Archived press release

Government drops OFR, and puts profit before environment

3 May 2006

Friends of the Earth today attacked the Government's announcement that it would not be re-instating the OFR - the only legislation requiring companies to report clearly on their environmental impacts. And it warned that the amendments to the Company Law Reform Bill announced today (Wednesday 3 May) would fail to remedy companies' worst abuses of the environment both here and overseas.

The new clauses for the Company Law Reform Bill laid before Parliament include the Government's response to the consultation on the Operating and Financial Review (OFR) - carried out following a legal challenge by Friends of the Earth.

But despite receiving more than 800 responses in support of reinstating the OFR, the Government has opted to include only some of its requirements in the Company Law Reform Bill and has opted not to provide clear standards to companies on reporting requirements.

Friends of the Earth's Senior Corporate Accountability Campaigner Craig Bennett said:

"This is a very disappointing result. The Government is saying that when profits come into conflict with responsible behaviour, companies must put profit first. There is nothing here that will provide justice for the victims of corporate irresponsibility or guarantee high environmental standards for UK companies".

The new amendments make clear that company directors have a clear duty to put the interests of shareholders ahead of their duty to take into account the interest of the employees and the impact on the environment.

Friends of the Earth welcomed new reporting requirements which state companies must provide information on environmental matters including companies' environmental impacts and social and community issues and their policies on this. But it said the absence of statutory reporting standards, meaning companies will be free to decide what information is included in their report, undermined this progess. Auditing requirements have also been weakened.

Craig Bennett added:

"This is not the end of the story. This legislation has still to be debated in the House of Commons and MPs have already received hundreds of thousands of letters from constituents on these issues. Ninety per cent of the public support enforceable rules to ensure companies behave responsibly. This issue is not going to go away."

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Published by Friends of the Earth Trust