Archived press release

Tory lords seek to water down responsible business requirements

6 February 2006

Tory Peers have today (Monday 6 February) attempted to water down draft legislation which gives company directors a legal duty to consider their impacts on communities and the environment as the Lords reached the first controversial part of the Government's Company Law Reform Bill.

Friends of the Earth attacked the move, which it said exposed a lingering prehistoric attitude to the environment within the Conservative Party. The environment group backed by the Corporate Responsibility (CORE) Coalition, the Trade Justice Movement, and a number of trade unions is campaigning for a strengthening of the duties on company directors in relation to environmental and social issues [1].

The position of the Conservatives in the House of Lords appears to be at odds with the new line being pursued by the Conservative Shadow Cabinet, which emphasises environmental protection and greater business responsibility [2]. And the new Conservative Leader David Cameron rejected the argument that corporate social responsibility would add more costs and red tape to business, telling a leading Sunday newspaper: "There's an important debate to be had about the standards of behaviour business should follow" [3].

Yet the lead Conservative spokesman in the Lords on company law, Lord Hodgson of Astley Abbotts (a former investment banker) and another Conservative Peer, Lord Freeman (Chair of both the arms company, Thales, and metals company, Metalysis) have tabled amendments which weaken the requirement for directors to have regard to issues such as the impact of a company's operations on the community and the environment.

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

"The Company Law Reform Bill is a key test of the new Conservative party. Its performance so far shows that parts of the party are still living in the dark ages. David Cameron has recognised the important role that business has to play in society - but here we see that Tory Peers aren't even happy with a legal requirement for directors to simply consider such issues. Their retrograde amendments must be defeated, and the whole Bill must be strengthened to ensure that directors are accountable to wider society, and not just to the shareholders they represent."

The amendments have been tabled prior to a debate on directors' duties in the House of Lords today. The Bill is currently undergoing scrutiny in Grand Committee in the House of Lords, and is due to enter the House of Commons in March 2006.

Notes

[1] Alongside members of CORE and TJM, Friends of the Earth is campaigning for mandatory reporting on social and environmental issues by UK companies, a positive duty for company directors to take reasonable steps to minimise their negative impacts, and rights of redress for affected communities overseas who have suffered harm as a result of the activities of a UK company.

[2] In January, the Shadow Trade & Industry Secretary Alan Duncan announced that the Conservatives were conducting a review of business policy to look at how companies could be more socially responsible.

[3] `Why I bought my nicotine patches at Boots the chemist', David Cameron, The Mail on Sunday, 15 January 2006

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Published by Friends of the Earth Trust