Archived press release

New bill calls for corporate responsibility

12 June 2002

A broad coalition of human rights, environment and development organisations today launched a private members Bill to demand greater social and environmental accountability from business. The bill is being tabled by Linda Perham, MP, and is backed by Amnesty International (UK), Friends of the Earth, the New Economics Foundation, Save the Children (UK) and CAFOD.

The legislation has been drafted as a response to the failure of the voluntary approach to corporate responsibility, the approach advocated by most business lobby groups and the UK government. In October 2000 the Prime Minister challenged the UK’s top 350 companies to produce social and environmental reports by the end of 2001 [1]. However, according to the Governments own figures, three quarters of these companies ignored Blair’s challenge [2]. Even those who do report on these issues have, in many cases, disregarded the key social and environmental issues that will have an impact on sustainable development. [3]

Opinion polls suggest that the public has also turned against the voluntary approach. A recent MORI poll found that 92% of the British public believe “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 [4].

The Corporate Responsibility Bill would:

• Make social, financial and environmental reporting (the so-called ‘triple bottom line’) mandatory;
• Require companies to consult on big projects;
• Place specific duties and liabilities on directors and companies, with respect to social, financial and environmental issues;
• Provide remedies and rights of redress for people negatively impacted by business activities; and
• Establish a new regulatory body to oversee environmental and social standards

The Bill is expected to gain widespread cross-party backing from MPs, 150 of which have already signed an Early Day Motion in support of the principles outlined in the Bill. A detailed survey of MPs last year found that 90% believe UK companies should be socially responsible, and that 86% believe this would have a positive effect on the UK economy.

Failure to address corporate responsibility issues at the forthcoming Earth Summit will increase the pressure on the UK government to address the shortcoming through current UK legislation. The Government is expected to table a new Company Law Bill some time in the next two years, and the CORE coalition are urging the Government to adopt proposals from MP Linda Perham’s Bill within UK Company Law. Further pressure on the government is likely to come from the European Parliament which last week voted in favour of producing European-wide legislation for social and environmental reporting.

Linda Perham MP said:
“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. People are concerned with the social and environmental impacts of corporate activities and Governments must recognise this”.

Charles Secrett, Director of Friends of the Earth said:
“In the post Enron world, even President George Bush understands that accounting and consultancy practices must be regulated and enforced to ensure high standards and good business behaviour. What is true for corporate finance is equally true for corporate responsibility. To date, it has been communities, campaigners and a few investigative journalists who have kept the worst corporate excesses at bay. Now, with the tabling of the Corporate Responsibility Bill, it’s the politicians’ turn to ensure the common good”.

Julian Filochowski, CAFOD
"New laws can help ensure that every company operates in ways that make life better for their workers and customers, and protect the environment in which they operate. The best companies already do this - but many companies are held back because they fear the laggards who just do not care will undercut them. By setting a level playing field for all, a new law would mean all companies had to act responsibly."

Rory Sullivan, Amnesty Business Group said:
“The intention of the Bill is to create a level playing field for all companies. Leading companies will continue to go far beyond the requirements specified in the Bill. For others, the Bill will define a minimum standard of corporate performance.”

Deborah Doane, New Economics Foundation said:
"It's naive for us to assume that the market will deliver better social and environmental performance of all businesses. The evidence just doesn't add up. Not only will regulation help to achieve wider sustainable development objectives, businesses will see their costs reduced, simplified processes and clearer definitions of what is expected of them by stakeholders."

Fiona King, Save the Children said:
"If companies have to assess and inform people about their social, environmental and economic performance, this could lead to real improvements in the way companies manage their impact on children's lives, particularly in developing countries. This initiative would help promote greater transparency in the way both business conducts its operations and the extent to which it fulfils its responsibilities in the societies where it operates. For example if oil, gas and mining companies were required to publish data on the revenues they pay to each government in all the countries they operate this would be an important step towards reducing corruption and misuse of resources.

EDITORS NOTES:
[1] “Richer and Greener” - Speech by The Prime Minister, to CBI / Green Alliance
Conference on the Environment, Tuesday 24th October, 2000.
[2] House of Lords written answers, 4th December 2001. Col. WA132.
[3] Source – ERM Study, December 2001; New Economics Foundation, March 2002
[4] MORI poll conducted between 20-25th September 2001. For more information,
see: www.mori.com/polls/2001/globalisation.shtml

About the CORE Coalition
Amnesty International (UK), CAFOD, Friends of the Earth, New Economics Foundation and Save the Children (UK) have formed the Corporate Responsibility Coalition (CORE) to build support for the reform of UK Company Law.

CORE’s goal is to improve the environmental, social and economic performance of companies by requiring greater disclosure and accountability.

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Published by Friends of the Earth Trust