Dominika Gregušová, Pexels

Finance sector should be regulated, MPs told

Insight / 21 Oct 2022

The UK finance sector must be regulated to ensure it is not profiting from tropical deforestation, and human rights must be protected. This was the message conveyed to members this week at the All Party Parliamentary Group (APPG) on Global Deforestation session on stopping UK financial flows to deforestation and human rights violations.

Apu Miguel Guimaraes from the Shipibo – Konibo Peoples and vice president of AIDESEP, the Interethnic Association for the Development of the Peruvian Rainforest (Peruvian National Indigenous Rights Organisation) highlighted the case of Santa Clara de Uchunya, where the community has been moved off its ancestral land to make way for palm oil plantations.

Numerous human rights violations have stemmed from the dispossession of their land, and a number of community members have lost their lives defending their territories and way of life. In 2021, 200 individuals globally were murdered for standing up for human rights, land rights and the environment.

Jonathan Gorman, representing the Global Resource Initiative Taskforce (GRI) secretariat – who earlier this year published a report highlighting the need for action to address the links between UK finance and deforestation, said such atrocities in supply chains were “terrifying”.

The GRI taskforce, which brought together representatives from business and civil society to look at the deforestation footprint of UK supply chains, recommended government action was needed to ensure the UK was not importing products linked to deforestation or human rights violations. The UK government had responded through the Environment Act, introducing mandatory environmental due diligence for companies in forest risk supply chains (but not addressing human rights issues).

“Government action is needed to apply similar principles to the finance sector,” Gorman said. “It would be inconsistent and unacceptable to allow financial institutions to benefit from activities linked to illegal deforestation.”

The GRI finance report highlights that over £300bn of UK pension fund investments alone are in companies, sectors and financial institutions with high deforestation risk, with Global Canopy’s Forest 500 data showing that almost two thirds of the 150 financial institutions with the greatest exposure to companies in forest risk supply chains do not have a policy on deforestation.

Sir Ian Cheshire, Chair of the Global Resource Initiative (GRI) Taskforce said there was a genuine appetite for collective action among the business community.

“Business wants a solution,” he said, adding “There has been a shift in understanding and we need to build on that.”

Anna McMorrin MP, co-chair of the APPG on Global Deforestation said the shift to net zero represented an opportunity for change, but added that change must respect the role of Indigenous peoples who have acted as guardians of the land for generations.

Veronica Oakeshott, Head of Forests Policy and Advocacy at Global Witness, urged MPs to find a practical solution.

“The current risks for finance are not significantly material,” she said. “This is why voluntary initiatives are not working. They are not fast enough to deal with the challenge that we have.”

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