The impact of UK overseas aid on environmental protection and climate change adaptation and mitigation

Written evidence submitted by The Co-operative Group

SUMMARY

· This submission is a response from The Co-operative Group (The Co-operative) to the Environmental Audit Committee’s inquiry into the impact the UK ’s aid programme has on environmental protection and climate change measures in developing countries.

· The Committee has invited organisations to submit written evidence setting out their views on this issue, including on whether financing mechanisms under Government influence (such as the Export Credit Guarantee Department (ECGD)) fully support environmental protection and climate change action in the developing world. The Committee has also welcomed hearing about particular aid projects which tackle environmental/climate change issues successfully. To this end, this submission includes:

- A brief overview of The Co-operative’s work to combat climate change and tackle global poverty;

- Examples of The Co-operative’s own development projects which tackle environmental/climate change issues successfully;

- And The Co-operative’s public policy position in relation to the ECGD as a financing mechanism under Government influence, which has an impact on environmental protection and climate change in the developing world.

INTRODUCTION

1 The Co-operative is a unique family of businesses, jointly owned and democratically controlled by over 6 million members. We are the fifth largest food retailer, the third largest retail pharmacy chain, the number one provider of funeral services in the UK . We also have strong market positions in banking and insurance. The Co-operative employs 120,000 people, and has around 4,800 retail outlets and branches.

2 Taking a responsible approach to business has been a guiding principle of The Co-operative since its inception. We are proud to have led UK businesses both on our approach to climate change and through our initiatives to tackle global poverty .

3 The Co-operative’s approach to addressing the issue of climate change is five-fold, embracing: energy efficiency, support for renewable energy, carbon offsetting, the provision of finance, and influencing public policy. This begins with ensuring sustainable business operations such as :

· In the last three years, we’ve achieved an absolute reduction of 21% in our operational greenhouse gas emissions.

· By 2012, we will generate 15% of our energy requirements from sustainable sources, including from our wind farm at Coldham in Cambridgeshire.

· During 2009, over 98% of our electricity was sourced from good quality renewable (or green) sources, such as wind and water power.

· We’ve made combating climate change a community investment priority. For example we’ve invested £2m in our Green Energy for Schools programme and we’re supporting the development of community owned renewables, such as the Torrs Hydro project in New Mills.

4 Strong business credentials in the UK have allowed The Co-operative to lead on initiatives to tackle climate and global poverty challenges:

· Climate change campaigning, including the Big Ask in 2007, which resulted in the Climate Change Act 2008 becoming law. We are also currently campaigning against tar sands development in Alberta, Canada.

· Tackling global poverty, through ethical trade, co-operative support, ethical finance and campaigning:

- Becoming the first major retailer to champion Fairtrade, and maintaining consistently higher sales of Fairtrade products for the size of our business than our competitors, with Fairtrade products in every one of our 2,900 Food stores across the British Isles. This is made possible by strong links with overseas suppliers.

- Investing £7m a year into co-operative support initiatives, in overseas co-operative development; large-scale water, sanitation and green energy projects; and products and services that help our customers and members raise money for global poverty charities.

- Pioneering ethical financial policies, meaning we’ve refused over £300m of bank finance, to date, from organisations that exploit people in developing countries or undermine human rights.

- Campaigning on global poverty issues, from trade justice, to human rights, to climate justice. We are currently campaigning to tackle the ‘unfinished business’ of Third World debt, calling for reform of the Exports Credit Guarantee Department (ECGD).

· Furthermore, in 2009 we supported The Wave campaign, mobilising 2,500 of our members to join the march in London to call on world leaders at the UN Copenhagen Summit to agree a safe and fair climate change deal for developing countries.

5 We also recognise the intrinsic link between climate change and global poverty:

· We are committed to reducing the carbon footprint of products, but never at the expense of the world’s poorest.

· We undertake carbon offset projects in developing countries, which not only reduce carbon dioxide emissions but offer significant social benefits to the communities involved.

· We support large-scale projects in communities in our supply chain, which combine improved access to water, sanitation and green energy.

EVIDENCE

6 In this submission we will provide two examples of The Co-operative’s Tackling Global Poverty work, relating to the impact of UK overseas aid on environmental protection and climate change adaptation and mitigation.

Tackling Global Poverty initiatives with positive impacts on environmental sustainability and climate change

7 Millennium Development Goal (MDG) 7 is to ‘ensure environmental sustainability’ and includes targets on reversing the loss of environmental resources, reducing biodiversity loss and improving access to safe drinking water and basic sanitation. Many of The Co-operative’s Tackling Global Poverty initiatives contribute to progress on MDG 7, with two specific examples given below.

Water, sanitation and green energy projects

8 The World Health Organisation has calculated that for every $1 invested in water and sanitation, $8 is typically returned in terms of money saved through improved health and productivity.

9 The Co-operative believes the combination of improving access to water, sanitation and green energy helps to improve basic conditions and hence provides an important platform for future successful development. We are therefore funding and delivering water pumps, toilets and either fuel-efficient cooking stoves or solar power solutions, to farmers and workers in our supply chain, including those in Malawi , Panama and Mozambique . For example:

· We’re supporting our own-brand Fairtrade sugar and tea producers and their communities in Malawi; in total some 30,000 individuals. Over several years these projects will provide new boreholes, latrines and hygiene education to community members. Such improvements in sanitation and water access should help reduce the spread of disease and also help stimulate other positive developments, such as improved school attendance. In areas where over 90% of households typically use wood as their primary cooking fuel, tree planting and agroforestry is further helping address deforestation and environmental degradation, along with support to set up fuel-efficient stoves networks. These stoves, which typically retail at equivalent to around £1.40 each, substantially reduce both wood needed and time spent cooking compared with traditional open fires. Work on the ground is being led by Concern Universal (sugar) and Oxfam (tea) and involves a great deal of community sensitisation and participation to ensure longer-term sustainability and success.

