Company law reform will toughen environmental reporting, says committee
Directors of large companies “will not be able to get away with assuming that environmental and social concerns are not relevant to their company”, if planned reform of company law goes ahead, says the parliamentary Trade and Industry Committee.The MPs were responding to government plans for the first major overhaul to company law in 40 years. Part of the proposals provide a framework for around 1,000 of Britain’s largest firms to include environmental and social reporting within an obligatory annual Operating and Financial Review (OFR).
An OFR “would be a marked improvement on current minimum reporting standards”, the committee says. It would benefit “all those concerned with wider aspects of company behaviour, whether as employees, local residents, or as interest groups involved in environmental/social issues or general corporate governance”.
But pressure group Friends of the Earth is urging that both the scope and content of the proposed OFRs be strengthened. “A thousand companies represents only a third of economic activity in the UK,” the organisation’s parliamentary co-ordinator Martyn Williams pointed out. “Under our proposals the OFRs would cover 85% of economic activity, while still only requiring 2% of UK firms to report.”
FoE also wants to see the Bill’s wording on social and environmental reporting requirements toughed up. “At the moment you would only need to report on an environmental impact if it harms your profitability. We do not accept the argument used by government and the CBI [Confederation of British Industry] that a firm’s environmental impacts will automatically impact on their profitability,” Williams added.