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Financial Services and Markets Bill [HL]

My Lord, I speak in favour of this group of amendments on re-embedding climate and nature considerations into UK financial institutions’ investment decision-making. I speak in particular in favour of Amendments 90 and 97A. I start by thanking the Minister for his constructive conversation with me earlier this week. I am reassured that he shares the ambition to see this through and has the steel to deliver it. The Minister understands the urgency of the risk that climate change presents to the financial stability of the City and he is the right messenger, not least because he used to work for Hermes. Hermes, the messenger of the Greek gods, was known for his great cleverness and speed. He wears winged sandals and carries a staff. I can vouch for that staff.

Amendment 90 in my name was tabled with the support of the noble Baronesses, Lady Young of Old Scone and Lady Coffey, and the right reverend Prelate the Bishop of Manchester. All co-signatories have been long-standing passionate advocates of getting

this legislation on to the statute book: it would be patronising of me to thank them when they have already done so much. I am delighted to see the noble Baroness, Lady Boycott, in her place, because she too has been a passionate, outspoken advocate of legislation against deforestation. Amendment 90 would simply require regulations under Schedule 17 to the Environment Act 2021, which refers to the

“use of forest risk commodities in commercial activity”,

to be made within six months of this Act receiving Royal Assent and would commence the Treasury review into deforestation-linked finance.

4.45 pm

My Amendment 97A was submitted to come after Clause 22 and was in fact accepted by the Public Bill Office. It was only very late in the day yesterday that I learned that it had been moved to after Clause 47, so my attempt to move it to a possible vote earlier in the day was scuppered, which I admit leaves me a little disappointed. Amendment 97A is exactly the same as Amendment 90, with the small addition of specifying the FCA as the verification and enforcement agency. In his response to this amendment, if the Minister feels that the FCA is not the right regulator, where does he think that responsibility lies? That is a question to which I would welcome an answer.

These measures are five long years overdue, as the noble Baroness, Lady Hayman, has said, and the prevarication must end, especially now that the EU has agreed its deforestation regulations. They will be implemented on 30 December 2026—this year—and will apply to Northern Ireland. We on the mainland will be operating under different rules. That is an untenable position. The Government’s announcement in June this year that they will consult and deliver legislation to align next year is not really good enough. We do not know when and we do not know what it will say. Businesses such as the UK Cocoa Coalition, whose members include Sainsbury’s, Waitrose, Ferrero, Hershey and other very big organisations, are calling for certainty to plan investment and growth: a clearer timetable for the UK’s forest risk commodities regime would avoid further uncertainty for both businesses and investors. Companies are already making decisions about supply chain management, traceability systems and compliance processes in response to the EUDR and other international requirements. Clarity on the UK’s timelines and next steps would support investment, facilitate preparation and provide confidence that the UK is moving towards a coherent and predictable regulatory framework.

We have been around this particular block a number of times and, as Einstein said, it is a sign of madness to do the same thing time and again and expect a different result. It will not surprise the Minister if I say that, had circumstances been different today, I would have pushed my Amendment 90 to a vote. Instead, I hope he will give an assurance from the Dispatch Box that he gets it; that climate and destruction of carbon sinks—i.e. deforestation—are two sides of the same coin. If climate is a financial risk, then so too is deforestation, and investment decisions will be poorer if these considerations are not taken into account.