No, it is not the Plate. It is not the River Nile, and it is not the Amazon, but if anyone thought it was the Amazon, they are getting close. The river I am speaking of is actually, for the most part, invisible and airborne. Every day, 20 billion cubic metres of water—that is 20 billion metric tonnes of water—is pushed up into the atmosphere by the forests of the Amazon basin. That water does not stay in the atmosphere; it is not like evaporation from the oceans. It is generated by a unique combination of the organic forest interacting with the inorganic atmosphere. It is seeded with microscopic spores of pollen and fungi. These make the Amazonian clouds heavy, which means that all that water rains back down across the continent, replenishing the forest and irrigating a land mass that otherwise would probably be a desert. The Amazon river as we know it—all 4,000 miles of it—pours just 17 billion tonnes of water into the Atlantic ocean every day, so the invisible river of transpiration beats it by 3 billion tonnes a day. Imagine the power it takes to push 20 billion tonnes up into the atmosphere.
On Brazil’s border with Paraguay is the Itaipu dam, the second most powerful hydroelectric power station in the world after the Three Gorges dam in China. Itaipu’s capacity is 14 MW. That is about four and a half times the capacity of Hinkley Point C, if Hinkley ever manages to get built. We would need 5,000 Itaipu power stations to push the 20 billion tonnes of water up into the atmosphere that that forest does every single day.
Forests are amazing. The Amazon is not alone, of course. The second lung of our planet is the Congo basin in Africa, and while we are talking about famous dams, it is worth noting that the Aswan dam, some 2,000 miles away, relies for 85% of its power on water that the Congo forest transpiration has deposited into the Ethiopian highlands, coming down through the Nile to Aswan.
Forests are amazing, or, to be a little more scientific about it, forest ecosystems provide critical and diverse services to human society. They are a primary habitat for a wide range of species. They support biodiversity and conservation. Forest growth sequesters and stores carbon from the atmosphere. It contributes to regulation of the global carbon cycle and mitigates climate change. Healthy forests produce soil and conserve it. They stabilise stream flows and water run-off, preventing land degradation and desertification. Forests reduce the risks of natural disasters such as droughts, floods and landslides. They contribute to poverty eradication and to economic development by providing food, fibre, timber and other forest products for subsistence and income generation. They are a key genetic source for the pharmaceutical industry, contributing to global human health, and they even serve as sites of aesthetic, recreational and spiritual values in so many cultures.
Forests may be home to 80% of land species, but they are also vital to the survival of our own. They produce 40% of the oxygen we breathe, support 1.6 billion livelihoods and play a crucial role in holding back a climate disaster on a massive scale.
What about deforestation? That has been happening for a long time. In fact, since the end of the last ice age, the world has lost one third of all its forests—that is about 2 billion hectares, or two United States of Americas. But even though it has been happening for about 11,000 years, the rate of acceleration is rather recent and incredibly alarming. More than half of all the forest lost since the Pleistocene has gone in the last 125 years—1.1 billion hectares gone.
The drivers of deforestation are well known. Agricultural expansion remains the single largest cause, and according to the United Nations Food and Agriculture Organisation, is responsible for 88% of global deforestation. The Intergovernmental Panel on Climate Change says that it contributes 11% of global carbon dioxide emissions. Similarly, in its report on deforestation in January last year, the Environmental Audit Committee identified what we might call the seven deadly sins of deforestation—the seven commodities that are driving 90% of global deforestation: beef and leather, soy, timber, palm oil, paper, rubber and cocoa.
However, the EAC was only picking up on the Global Resource Initiative taskforce’s recommendations from 2020. I commend the previous Conservative Government for establishing the GRI taskforce under the chairmanship of Sir Ian Cheshire as part of the 25-year environment plan. Sir Ian realised that if the market was to transition to sustainable commodity supply chains, it would need Government to adopt a strategic, co-ordinated approach to align and accelerate action.
The Government’s response to the taskforce’s 14 recommendations showed real understanding of the issues. They said:
“When nature’s free services fail, the poorest people suffer first and worst. Over a billion people rely directly on forests for their livelihoods—including indigenous peoples who look after around 80% of biodiversity.”
They continued:
“Protecting and restoring mangroves, forests, and peatlands could provide around a third of the most cost-effective climate change solutions we need, while supporting species and helping communities adapt to become more resilient. Shifting towards more sustainable forms of agriculture would not only protect the planet’s lungs, but it could add a further $2.3trn in productive growth to the global economy and create a further 200 million jobs by 2050…We know that there is no pathway to Net Zero emissions—or indeed the Sustainable Development Goals—that does not involve protecting and restoring nature on an unprecedented scale. But despite the huge contribution nature can make, it attracts just 3% of global climate finance.”
