INSIGHT by Global Witness
The UK government has rejected a key amendment to the Financial Services and Markets Bill that would force financial institutions to carry out mandatory checks on whether their investments are financing global deforestation and human rights, in a move Global Witness described as “utter hypocrisy”.
Despite backing from the Labour and Liberal Democrat frontbenches, the government rejected the amendment – pledging instead an open-ended review of deforestation. The Economic Secretary said the review process would be used to create “due diligence standards” but stopped short of saying mandatory checks would be brought into law.
The government’s position is in direct contradiction with its own expert taskforce on supply chain ethics, as well as businesses, campaigners and the House of Lords. Financial institutions handling more than £2.7 trillion also publicly backed the new law ahead of last night’s vote.
Cassie Dummett, Forests Campaign Lead at Global Witness, said:
“The UK government sells itself as a climate champion – but it has rejected yet another opportunity to turn rhetoric into action. It has firmly planted itself not only on the wrong side of business leaders, financial institutions, and their own experts – but also communities whose homes and livelihoods are being destroyed by rampant deforestation.
“It is utter hypocrisy for the UK government to claim they are climate leaders whilst simultaneously failing to curb the billions of pounds being poured into environmentally damaging activities by the City of London. Today’s disappointing outcome has pulled into question their commitment to tackle the climate crisis. Despite their many promises, they have kicked the can down the road on deforestation with another open-ended “review”.
“The British public – already appalled at having their pensions fund deforestation – will see this for what it is: a total failure to treat the climate emergency with the urgency it deserves. We simply cannot afford to waste more time conducting reviews, when we already have a viable blueprint to end deforestation. The EU is looking into a similar law to stop finance driving deforestation, but the UK today proved missing in action.”
Baroness Rosie Boycott, who led the campaign for the amendment in the Lords, said:
“We must do everything we can to avoid our current descent into a nature-depleted chaos. What is good for forests is good for the economy and that is why MPs from across the political spectrum want to cut off the money pipeline to deforesting projects abroad.
“The mandatory due diligence law I’ve been fighting to introduce is long overdue. We must ensure UK finance uses the information already available to them to stop lending to the most egregious companies who deforest time and again.
“Rishi Sunak promised to act on biodiversity loss without delay at the G7. The public and private sector want this law and by passing it, we can be on the right side of economic history. Back in 2021, Rishi Sunak promised he would make London the world’s first net zero financial centre. When will he deliver, if not now?”
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