· In Mozambique, we are supporting a project, via Save the Children, to provide boreholes, latrines and sanitation education in an area where less than 10% of people have access to clean water and sanitation. Additionally, a solar-powered facility is being constructed to pump water for storage, provide power for lighting in schools and to charge mobile phones.

In addition, The Co-operative Pharmacy is working in partnership with UNICEF, on a large-scale project in Togo to help deliver a step-change in sanitation. The project is helping to build toilets and handwashing facilities in 390 villages, benefiting over 190,000 people.

10 The success of these projects is already apparent. For example, during the first year of the Malawi sugar project, significant progress has been made, with thousands of community members and school pupils gaining access to clean water, improved sanitation and fuel-efficient cooking stoves. Networks have also been set up, such as water point management committees, school sanitation clubs, village natural resources management committees and stove manufacturing groups, which are engaging with the communities and schools to promote the project outputs, and which have also received training to help ensure the longer-term sustainability and success of the project. The projects demonstrate that targeted aid that enables people in developing nations to provide their own solutions is the most effective use of investment.

Carbon offset projects

11 The Co-operative offers carbon offsets with its mortgages, holidays and insurance policies, which fund projects in developing countries. These projects, delivered via Climate Care, not only reduce carbon dioxide emissions, but offer significant social benefits to the communities involved. The Co-operative is currently supporting the following carbon offset projects:

· Energy-efficient cooking stoves in Cambodia

Energy-efficient cooking stoves reduce the amount of wood needed for cooking, which means less CO 2 is released. The reduced demand for wood helps protect Cambodia’s forests as well as reducing household spend on fuel by around 20% compared to standard stoves. The stoves also emit fewer airborne particles and so can improve indoor air quality, which has attendant health benefits. It is estimated that over 330,000 people will ultimately benefit from the installation of energy-efficient stoves in Cambodia derived from 2009 offsetting activity.

· Treadle pumps in West Bengal and Uttar Pradesh in India

These manual pumps are used to irrigate fields outside the monsoon season. They provide a more sustainable and affordable alternative to expensive diesel-powered pumps, increasing productivity and bringing much needed additional income to farming families throughout the year, which in turns reduces the need for long periods of migration for work. Improvement of land management also helps households to enrich their diet, through the increased variety of crops they are able to grow and increased opportunities to afford livestock. It is estimated that over 265,000 people will ultimately benefit from the installation of treadle pumps in India derived from 2009 offsetting activity.

· Reforestation in the Kibale Forest National Park (KFNP), Uganda

To date, over 370 hectares of forest have been reforested in the KFNP, as a result of The Co-operative’s carbon offsetting, and chimpanzees and forest elephants have begun to migrate into areas previously reforested by The Co-operative Bank. Reforestation licensing agreements have enabled local communities to extract resources at sustainable rates (and with permit revenues reinvested in, and controlled by, the local community). Each year the project provides employment for around 400 workers in high season, all of whom are employed from the local population.

Export Credits Guarantee Department (ECGD)

12 Over ten years ago, The Co-operative campaigned for the cancellation of third world debt and significant progress was made. As the first corporate member of the Jubilee 2000 Coalition, our customers and members contributed to the first ever global petition on debt relief and helped prompt the commitment of G7 leaders to write off billions of poor country debts. To date, over $100 billion of debt has been cancelled, freeing some of the poorest countries in the world from the slavery of debt.

13 The British Government has led the world since the Gleneagles Summit in 2005, and cancelled billions of pounds of Third World debt. However, some £2bn – or 96% of Third World debt owed to the UK – is still outstanding in Export Credit Guarantees. Furthermore, the ECGD is issuing new debts through insuring failed UK exports. The vast majority of companies receiving ECGD support are large arms manufacturers, aerospace companies, or those working in fossil fuel industries. The ECGD has supported projects that have, on occasion, not paid sufficient regard to environmental sustainability or climate change considerations, or have led to human rights violations. Initiatives that have been supported include:

· An oil pipeline in the Caucasus which has been implicated in environmental damage and human rights violations;

· A power plant which cost the Indian authorities hundreds of millions of dollars despite being shut down because the local government couldn’t afford to buy electricity from it; and,

· Arms sales to the regime of the brutal Indonesian dictator General Suharto, which were used to repress the people of that country and which the current Indonesian government is still paying for.

14 The Co-operative is concerned that many developing countries are still paying off large debts for ECGD-backed projects that were of no benefit to their people, or which fostered corruption. We are also concerned that unjust debts will continue to mount up in the future since some smaller ECGD projects (where the repayment terms is 2 years or less, or the value of the British export is under SDR 10 million) are now exempt from environmental, social, and human rights (ESHR) assessments, meaning they are not even checked for forced or child labour. Moreover, there is evidence [1] that projects previously approved by the ECGD with a value under SDR 10 million, and subject at that time to ESHR assessments, were linked to problems such as risks of child labour. These types of projects would now be approved without screening or assessment.

15 The Co-operative believes that there is an opportunity for a new approach and that the ECGD could be a force for good – for instance exporting green technology to help developing countries on their path towards low-carbon development. We are campaigning for the Government to:

· Publicly audit all outstanding ECGD debts and cancel those found to be unjust, e.g. where the ability to repay never existed or corruption was evident;

· Adopt and enforce much stronger standards to promote a green economy, human rights and the end of poverty e.g. stop big fossil fuels and instead support projects on renewables and energy efficiency;

· Stop the conversion of failed exports into Third World debt.

15 December 2010