On 5 October 2021, the Scottish Parliament is debating legislative consent to the UK Environment Bill which is making its way through the UK Parliament. A Supplementary Legislative Consent Memorandum was lodged with the Scottish Parliament on 9 July 2021, which details the Scottish Government’s position on two amendments to the Bill made during the Lords Committee Stage. The Net Zero, Energy and Transport Committee published its report on the LCM on 29 September 2021.
One of those amendments is about addressing the use of ‘forest risk commodities’, that is, products that are at high risk of being associated with illegal deforestation, including abroad (this is explained further below). It relates to a developing area of global environmental policy and law – seeking to tackle drivers of greenhouse gas emissions and biodiversity loss associated with consumption, including through regulating businesses in respect of their supply chains and due diligence. This blog explains what the amendment means, where it has come from, and what additional questions it poses for environmental policy in Scotland.
Why was a Supplementary LCM lodged?
The UK Environment Bill is an extensive UK Government Bill containing provisions on post EU-Exit environmental governance, a range of environmental targets and provisions across policy areas including waste, water, air quality and chemicals. Most of the Bill applies in England only. However, significant provisions in the Bill also apply to Scotland, Wales and Northern Ireland. A previous LCM relating to the UK Environment Bill was lodged with the Scottish Parliament in 2020. The LCM was reported on by the Environment, Climate Change and Land Reform Committee and by the Delegated Powers and Law Reform Committee. A Legislative Consent Motion was voted on and agreed to by the Scottish Parliament on 12 November 2020.
The Bill is currently at “report stage” in the House of Lords (one of the final stages in the law-making process at Westminster) and a substantial number of UK Government amendments were tabled during the Lords Committee Stage. It is the view of the Scottish Government that two UK Government amendments fall within the legislative competence of the Scottish Parliament and, as such, require a supplementary memorandum to be lodged. The two amendments in question (the focus of the Supplementary LCM) relate to different areas of the Bill:
- An amendment regarding the use of forest risk commodities in commercial activities, aimed at preventing the use of those commodities where relevant local laws have not been complied with. This is a new area of the Bill, there has been no previous scrutiny of this or related provisions in the Scottish Parliament as part of the first LCM.
- An amendment relating to the post-EU exit governance aspects of the Bill on guiding principles on the environment.
There is a dispute between the UK Government and Scottish Government in respect of both of these amendments. The UK Government does not consider that these amendments fall within devolved competence and, as such, has not sought consent from the Scottish Parliament. It is, however, the view of the Scottish Government that the two amendments fall within the legislative competence of the Scottish Parliament.
SPICe does not advise on legislative competence. However, the amendment to the Bill on forest risk commodities raises interesting questions in relation to environmental, net zero and circular economy policy, including on the levers to address the impact of supply chains in Scotland on global drivers of climate change and biodiversity loss. Those questions are the focus of this blog.
What are ‘forest risk commodities’?
The phrase ‘forest risk commodities’ means products which are associated with a high risk of links to illegal deforestation. Often, the term ‘forest risk commodities’ refers to products in the agri-food supply chain, such as coffee, cocoa, palm oil, beef and soya, and related products such as leather. Sometimes, products directly derived from trees are also included, such as pulp, paper and rubber. Sometimes, the forest risk product is the end product in itself, and sometimes it is an ingredient or component in another product.
Many of these products will be grown or harvested abroad but are used in UK supply chains. It is their use in the UK which is the focus of the proposals in the amendment, recognising that supply chains at home drive environmental impacts abroad.
What are the forest risk commodities proposals in the UK Environment Bill?
The amendment to the UK Environment Bill (clause 119 and Schedule 17 in the Bill as amended) makes it unlawful for certain businesses to use specified forest risk commodities in their commercial activities unless relevant local laws in the countries where the products are grown, reared or cultivated are complied with. The provisions set out a requirement for businesses in scope to undertake ‘due diligence’ to prevent the use of those products and report on their due diligence activities annually. In other words, businesses in scope must investigate, review, or otherwise formally take care to ensure that their supply chains do not include any forest risk commodities which have links to illegal deforestation.
The specifics of which businesses and which forest risk commodities would be in scope of the provisions would be determined by the UK Secretary of State and set out in secondary legislation (which, in the Bill as it stands at the moment would be UK-wide Regulations not requiring consent of Scottish Ministers). A product in scope must be a commodity that has been produced from a plant, animal or other living organism, and only if the Secretary of State considers that forest is being (or may be) converted to agricultural use to produce the commodity. Timber products are not in scope in this case.
Where do the proposals come from? Why are forest risk commodities a problem?
The twin crises of climate change and nature loss require countries to not only look at how they address drivers of emissions and environmental damage within their borders, but to look also at how consumption and supply chains might be driving those issues abroad. Consumption of products and materials accounts for an estimated 74% of Scotland’s carbon footprint for example. Each year approximately 12 million hectares of forest are destroyed worldwide. This deforestation, together with agriculture and other land use changes, is responsible for roughly 25 per cent of global greenhouse gas emissions. A key driver of global deforestation is for production of various commodities.
