the point of speaking on Second Reading, we might have had more opportunities to speak about the Bill, but sadly events precluded that. I believe that the Bill is a simple measure that would provide transparency to the public about what companies are doing to tackle carbon in supply chains. It very much mirrors a measure that I introduced as the Minister responsible for tackling modern slavery and organised crime in the Modern Slavery Bill—now the Modern Slavery Act 2015—supported by my right hon. Friend the Member for Maidenhead (Mrs May), who was then Home Secretary, to make sure that companies took seriously the issue of human trafficking and modern slavery in supply chains.

We did that, because it is far too easy for people to hide behind the regulatory requirements to report on the measures that they are taking within their own businesses. Supply chains are different. What goes on in a long, complex supply chain can amount to abuse and include things that keep the costs low for the business in the UK and, ultimately, UK consumers but would not be tolerated if they were happening in the UK. Section 54 of the Modern Slavery Act was incredibly important, and my right hon. Friend will know that we went to considerable effort as Ministers to secure Government sign-off.

The Government are not keen on new regulation. I am not in any way naive about that, but this is a unique type of regulation, because it does not say to business, “This is what you must do. This is how you must behave.” Instead, it says, “Tell us what you have done.” If the business has not done anything, it should say so. If, as a business, it does not want to find out whether there is human trafficking and modern slavery in its supply chain, it should tell us, by putting up a statement on its website, signed off at board level, saying that it has not taken any action. Consumers will be able to read that. People who might want to work in the business will be able to read it too, and can make an informed decision about whether they want to be involved or associated with it, or whether they want to be employed by it. If a business has not taken any steps whatsoever or any action, why would anyone want to have anything to do with that business?

This is about giving power to the consumer and the employee. It is about giving power to people who would not normally have that power to make a decision about whether they want to transact with that company. As I have said, the measure is important; it has to be signed off at board level. We all know from dealing with business that if decisions are made below board level, often the board does not know about them. The board needs to know about this, and it needs to take the right steps.

Can my right hon. Friend tell the House the effect of the measure on dealing with people trafficking and modern slavery registration? Has it resulted in less of that illegal activity or has it not made any difference at all?

I think it has begun to make a difference, but the measure was only introduced in 2015. It applies only to large companies with a turnover of over £36 million, and we have only just begun to see it being used. I know from friends I used to work with when I was employed as a chartered accountant that they are taking this matter seriously. In fact, my right hon. Friend the Member for Maidenhead and I were on a panel only yesterday—this Sunday is Anti-slavery Day—discussing exactly that point and the measures that businesses are taking to identify slavery in their supply chains. It is making a difference. More can be done, and I am pleased that the Home Office has taken more steps in that direction, but it is making a difference.

May I say through my right hon. Friend to our hon. Friend the Member for Christchurch (Sir Christopher Chope) that if he wants to know what companies are doing he should look at company reports and accounts, and he will see that real action has been taken by companies, who have explored their supply chains, ensuring that there is no modern slavery in them.

My right hon. Friend is absolutely right. I can tell my hon. Friend the Member for Christchurch with absolute conviction that companies and boards are taking this matter seriously. Would anybody wish to be a board director signing off a report saying that they had taken no steps to eradicate modern slavery in their supply chain? I do not think any of us would want that.

I was thinking about what I could do usefully to assist the Government in dealing with carbon, because it is very easy for businesses to offshore carbon. I am not suggesting that UK businesses do that or choose to have products manufactured in high carbon-emitting countries to avoid carbon emission restrictions in the UK. It is absolutely right that this country was the first to legislate for net zero by 2050. That is fantastic, and this country should be incredibly proud of it. We are also hosting COP26, which again gives the UK an opportunity to show global leadership. The Prime Minister, in his recent address to the United Nations, said:

“we have a responsibility to our planet to lead in this way and to do this.”

I say to my right hon. Friend the Minister that this is a simple measure that companies understand. It would allow us to shine a light through supply chains and see what carbon emissions companies are offshoring and what they are doing to bring products for sale in the UK without giving proper regard to carbon emissions.

Now, I am a realist as well as a former Whip—

Amazing to think, isn’t it?

As it is 2.21 pm on a Friday afternoon, I recognise that it is perhaps unlikely that this Bill will be granted its Second Reading. I know that a great deal of work is under way in the Department to look at what measures can be introduced. The Department for Business, Energy and Industrial Strategy is not short of new ways to assist businesses in reducing their carbon emissions and contributing towards reaching net zero by 2050, but I offer this Bill to the Minister as another weapon in his arsenal—another thing that he can use to assist us to reach net zero not just in the UK but across the whole world. If we can lead in that way with a simple measure that will enable consumers and possibly employees to see what businesses are doing to eliminate carbon, that would assist him and the Government in reaching the target.

