Policy Issues
> Company Law Reform Bill
> Back
I believe that directors of
companies need to have regard to the social and
environmental impact of their operations. I was involved
with Early Day Motion 697 from the beginning by acting as a
sponsor. This Early Day Motion argues that companies’
freedom to operate must be balanced with clear
responsibilities to society and the environment. I have
urged the Government to enshrine in new company law a duty
for directors to identify, consider, act and report on any
negative social and environmental impacts caused by a
company's activities in the UK or overseas.
Regarding the Company Law Reform
Bill specifically, the Government has included in the
drafting of the Bill that ‘a director must (as far as
reasonably practical) have regard to…the impact of the
company’s operations on the community and the environment.’
If passed, this will be the first time that these additional
duties have appeared in legislation beyond the duty to
maximise shareholder value, and this step is enshrined in
law. Once this important precedent has been established, I
hope that it will be built upon in future so as to establish
clear social and environmental responsibilities in
Directors’ duties.
It is also important to
recognise that the Government has done a lot of valuable
work in the area of corporate responsibility, both at a
national and international level and is committed to
furthering this work.
The UK Government has played a
leading role in ensuring that the international framework to
promote workers’ rights and to tackle abuses of those rights
throughout the world is in place, particularly through its
work with the International Labour Organisation (ILO) - the
UN specialised agency responsible for labour rights. The
internationally agreed core labour standards of 1998 are an
integral part of that framework. The core labour standards
cover freedom of association and the right to collective
bargaining; elimination of discrimination in employment; and
the elimination of forced and child labour. Under the
Declaration and its Follow Up, all countries whether or not
they have yet ratified the relevant ILO core Conventions are
required to respect, promote and to realize the principles
contained in these Conventions. The support of the UK
government for the implementation of the ILO Convention 182
on the Elimination of the Worst Forms of Child Labour is a
significant step towards improving corporate standards
internationally. The UK works with the ILO under an agreed
Partnership Framework arrangement through which we are
making available £15 million of extra-budgetary funds over a
five-year period for core activities and technical
cooperation programmes.
If you share my concerns about
corporate abuse I would recommend that you view the UK
Government gateway to Corporate Social Responsibility, which
can be found online at
www.csr.gov.uk. This sets
out the Government’s approach to securing the benefits of
business for the wider social and environmental good. The
support for UN bodies such as UNICEF also makes a
significant contribution to the protection of labour
standards, and particularly child labour. With regards to
corporate behaviour the Government gives considerable
support to initiatives that encourage multinational
companies to act responsibly such as the OECD guidelines for
Multinational Enterprises. The UK Government also
supported fully the UN Global Compact which the UN Secretary
General, Kofi Annan, announced in 1999. This sets out ten
principles for business in the area of human rights, labour
and the environment.
In addition, the Government has
taken action at a national level through their work with
Business in the Community, and setting in place measures for
securing greater accountability through the Government’s
response to the review of Company Law. The new Operating and
Financial Review also offers progress on ensuring greater
corporate transparency and accountability.
Whilst considerable progress has
been made in this area by the Government, there is still
more to be done to tackle these important issues.
Return to Key
Issues Page
|
