Government pushes for increased transparency and information on environmental issues
Leading companies will now be required to show more transparency and to consider environmental issues in their reporting. The Department for Trade and Industry (DTI) has launched a Modernising Company Law White Paper in which they announce that in future, the most economically important companies – both private and public - will have to prepare and publish an Operating and Financial Review (OFR).
Directors will need to consider a range of topics to include in their OFR, such as employee and business relationships and regard for the company’s impact on communities. The White paper makes clear that the Government believes every director needs to consider environmental issues as one, if not the, most important factor.
“These new developments can only reinforce the message that looking at environmental issues is not only good for the environment but also makes good business sense.” said Environmental Minister, Michael Meacher.
The White paper emphasises that it will be up to the directors to decide precisely what information is relevant, but the OFR will make companies statutorily accountable for how these factors are covered in their report. Any company that fails to report on relevant issues will risk adverse comparison and questions from shareholders and others.
As well as increasing the transparency of companies, the government is planning to increase the ease with which individuals can access information about the environment.
The Department for Environment, Food and Rural Affairs (DEFRA) launched a public consultation period for new Environmental Information Regulations. The public already has a legal right of access to environmental information but DEFRA’s proposal aims to improve this.
The new regulations, which should come into force this winter, are a step towards the full implementation of the Freedom of Information Act 2000 and will enable the UK to fulfil its obligations under the United Nations Economic Commission for Europe “Aarhus Convention”.
The Government considers that making information about the environment publicly available is essential in contributing towards the achievement of sustainable development. If the public can obtain information on the environment easily, they will be able to understand more fully the consequences of certain proposals and actions, and to participate more effectively in decision-making processes that affect the environment.
Recently, it was revealed that although Prime Minister Tony Blair called on the UK’s top companies to produce corporate environmental reportsy by the end of 2001, under 80 of the top 350 FTSE companies carried out his request (see related story).
Environment Agency Chairman Barbary Young has also likened corporate social responsibility to teenage sex, stating that although there is a lot of talk about it, there is little action, and those that were doing it were carrying it out badly (see related story).
Comments are invited on the new draft regulations. The public consultation period will run from 15 July to 4 October 2002.
Story by Amelie Knapp
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