As I say, I am very realistic about what may or may not happen in the next few minutes with this Bill, but I can make an offer to the Minister. Could I work with him and his officials on this? Could we look at doing some proper analysis of how this measure might affect businesses? I know that, particularly in the light of the covid situation, no Minister wants to impose more burdens on business, but business will understand, and I think welcome, this measure. We introduced the modern slavery measure because business asked us to do so. It said, “Can we all step across the line together?”

I would be grateful if my right hon. Friend could point to any examples of where something similar is being worked up elsewhere in the world, so that we can use it, leverage it in and put it into legislation.

The thing that we should look to is what we did on modern slavery. There are other countries that do this. California was the first place to have a transparency in supply chains measure. We would be world leaders, though, in transparency in supply chains on carbon, and that would give us a real edge with COP26 coming up.

I make this offer to my right hon. Friend the Minister. Would he work with me? Would he allow me time to work with his officials to work this up? I know it will take a bit of time and effort to get it through the Government clearing processes and reach collective agreement, but I believe it would give him and the Government a real global lead in how we tackle carbon emissions.

I thank my right hon. Friend the Member for Staffordshire Moorlands (Karen Bradley) for giving the House an opportunity to debate this extremely important issue. I am extremely happy to respond on behalf of the Government.

I wholeheartedly agree with my right hon. Friend on the importance of transparency in supply chains. I know the great work she did when she was an Under-Secretary in the Home Office, under the guidance of my right hon. Friend the Member for Maidenhead (Mrs May) who was, at the time, the Home Secretary. That work was signal legislation. It had a huge impact and I think it is having a huge impact. It was a remarkable piece of legislation and I commend them for that.

The importance of highlighting the transparency of carbon emissions in supply chains is also extremely important. My right hon. Friend the Member for Staffordshire Moorlands will know that I always had an open-door policy. She saw me a number of times before the lockdown—before the new normal, as she put it—and, as far as I was concerned, we had a very constructive discussion on this issue. I will just say to her that whatever happens in the next five minutes she should continue to engage with the Department and me on this extremely important issue. There may be a number of differences between her policies and ours, but I think there is a strong common strategic objective which we should pursue together. I am therefore very open to having more conversations with her.

More broadly, the House will recognise that the UK has long been a leader in the fight against climate change. We have managed to do that while achieving impressive rates of economic growth. Between 1990 and 2018, the UK managed to reduce carbon emissions by 43% while growing the economy by 75%. As that has happened, the UK has decarbonised its economy at the fastest rate of all G20 countries since 2000. Our carbon emissions today are at their lowest level since the 19th century. Once again, I pay tribute to my right hon. Friend the Member for Maidenhead. It was under her Administration that we passed the net zero carbon legislation last year which essentially made us world leaders, as my right hon. Friend the Member for Staffordshire Moorlands suggested.

I pay tribute to the work the Government are doing. Does the Minister not agree that the key is the development of offshore wind, particularly, of course, in East Anglia? Does he agree that a key issue is the ability to grow that sustainably by having a more joined-up infrastructure in wind farms?

After a number of years in the House, my hon. Friend shows himself very adept at crowbarring somewhat irrelevant issues, which are extremely pertinent to his constituency, into this narrow debate.

I join my hon. Friend in supporting offshore wind and perhaps less emphasis on onshore wind in places such as Staffordshire Moorlands.

Mr Deputy Speaker, you will know, with your experience, that some of these remarks are not necessarily in scope. [Laughter.] So I will continue by addressing the actual issue.

My right hon. Friend the Member for Staffordshire Moorlands mentioned COP26 in Glasgow next year, where we will be taking centre stage and a leadership position not only in driving our climate ambitions but in encouraging others on a global platform, our friends and allies across the world, to take up the fight against climate change and, we hope, pursue highly ambitious nationally determined contributions. During these difficult times, our commitment to COP26 and urgent climate action has not wavered. Businesses and people are at the heart of our strategy for tackling climate change. We know we can only get there with a strong green recovery.

On corporate transparency, my right hon. Friend’s aims are absolutely central to the strategy we should pursue. There are minor differences of detail. She will know that we introduced legislation last year and that we were one of the first countries to endorse recommendations of the Task Force on Climate-Related Financial Disclosures. We feel as a Government that some of this action should be more embedded before we go down the route that my right hon. Friend has suggested.

I would just say to the Minister that sometimes we have to lead, and this is an opportunity to lead and to be the first to do something really important.

Dare I say, we are leading—maybe not exactly along the lines that my right hon. Friend has prescribed, but we are taking leadership? As I have said to you, Mr Deputy Speaker—

The debate stood adjourned (Standing Order No. 11(2)).

Ordered, That the debate be resumed on Friday 15 January 2021.