These specific proposals are the result of a process looking at environmental impacts abroad from UK supply chains. In 2019, the UK Government appointed a Global Resources Initiative Taskforce, which convened businesses and environmental organisations to “drive more resilient and sustainable food systems that avoid deforestation and environmental degradation overseas, while supporting jobs and livelihoods.” The Taskforce produced a final report in March 2020. With regard to the need to bring supply chains (and commodities like beef, soya, palm oil and timber) more into the sphere of environmental regulation, the report states:
“Production of these commodities continues to drive forest loss and conversion of natural habitats that are critical for the 1.6 billion people that live or depend upon them, for the rich biodiversity and ecosystems they contain and for their globally significant carbon mitigation potential.
Commodity-driven forest loss and land conversion must be an urgent global priority.”
It also emphasises that a focus on forests should only be a first step – stating that wider environmental and human rights impacts associated with commodities must also be addressed and lessons extended to other food commodities, mining and other extraction.
The recommendations include:
- that the UK Government publish a Strategic Sustainable Commodity Action Plan
- to introduce a legally binding target to end deforestation within UK agricultural and forestry commodity supply chains by no later than 2030
- to introduce mandatory due diligence requirements for business and finance
- to strengthen and extend mandatory public procurement requirements
- to convene a global call for action on deforestation and sustainable supply chains in the lead up to COP26
- to mobilise global public and private funds to tackle deforestation and land-use conversion and support sustainable production and trade.
What would be the impact of these changes in Scotland?
The provisions as they are currently drafted apply to Scotland, and if passed, mean that Scottish businesses in scope would be required to ensure that they were not using any specified forest risk commodities that have links to illegal deforestation in their supply chains, and to report on their due diligence activities. This is likely to be required of businesses within the agri-food sector but could also be required of other businesses who use these products in their supply chains.
As the provisions are drafted, it is the sole responsibility of the Secretary of State to lay any secondary legislation in the UK Parliament. There is no requirement to seek the consent of the devolved administrations. The Scottish Government disagrees with this approach because it believes this to be a devolved matter, where, they state, the amendment has a clear environmental purpose.
What is the Scottish Government doing to tackle impacts in supply chains?
Although the Scottish Government disputes the forest risk commodities amendment in relation to legislative competence, it does however state that it agrees with the policy intention of the amendments. In giving evidence to the Net Zero, Energy and Transport Committee on 14 September 2021, the Scottish Government stated that the amendment is consistent with Scottish Government policy in relation to reducing the global impact of consumption in Scotland. However, as noted above, whilst the Scottish Government agrees with the policy direction, without a legislative consent provision there would be no formal role for Scottish Ministers (or the Scottish Parliament) in agreeing subsequent secondary legislation using the powers created by the amendment.
The Scottish Government recognises the significance of Scotland’s global footprint. Scotland’s Environment Strategy, published in 2020, sets out as part of its vision that we will seek to reduce the global impact of our consumption. The Strategy states:
“If everyone on Earth consumed resources as we do in Scotland, we would need three planets. Our consumption relies on resources extracted or used in other parts of the world… We have a significant carbon footprint, including emissions produced in Scotland, and emissions in other countries making goods which we import… Some of the commodities we import are associated with deforestation, water stress and other ecological pressures in different parts of the world.
… we will strive to ensure that Scotland lives within the sustainable limits of our single, shared planet; and, where we can, take actions which help to make the impact of our consumption and production on other countries sustainable. As a first step, we will gather evidence on the nature of Scotland’s international environmental impact.”
Whilst again it’s worth noting that SPICe does not advise on issues of legislative competence, this amendment does provoke an important question in the context of the climate and ecological crises – what are the devolved levers to tackle consumption impacts? With both COP26, the upcoming international climate conference, approaching in Glasgow, and COP15, the major international biodiversity conference, also preparing to get underway in China later this month, how can the Scottish Government seek to tackle environmental impacts that extend beyond Scotland’s borders?
In the previous Parliamentary session, the Scottish Parliament’s Environment Climate Change and Land Reform Committee recognised the potential for scrutiny in this area in its legacy report. It notes commitments in the Environment Strategy and states:
“While some powers in relation to tackling impacts of imported products and services are reserved, there may be devolved policy levers which could be explored in future – such as in environmental fiscal reform, the ability to influence supply chains through procurement and supporting sustainable business models in Scotland.”
There are also developments in EU law in this area which might may result in a new Directive on sustainable corporate governance or other legal changes, raising potential questions about alignment with EU standards (a Scottish Government policy commitment) if there are indeed devolved means to achieve similar goals.
With growing global awareness of how international supply chains can both support and hinder sustainable development, the forest risk commodities amendment has provoked questions for devolved environmental policy that are likely to return, as efforts to transition to a net zero, circular economy progress.
Anna Brand and Alexa Morrison