Home > Press releases > 2004 > New Operating Rules for Business Fail to Convince
Nov 25 2004
New rules designed to improve the way companies report on their activities have been watered down so much that they will be all but meaningless, Friends of the Earth said today, following the announcement of the Operating and Financial Review (OFR) by the Department of Trade and Industry [1].
The OFR, announced by Trade and Industry Secretary Patricia Hewitt, was supposed to provide shareholders with more useful information on the company's activities. But the final review, which has been watered down following extensive lobbying from business, fails to require companies to report on a wide range of risks that companies are exposed to.
Weak wording means that companies will only have to report on social and environmental impacts to "to the extent necessary" - which allows companies to determine what risks they wish to declare. Friends of the Earth and the Corporate Responsibility Coalition (CORE) [2] argue that environmental risks such as climate change also pose a serious financial risk to shareholders.
Friends of the Earth and CORE argue that companies should also be obliged to report on social and environmental impacts on stakeholders - as well as shareholders - but this need has been ignored by the DTI.
Earlier commitments to make it an offence to produce a negligent OFR or to require companies to use "due and careful enquiry" in producing their OFR have been removed.
Friends of the Earth's Head of Corporate Accountability Campaigning, Craig Bennett said:
"This review has been watered down to such an extent that it is of no value to anybody. Full and meaningful reporting is in the interests of shareholders, stakeholders and companies alike.
"The Government is clearly willing to ignore public concerns and be led by the nose by the business lobby. Is the Government really happy for companies to produce reports without `due and careful enquiry' or even to produce a negligent report?"
[1] www.dti.gov.uk news release reference P/2004/435
[2] www.corporate-responsibility.org
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