Fourth Report - The UK's contribution to tackling global deforestation

Significant action is required to reduce the impact on deforestation of the UK’s consumption of agricultural products. While the UK is the 15th largest contributor to tropical deforestation in global terms, the intensity of UK consumption (measured in footprint per tonne of product consumed) is higher than that of China. This figure ought to alarm Ministers.

Consumption patterns in the UK which rely on the current global supply chain are unsustainable. Addressing these patterns is essential to the UK’s contribution to the alleviation of global biodiversity loss. The first step in addressing them is in recognising the need to reduce the UK’s overall consumption. We welcome the news that the UK Government has commissioned the Joint Nature Conservation Committee to develop a global environmental footprint indicator, but we are disappointed to observe that the Government has not yet made a commitment to setting a global footprint target using this indicator, so as to track progress made in reducing the UK’s global environmental footprint.

We reiterate the recommendation we made in our September 2021 report on The UK’s footprint on global biodiversity, which reflects that of the Global Resource Initiative Taskforce, that the UK Government should commence the process of setting an environmental footprint target with the aim of reducing the UK’s global environmental impact, including its deforestation footprint.

Understanding which forest risk commodities are contributing to deforestation, and on what scale, is essential for the UK and other nations to introduce effective legislation and policies. Monitoring and transparent data reporting are therefore crucial, including on how consumption contributes to deforestation. These are very complex undertakings, requiring global cooperation at the national government level and within the private sector. Complete and transparent data availability is essential for companies and the financial sector to be able to understand, and to reduce, exposure to deforestation in their supply chains or portfolios.

To ensure that the UK can measure and track progress, we recommend that the Government should continue to fund the development of a monitoring, measurement and reporting framework for UK consumption.

We recommend that the Government use its influence in all relevant forums to promote international data disclosure (and domestic disclosure of UK customs and industrial data) so as to improve the monitoring of forest risks in the UK and globally.

Illegal mining is increasingly recognised as a driver of deforestation in some regions. The Foreign, Commonwealth and Development Office has indicated that its programmes addressing deforestation are to be expanded to cover a wider range of forest risk commodities, beyond timber, and will expressly include mining. We welcome this explicit recognition of a broader range of drivers of global deforestation. (Paragraph 27) The UK’s contribution to tackling global deforestation 47

We recommend that UK consumption monitoring be developed to incorporate the monitoring of mined products, so as to support the Government’s programmes addressing the impact of mining-related deforestation.

Given the scale of government purchasing power, both centrally and across the wider public sector, the UK Government has an opportunity, and a responsibility, to drive best practice and to demand the use of sustainably sourced products.

We recommend that each Government Buying Standard be made mandatory for all large public sector bodies, including the NHS, the Armed Forces and HM Prison Service, as it currently is for UK Government departments and their partner organisations. Annual reporting on compliance against public procurement policies should also be mandatory for these large public bodies: the annual reporting should in each case indicate the proportion of overall goods procured which have been sourced from UK producers.

Sustainable government procurement presents a pathway to increasing the sustainability of supply chains. Government performance against existing sustainable procurement policies has been unimpressive to date. The 2020–21 Greening Government Commitments report indicated that ten departments had submitted information about their performance against the procurement commitment in that year. Given that 2020–21 was a year in which the pandemic had a significant impact, the Cabinet Office ruled that the data submitted “should not be considered as a representative measure of overall government performance against this commitment” and declined to publish the data submitted. We expect Ministers to require full reporting by their departments against the procurement commitment, and all other Greening Government Commitments, for 2021–22: in the interests of transparency and the encouragement of high levels of compliance, the data should be published in full in the 2021–22 annual report.

There is an opportunity to learn from the experience of timber and palm oil procurement, and to strengthen and extend these approaches.

We recommend that the GBS require all acquired forest-risk commodities (in addition to palm oil, timber and paper) to be certified as sustainably produced. (Paragraph 41) The UK’s proposed due diligence system under the Environment Act 2021

Current UK regulation is not sufficient when it comes to limiting non-sustainable deforestation. It relies too heavily on the laws in exporting countries and an assumption that that these laws will incorporate adequate provision for sustainability: as currently drafted the Regulations take control of the UK’s impact on sustainable timber production out of the UK’s hands.

We recommend that the Government bring forward proposals to amend the UK Timber Regulations so as not only to prevent illegally harvested timber being placed on UK markets but also to require all imported timber to be sustainably harvested. (Paragraph 52) 48 The UK’s contribution to tackling global deforestation

The Government’s consultation on proposals for Schedule 17 implementation ended in March 2022, but secondary legislation has not yet been brought forward and the Government has not yet committed to a date by which it can be expected. While we welcome the Secretary of State’s recent clarification of the initial commodities which are to be within scope, and the turnover threshold to which the Schedule 17 regime is to apply, many details of the proposed scheme remain unclear. We are concerned that this leaves businesses with uncertainty and impairs their ability to prepare properly to meet the requirements of the regime. Under the Glasgow Leaders’ Declaration on Forests and Land Use, the UK has committed to ending deforestation and forest degradation by 2030, and at COP15 global agreements were made to halt and reverse biodiversity loss by the same deadline. With less than seven years remaining until 2030, the UK Government should avoid all further delay to ensure that the UK plays its part in meeting these vital goals.

