Archived press release

Will london principles green the city?

1 September 2002

NEW BUSINESS CODE ANNOUNCED AT EARTH SUMMIT

A voluntary business code – the London Principles of Sustainable Finance [1] – is launched tomorrow at the Earth Summit. But Friends of the Earth (FOE) warns it has little chance of success unless backed up by robust corporate accountability legislation at a national and global level [2].

The London Principles is a joint voluntary initiative between the Corporation of London and the UK Government. It promotes best practice in financing sustainable development by encouraging financial institutions to adopt seven core principles based on economic prosperity, environmental protection and social development.

As with virtually all voluntary codes [3], it suffers from a lack of credible independent verification or enforcement. FOE is calling for global rules to ensure international investment is sustainable at the Earth Summit [4].

The Government has pointed to the development of self-proclaimed Socially Responsible Investors as an indication of the City’s good intentions. However, they remain a marginal part of the City’s business. Last year FOE targeted City institutions such as Barclays for their investment in destructive logging companies. Mr Blair has called before for the City to voluntarily improve its behaviour, but was comprehensively snubbed. He asked all FTSE 350 companies to properly report on their social and environmental impact by the end of 2001. But just one third did.

Friends of the Earth spokesperson, Simon McRae, said:

"Time and again we’ve seen well intentioned voluntary schemes come and go. A few companies may get involved, but for the majority, as the UN has pointed out, it continues to be business as usual. We need robust international and national law to secure corporate accountability. The World can’t wait on the whim of chief executives and if this well-meaning code distracts from action in that direction they will be a failure for those around the world who suffer the down side of bad investment.”

Notes

[1] Reports on the London Principles can be found at www.forumforthefuture.org.uk, who have helped development them.
[2] A background briefing on financial initiatives for sustainable development (PDF†) is available from the press office at Friends of The Earth.
[3] A briefing on the problems with the voluntary approach (PDF† 94K) is available from the press office at Friends of the Earth
[4] More information can be found at www.foei.org

†To view PDF files you will need to download Adobe Acrobat Reader. Visually impaired users can get extra help with these documents from access.adobe.com.

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Published by Friends of the Earth Trust