I suspect that the excellence of that written response is directly attributable to the noble Lord Goldsmith. But an excellence of understanding requires an excellence of follow-through, and that was less excellent.
It is true that in response to the taskforce’s recommendation to mobilise
“a global call for action to tackle deforestation and build sustainable commodity supply chains in the lead up to COP26”,
the Johnson Government did deliver a call to action—but a call to action and action are two different things. Yes, more than 100 global leaders signed up to the pledge to halt deforestation by 2030, and, yes, 30 financial institutions, managing nearly $9 trillion in assets between them, promised to disclose the
“deforestation risk and mitigation activities in their portfolios”
by 2023, and to eliminate harmful practices from their portfolios by 2025. But ’23 has come and gone. Today it is 2025, and we are still not eating the
“guilt free chocolate…that’s carbon not calorie guilt free”,
that Boris Johnson boasted about. We are nowhere near on track to halting forest loss by 2030.
One of the things that fuels people’s disillusionment with politics is that so much fanfare surrounds policy announcements, but so little of the hard graft of delivery gets done after the announcements have been made. The public understand that our diets and supply chains are deeply entwined with this issue. We may not see the bulldozers or the farmers who are eking out a living with slash and burn, but the products we consume every day, from chocolate bars to cooking oils, link us directly to the deforestation that we say we want to stop. If we told the public that we had just destroyed the entire New Forest, they would be horrified, yet that is the area of forest that our failure to enact the due diligence recommendations has eradicated since 2021. With that knowledge comes the understanding that we are complicit.
But there is only so much that people can do through their individual action and choices. That is why the taskforce’s recommendations about a due diligence obligation were so important. It said that the Government should “urgently” introduce
“a mandatory due diligence obligation for companies that place commodities and derived products that contribute to deforestation on the UK market”,
and that they should take action to ensure that similar principles are applied to the finance industry. That due diligence obligation would require companies to analyse the presence of environmental and human rights risks and impacts within their supply chains, take action to prevent or mitigate them, and publicly report on actions taken and planned. The financial sector would also be covered by a similar mandatory due diligence obligation, requiring it to exercise due diligence to ensure that its lending and investments do not fund deforestation.
The taskforce demanded action, and in the Environment Act 2021 it got a pale version of it. The Act introduced measures to prohibit UK businesses from using commodities grown on illegally deforested or occupied land. At the COP28 summit in Dubai in 2023, the UK delegation announced the list of commodities that could be included in environmental law and explained that businesses with more than £50 million in global annual turnover that use more than 500 metric tonnes of commodities a year would need to source from land they could prove was not illegally deforested.
Although well intentioned, by focusing on legality, the Act failed to hold out an absolute standard of whether the supply chain was in fact involved in deforestation. It ignored the fact that politicians such as Jair Bolsonaro would simply change their domestic legislation to grant legal status to what had previously been illegally deforested land, and so get round the Act’s intention.
The failure to impose adequate due diligence on companies, banks and finance houses and institutions has meant that, since the Glasgow declaration, UK banks have provided more than £1 billion to companies that present a forest risk. Last July, UK investors still held £1.4 billion-worth of assets and shares issued by these companies. The largest 50 of those investors make up 99% of the total UK forest-risk investments, yet 18 of them were actually signatories to the net zero asset managers initiative. Sadly, just eight have made any clear public commitment to eventually removing deforestation from their portfolios. That leaves 42 that should be ashamed of themselves.
Three names stand out, but for all the wrong reasons: HSBC, Barclays and Standard Chartered. Between them, those three banks have provided 97% of the £4.5 billion-worth of credit lines for forest-risk companies since the Paris agreement was signed in 2015. It is not just in government where there is a gap between policy and action. In 2017, HSBC committed
“not to provide services to customers either directly or indirectly involved in deforestation”.
In fact, it has provided credit lines amounting to £1.9 billion to forest-risk companies such as JBS, the world’s largest meat company, which, despite a record of corruption and forest destruction, just last week was approved by the Securities and Exchange Commission to list on the New York stock exchange, giving it access to new sources of finance and capital markets. It is, of course, just a few months since JBS dropped its net zero by 2040 climate pledge, claiming, “Well, it was never a formal commitment.”
The Environment Act was an important marker that the UK takes seriously its role in the global supply chain, and that it wants to lead the way and manage the responsibility that comes with it. But a marker only stands in place of action for so long. Four years later, it has become an ironic sign of failure.
