UK sees first bill to require CSR reporting

Source: Sustainable Development International (SDI), 16 November 2006

Up until early November, UK companies were not required to file CSR reports. With the passing of the Companies Act; the largest bill to pass through Commons, directors will have to report on what they are doing and therefore, having to consider how it affects the community and environment. The Companies Act makes it mandatory for business to report anything concerning the welfare of the employees, community, environment and the company itself. It will allow shareholders and the general public to judge companies’ performances.
NGO and environmental lobbyists have been trying to get this bill passed and it is a significant step towards similar international laws. Action Aid said it welcomed the new bill because it meant the government was stepping away from neutrality.

"Many companies publish ‘corporate social responsibility’ reports, but exclude information on activities they don’t want people to know about,” said the Compass group of MPs; chaired by Jon Trickett, while the bill was under consideration.

Margaret Hodge, the industry minister, said that this law was a start in tightening the controls imposed on companies when it comes to environmental and social issues. The law, however, will not make them report anything that would jeopardise commercial confidentiality. Hodge said it would be up to the director’s discretion as to what falls into this category.

“Most of the Act does not come into force until 2008,” said Martin Webster, a company law expert for Pinsent Masons. “But companies should be preparing for it now.”

Some companies complained that the Act would just add more red tape for them to deal with. One of the additions to the bill during consideration, requires businesses to include information about their supply chain when filing CSR reports. Miles Templeman, director-general of the Institute of Directors, had written during that time that he was concerned companies might have to report information a third party considered confidential.

Another amendment to the bill had been brought foreword by Trickett. It specifies what the standards for reporting are.

“Requiring companies to report on their social and environmental impacts and their treatment of employees and suppliers is no use if there are no standards in place to ensure that the information they provide is accurate and meaningful,” said the Compass group in a statement.

Hodge said, to concerned directors, she would "ask (her) officials to conduct an assessment of whether (their) provisions are working in the way (they) hoped two years after the implementation of the business review provisions of this bill.”