How financial institutions can also help tackle the issue of deforestation - Chris Grayling

The threat to the three biggest forest areas, in the Amazon, the Congo basin and South-East Asia, is particularly acute, and I am very proud that the United Kingdom has taken such a lead in the Congo in particular to try to halt deforestation and protect the key habitats there.

I know that Members on both sides of the House share my concern about the conduct of the Brazilian Government over deforestation in the Amazon, and I will continue to use opportunities in the House to push for change there, regardless of who wins power at the elections later this month.

The deforestation threats that remain around the world overwhelmingly result from commercial pressures driven by agriculture. Forests are being cut down to make way for palm oil plantations, for soya production or for cattle ranches. In some places, including Costa Rica and Gabon, governments have put a brake on deforestation, which is hugely welcome, but in too many places illegal deforestation is still destroying the natural world.

I am proud that this country has been at the forefront of creating legislative frameworks to help to address the commercial exploitation of forest-risk products.

What we have done should make it much harder for UK retailers to end up selling products from areas where illegal deforestation has taken place, but more needs to be done and that is what this Bill seeks to achieve.

Solving the problem of illegal deforestation is not just about identifying where agricultural products originate from, or the sustainability, or otherwise, of supplies of commodities such as timber; it is vital to follow the money as well and that is where we need another round of change.

We should all be proud that the UK has one of the tiny number of major financial centres around the world. The City of London is probably the most important part of our economy today, generating profits that bring taxes to the Exchequer and help to pay for things such as the NHS. But the City is also a place where deals are done that affect countries around the world, so it is a place where corporate responsibility is of exceptional importance.

I want the City to provide financial resource and advice to investment projects and to corporations around the world—that is a given, and the City does a good job of it.

In doing so, however, the institutions offering those services from the UK also need to be mindful of the impact the finance they provide has on the communities, countries and environments they work with.

Although the clearance of an area of rainforest is often carried out at a local level by people creating a new farmland area, rather than by big corporations, it is the corporations that then arrive to buy the products of that illegal land clearance.

The Government are rightly requiring retailers to know where products such as soy and palm oil come from, and that they do not sell products that are sourced from illegally deforested areas, but it has to be right that the financial institutions that bankroll those big corporations also apply a similar standard to the investments that they make, to the banking services that they supply, and to the shares that they purchase.

An abridged version of a speech delivered by former cabinet minister Chris Grayling during a reading of the Financial Investment and Deforestation Bill in the House of Commons.