We recommend that the Government publish its proposed suite of regulations as a matter of urgency. Where regulations are to be subject to the affirmative procedure, Ministers must publish a clear timetable for drafts to be laid, approved by both Houses and brought into force, to allow those businesses likely to be within the scope of the regulations sufficient time to prepare.

The due diligence system established under Schedule 17 will prohibit the use of illegally produced commodities with reference to compliance with local laws. This means that products of legal deforestation will not be within the scope of the system, unlike comparable EU legislation. This is regrettable. Only 31% of deforestation globally is illegal; the wide variation in the strength of local laws on deforestation is a weakness of this approach, and there is the possibility of deregulation in response to the UK’s due diligence requirements.

We recommend that, in order to increase the sustainable use of forest-risk commodities, the Government should bring forward amendments to paragraph 2 of Schedule 17 to the Environment Act so as to prohibit UK businesses from trading or using commodities linked to deforestation activity as defined by the UN Food and Agriculture Organization, whether or not the activity is permitted by local legislation.

To be effective, the Government’s proposed approach requires the UK to work in partnership with producer countries and to reinforce (and in some cases, strengthen) their legal and policy provisions to counter deforestation. We therefore recommend that the proposed demand-side due diligence system is complemented by Government initiatives to support and build capacity in producer countries.

A phased introduction of forest risk commodities misses the opportunity to set early and clear expectations that deforestation is not welcome in any UK supply chains. While the Government’s announcement that four major commodities will be brought within initial scope of the Schedule 17 regime is welcome, the failure to include commodities such as maize, rubber and coffee within this scope does not demonstrate the level of urgency required to halt and reverse forest loss and land degradation by 2030. (Paragraph 81) The UK’s contribution to tackling global deforestation 49

We recommend that the Government’s proposals for due diligence legislation should include from the outset all forest risk commodities associated with a material UK deforestation footprint (soy, palm oil, cocoa, maize, beef and leather, rubber and coffee) rather than taking the phased approach which Ministers appear to favour. In the response to this report we expect the Government to set out the evidential basis for the claim that the commodities within initial scope are estimated to account for 64% of the UK’s tropical deforestation footprint, and to indicate the proportion of the UK’s global deforestation footprint estimated to be covered by these commodities.

A due diligence system is likely to require companies to comply with any human rights requirement included in local land use or land ownership laws. We observe that the legal status of customary land tenure rights of indigenous peoples and local communities (IPLCs) varies between nations. Unless customary tenure rights are explicitly recognised and protected under national law, IPLCs with customary land rights are vulnerable to rights violations.

We recommend that provision be made in the due diligence system—by amendment to primary legislation, if necessary—to ensure that products are not illegally produced in relation to land use and land ownership laws, including customary tenure rights.

Schedule 17 requires the Secretary of State to evaluate the effectiveness of the due diligence system in the third year following its full entry into force. The Act requires an evaluation of the impact of the regime on deforestation activity, but does not explicitly require an evaluation of the impact of the system on the human rights of indigenous peoples.

We recommend that the statutory evaluation of the Schedule 17 due diligence system address expressly whether the due diligence system has effectively supported the human rights of indigenous peoples to land, territories and resources.

The UK financial sector is a direct and indirect contributor to financing deforestation. Financial institutions cannot meet their deforestation policies or their net zero commitments without also addressing their exposure to deforestation through the companies they finance.

Information and data availability is one of the greatest challenges for financial institutions with regards to allowing them to assess and reduce their deforestation risk. We therefore welcome the Government’s championing of the work of the Taskforce on Nature-related Financial Disclosures. We observe that making nature-related disclosures mandatory would not obviate the need for mandatory due diligence for the finance sector under Schedule 17 to the Environment Act.

We recommend that the Government bring forward legislation to bring businesses in the UK financial sector within the scope of the Schedule 17 regime.

In order to support target 15 of the Kunming-Montreal Global Biodiversity Framework, we recommend that the Government bring forward proposals to legislate for mandatory 50 The UK’s contribution to tackling global deforestation disclosure of nature-related impacts by businesses, including the financial sector, on the basis of the November 2023 recommendations of the Taskforce on Nature-related Financial Disclosures, and should set a clear timetable for doing so. (Paragraph 95) Global agreements to tackle deforestation

The UK Government has played a significant role in brokering agreements to reverse deforestation and has been influential in increasing the profile of nature at climate COPs. For the first time, many nations and significant private sector institutions have committed to action on deforestation: substantial financial commitments on deforestation have also been made.