UK financial institutions continue to bankroll deforestation. Trade agreements lack meaningful environmental safeguards, and indigenous land defenders face daily violence and intimidation. Unsustainable logging fuels forest destruction; weak governance and corruption continue; and infrastructure projects and mining operations further encroach on forested lands, fragmenting ecosystems and threatening indigenous territories. Land tenure insecurity, poor enforcement and a lack of economic alternatives all conspire to make deforestation a systemic problem.
There can be no one silver bullet but, my goodness, there must be a desire to start. With COP30 this November being hosted in Brazil, there is a compelling case to move from intention to delivery. First, the Minister knows only too well that we must urgently expand the due diligence regime to cover all forest-risk commodities, whether legal or illegal, under producer country law. We should introduce criminal liability for companies knowingly profiting from deforestation, and require UK banks and investors to disclose their deforestation risk.
There will need to be a phased timeline, but my question is not when it will be done but why it has not been done already. If we understand where the blockage in the machinery is, perhaps we can help apply a bit of pressure to assist the Minister in getting it done. I know she will be keen to do so. Some say the blockage is in the Cabinet Office, some say Northern Ireland and the Windsor framework. I would point out to the Minister and her ministerial colleagues that the strong due diligence measures of the European deforestation legislation are due to come into force in December this year. It would be best if the regulation of the whole of the UK were consonant with that. Will the Minister set out a clear timeline for the full implementation of schedule 17 to the Environment Act?
Secondly, the UK must champion a trade model that values environmental protection and human rights. As the UK is in advanced trade negotiations with the EU and India, and to a lesser extent with the USA, what discussions has the Minister had with her colleagues in the Department for Business and Trade about the need to embed deforestation safeguards and environmental standards in all future trade agreements? I immodestly recommend to her the blueprint set out in the Labour party’s green paper of 2018, entitled, “Just Trading: What would a just trading system look like?”, when I was shadow Trade Secretary.
Thirdly, the tropical forests forever facility—TFFF—championed by Brazil, will inevitably assume centre stage as we progress towards Belém and COP30. By using arbitrage between the cost of long-dated Government bonds and loans and the returns of a more diversified portfolio, the TFFF fund seeks to provide a long-term payment for conservation and restoration of tropical forests. The facility would help to address a significant market failure, placing a value to the ecosystem services that those forests provide, and returning that to the forest communities that curate them.
Will the Minister tell us how the UK will be involved in the TFFF? What conversations has she had with colleagues in international development? How will the fund prioritise and reward the role of indigenous and traditional knowledge partners in forest stewardship? She knows that indigenous peoples need specific legal protections, recognition and direct funding. Forests thrive when indigenous rights are upheld. Our aid and climate finance must prioritise those locally led solutions. That is fundamental, not just for nature and climate mitigation, but for justice, for addressing poverty and for human rights.
The establishment at the convention on biological diversity COP16 meeting in Rome of the Cali fund, which commits 50% of its resources to indigenous communities, was an overdue recognition of their role as custodians of forests and the nature and biodiversity that make them. I ask the Minister to update the House about the steps our Government are taking to help operationalise that fund, and to ensure that its resources reach those local communities quickly and without loss. Can she tell us whether and how indigenous communities are represented on the fund’s board of management, and how the Cali fund will work alongside the TFFF? Is the UK planning to invest in the TFFF, and now with the 40% cut in official development assistance from 0.5% to just 0.3% of GNI, what will happen to the £11.6 billion that was ringfenced for climate in ICF3, and the £3 billion within that that was further ringfenced for nature?
After years of declining indicators, we now have an opportunity to reverse the trend of deforestation. I am proud of the direction that our Labour Government have taken since July, from creating a special envoy for nature to committing to deliver three new national forests. Domestically, the Government are investing up to £400 million in tree planting and peatland restoration over 2024-25 and 2025-26. However, if we are to lead globally we must also act globally, and that includes how we mobilise capital. Public funding is crucial, but on its own it is not enough. We need to unlock private finance to support conservation and sustainable development, especially in regions safeguarding the planet’s remaining great forests, and that means scaling up tools such as green bonds, blended finance and debt-for-nature swaps. The City of London can and should be a hub for that kind of innovation, not only for climate finance, but for nature-positive finance.
We sometimes hear the environment and the economy pitted against each other, as if nature is a subset of the economy. Of course the truth is the other way round, because without nature and the ecosystem services that it provides, there is no economy, and the most vital part of that nature is our amazing forests.