The Corporate Responsibility Bill was tabled by Linda Perham, Labour MP for Ilford North, with the backing of Amnesty International (UK), Friends of the Earth, the New Economics Foundation, Save the Children (UK) and CAFOD, which have formed the Corporate Responsibility Coalition (CORE).

The bill has six main principles: mandatory social, financial and environmental reporting; consultation on major projects; introduction of new duties and liabilities on directors and companies for social, financial and environmental issues; provision of remedies and rights of redress for people negatively impacted by business activities; and, a new regulatory body to oversee environmental and social standards.

The UK government is coming under increasing pressure to review its voluntary approach to corporate responsibility after government statistics revealed that only 23% of the top FTSE350 companies met a challenge set by the Prime Minister to produce environmental reports by December 2001. This follows a vote in the European Parliament on 30 May supporting a requirement that companies report on the social and environmental impact of their activities, as part of a European framework for promoting corporate social responsibility (CSR) (see related story). France, the Netherlands and Denmark already require mandatory reporting.

“Over 150 MPs have expressed their support for mandatory reporting and the weight of opinion in Britain and in Europe suggests governments will have to act,” said Linda Perham MP. However she acknowledged that the bill stands little chance of becoming law. CORE is lobbying the government to adopt the bill’s principles in its new Company Law bill, which is expected during the next two years.

The Confederation of British Industry, CBI, senior CSR policy adviser, Philip McCrum, said: “It is vital that ministers continue to adopt a carrot-led rather than a stick-driven approach”. He pointed to the government’s comments in its recent CSR annual report, that “excessive intervention risks stifling innovation”, and said, “CSR is an important part of modern business thinking and British firms are leading the way by showing how the idea can make a meaningful difference on the ground”.

Deborah Doane, head of corporate accountability at the think-tank, the New Economics Foundation, said the overall picture from a number of studies is the same – the market does not provide sufficient incentives for companies to report on their social and environmental impacts on a voluntary basis.

Many companies fear that the laggards in the business sector who do not care for environmental and social issues will undercut the responsible companies, pointed out Julian Filochowski of CAFOD. “The intention of the bill is to create a level playing field for all companies,” said Rory Sullivan, from the Amnesty Business Group.

FOE quoted a recent MORI poll suggesting that 92% of the British public believes “multinational companies should meet the highest human health, animal welfare and environmental standards wherever they are operating”. The same poll also found that between 87% and 92% of people think governments should protect the environment, employment conditions and health – even when it conflicts with the interests of multinationals.

The European Parliament resolution still treats CSR as a voluntary concept. However, it also proposes the creation of an EU multi-stakeholder CSR platform made up of representatives of business, trade unions, non-governmental organisations, public authorities and representatives of non-EU countries. Stating that companies should be required to supply information on the social and environmental impact of their operations, it calls for the mainstreaming of CSR in all areas of EU competence, “in particular, regional and social funding where companies could play a stronger role in supporting training for socially responsible restructuring”.

A spokesman for the European Parliament stated that ultimately, the European institutions are hoping this initiative will offer a new European framework for the promotion of CSR. The European Commission is due to publish its response to the Parliament’s vote in July, with the revision of the Fourth Company Law Directive, where mandatory social and environmental reporting is due to be considered during the second half of the year.

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