Decisive action must follow these commitments if the Kunming-Montreal goal of halting and reversing biodiversity loss by 2030 and the commitments of the Glasgow Leaders’ Declaration and subsequent COP agreements are to be met. The UK must lead by example, fulfilling its pledged funding commitments, continuing its diplomatic efforts to keep issues of deforestation and nature prominent in global discourses and restoring and conserving its forests at home.

It is encouraging to see the commitments made at COP26, COP27 and COP28 on deforestation which were accompanied by major funding commitments. Past commitments to mobilise finance for climate adaptation have not yet been fulfilled and commitments to restore nature remain relatively underfunded. In order to meet the commitments of the Glasgow Leaders’ Declaration on Forests and Land Use and the goals of the Global Biodiversity Framework by 2023, mobilising the promised funding is critical.

Whilst the Committee welcomes recent funding announcements to tackle deforestation, it is unclear whether these are in addition to the £1.5 billion previously committed to in the Global Forest Finance Pledge.

The UK Government should lead by example. We therefore welcome the recent confirmation that the UK is to maintain its flagship £11.6bn climate and nature funding pledge. The UK cannot step off the global stage in relation to its climate, nature and deforestation commitments. The Government should make it clear how the £1.5bn of funding specifically committed to activity to address deforestation is being spent. Greater transparency will ensure that this Government and future Governments can be held to account.

It is encouraging to see the IPLC donor pledge supporting the principle of the advancement of Indigenous Peoples’ and local communities’ forest tenure rights and rewards their role as guardians of forests and nature. However, extremely little funding pledged for nature has previously supported IPLC tenure rights, and even less has reached indigenous peoples and local community organisations directly.

We welcome the commitment of the Foreign, Commonwealth and Development Office to fund capacity building initiatives for IPLC grassroots organisations. We recommend The UK’s contribution to tackling global deforestation 51 that, in order to ensure that this funding is used to maximum effect, Ministers ensure that the greatest possible proportion of UK funding is disbursed so as to reach IPLC organisations directly and verifiably. (Paragraph 129) Global cooperation to tackle deforestation

We welcome the Government’s commitment to a programme to continue the work of the of the Forest Governance, Markets and Climate Programme, and the potential extension of its scope to include mining commodities.

We recommend that the scope of the next phase of the Forest Governance, Markets and Climate Programme should be kept under regular review to ensure that the most significant drivers of deforestation are included.

We look forward to the publication of the report of the Government’s review of the effectiveness of FLEGT-VPA programme. The evidence we have received indicates that the experience of the FLEGT-VPA varies greatly depending on the country context.

We recommend that the report of the Government review should be shared widely, including with the relevant EU authorities and Member States preparing for the successor programme to FLEGT-VPA. Lessons learned should be incorporated thoroughly into future UK programmes so as to address most effectively all deforestation activities driven by production of forest risk commodities. Where appropriate the review’s findings should take a country-based approach, analysing the country-specific factors which have contributed to particular outcomes.

Indigenous peoples and local communities (IPLCs) are vital protectors of forests: but they themselves are victims of the negative effects of deforestation activity, which can include violence and deprivation of livelihoods. Ensuring the full and meaningful participation of IPLCs in negotiations to address deforestation activity is therefore crucial: it is encouraging that this appears to be recognised in Government.

Security of tenure rights for IPLCs is essential to measures to address deforestation. The UK Government can make a significant contribution to ensuring security of tenure. We recommend that the Foreign, Commonwealth and Development Office

We recommend that the Foreign, Commonwealth and Development Office continue to address measures to improve tenure rights through its development programming. Ministers must ensure that IPLCs are supported in the protection and restoration of forests: one means of achieving this objective is by promoting the inclusion of IPLC representatives in all relevant global and national negotiations.

For the UK Government to make good on its declared intention to put environmental sustainability measures at the heart of global production and trade, Ministers must ensure that biodiversity considerations are more consistently incorporated into its trade agreements and operations. (Paragraph 168) 52 The UK’s contribution to tackling global deforestation

Ending commodity-driven deforestation requires decisive action by all major consumers. While the UK and EU markets represent a relatively high proportion of global consumption of some forest risk commodities, such as cocoa and coffee, they account for a relatively small proportion of others, including soy and palm oil, compared to other large markets such as the Asia Pacific market. In order to have maximum impact on efforts to halt and reverse deforestation, the UK’s engagement must therefore extend to major consumers of forest-risk commodities in other markets.

If the UK Government is to persuade other major consumers to act on their deforestation footprint, it is important that the UK leads by example. We recommend that Ministers use the opportunity of bilateral and multilateral trade negotiations to encourage consistently high environmental and social standards, so as to accelerate the transition to sustainable supply chains which minimise deforestation risk.

We reiterate the recommendation of our 2021 report on the UK’s footprint on global diversity: sustainability impact assessments must be conducted for all future trade agreements. Ministers must develop strategies for the effective monitoring and delivery environmental net gains, including gains through halting and reversing deforestation, in its negotiations for and implementation of the UK’s trade deals. (Paragraph 171) The UK’s contribution to tackling global deforestation 53