Archived press release

CBI accused of exaggerating red tape burden

18 October 2006

Campaigners rejected the Confederation of British Industry's (CBI) claims that new clauses in the Government's Companies Bill would be a legislative burden on business - adding that the CBI's approach failed to recognise the role played by business in the globalised world.

The Government has introduced amendments to the Bill which will require UK companies to report on their supply chains - a requirement which existed in previous regulations.

Indeed, campaigners pointed out that the proposed amendment is less strenuous on companies than the regulations previously introduced in the Operating & Financial Review, scrapped by the Treasury in November 2005.

Head of Trade and Corporates at ActionAid, Julian Oram, said, "The CBI is making a mountain out of a molehill. The truth is that any well run Company will already have a good understanding of its supply chain, and that reporting on these issues will not add additional layers of red tape. What's worrying is that under the government's current proposals there will be no yardstick against which companies reporting on these issues will be measured.

Friends of the Earth's Head of Corporate Accountability Campaigner Craig Bennett said: "This is another example of CBI scaremongering and politicians should not be taken in. It is not in the long-term interest of UK companies to ignore their relationship with and impact on suppliers overseas. And it is plain wrong that shareholders should profit at the expense of the environment and communities on the other side of the world. The proposed changes are far from radical, but acknowledge that companies should consider issues down their supply chain. Surely this is the least that UK companies could be required to do?"

Some UK companies have come under sustained criticism from campaigners for their social and environmental impacts overseas - from small farmers supplying Tesco to the communities in the Niger Delta whose environment has been destroyed by Shell.

Campaigners are urging the Government to introduce further amendments to the Companies Bill and establish an independent review to examine how communities can hold British companies to account in UK courts.

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Published by Friends of the Earth Trust