Is the Operating and Financing Review the first step to legislating for CSR?
Often overlooked by industry, new legislation requiring big business to assess their potential social and environmental impact could pose a huge hurdle.This was the message of Peter Wilson, director of consultants WSP Environmental as he led a seminar at ET2005 in Birmingham this week Can an EMS meet the environmental requirements of the Operating and Financing Review (OFR) looking at how OFR might mesh with existing ISO14001 schemes and what additional work would need to be made to meet the new standards.
"I've yet to hear a business talk about this with the degree of gravity this requires," he said.
"They think they'll take it in their stride, but it's going to be a big stride."
He pointed out it would not be as straightforward as transferring work done for ISO14001 certification into a new report.
As well as financial responsibilities to shareholders, companies now need to assess how social and environmental factors could affect the viability of business.
He said the legislation had been brought in to restore faith in the markets so investors could rely on information published by companies after high-profile scandals such as the Enron debacle and Shell overestimating their assets had shaken confidence.
Benefits for the environment were not the intention of the legislation but could be a welcome side-effect.
While only FTSE listed companies and those on other global markets but trading in the UK need produce an OFR Mr Wilson warned others would be wise to follow suit.
Apart from the legal penalties listed firms faced for non-compliance there were sound financial reasons for all companies to take OFR's arrival on board.
"If I were an investor and a listed company could show me they had taken these things into account, and there was an identical non-listed company, I would choose the one that provided me with the most information and reassurance," he said.
"Ignoring this legislation is not an option."
by Sam Bond