The Chancellor announced the Government was dropping the OFR, a kind of obligatory CSR which would have forced publicly listed companies to report on their social and environmental impacts, at the CBI annual conference in November (see related story).

Now Friends of the Earth says it is on the verge of starting legal procedures, arguing it believes the Chancellor’s decision was unlawful.

The letter the group has sent the Chancellor claims his failure to consult before making the decision was in breach of the Government’s own Code of Practice and denied key stakeholders the opportunity to comment.

It argues the reason he gave for doing so – to remove gold-plating from EU regulations – does not hold water, as the OFR was born out of a UK-based policy review that had no link to Brussels.

Brown’s decision also flies in the face of the Government’s own research gathered during seven years of consultation which supports OFR, says FoE, and motivated by a need to protect his pro-business reputation rather than for the good of society as a whole.

“We believe Gordon Brown’s decision to scrap the Operating Financial Review was unlawful. It appears to have been made purely as a sop to the CBI to protect his reputation as a pro-business Chancellor, rather than in the interest of society as a whole,” said Craig Bennett, head of corporate accountability campaign for FoE.

“The huge outcry against his decision is an indication of just how wrong he was.”

Phil Michaels, FoE’s legal advisor said: “We have written to Mr Brown today to warn him that unless he can satisfy us that his decision was lawfully made we intend to seek a judicial review.

“The decision was a breach of fundamental public law principles of fairness and due process. Friends of the Earth remains committed to challenging unlawful public decision making that acts against people and the environment.”

The OFR would have required the top 1,300 companies to produce an annual statement on their prospects including in relation to social and environmental issues.

Companies were due to start publishing the first Operating and Financial Reviews in April 2006.

By Sam Bond

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