Focus: Corporate Responsibility - Government accused of 'turning its back' on trade

Anita Pati, anita.pati@haynet.com

NGOs have criticised plans not to reinstate legislation to restrict the harmful effects of companies abroad.

Voluntary organisations have accused the Government of turning its back on the Make Poverty History campaign's call to tackle the issue of unfair trade.

Campaigners are angry that the Government has dropped plans to make companies report on the environmental and social damage they cause in the UK and abroad.

The latest amendments to the Company Law Reform Bill do not reinstate the Operating and Financial Review, which would have introduced statutory standards against which directors and companies would have to report on their environmental, community and social impacts - including the damage caused in developing countries.

Trade and industry minister Lord Sainsbury of Turville said in a House of Lords debate: "Our objective has been to ensure effective and appropriate narrative reporting without imposing unnecessary burdens on companies."

Julian Oram, corporate policy officer at ActionAid, said this meant the Government had "turned its back" on trade. "As part of Make Poverty History, the Government said it supported the objectives of trade justice," he said.

"But it never really acknowledged the role of businesses in contributing to poverty. Now that there's an opportunity to do something about it, it's turning its back. The Company Law Reform Bill presents a golden opportunity for the Government to keep its promises on tackling global poverty. Its vows will look hollow unless the new law restrains corporations' licence to make profits at the expense of the world's poor."

Craig Bennett, senior corporate accountability manager at Friends of the Earth, said: "When Gordon Brown scrapped the OFR last year, people said he had departed from the agenda set out in the Make Poverty History campaign. What the Government has done is to set down in law that, where there's a conflict between environmental and business interests, directors will have to put business interests first. This is a Government that in 1997 claimed it would put environment at its heart."

Campaigners might feel trapped between a rock and a hard place, however.

Conservative leader David Cameron, who announced a new corporate responsibility group at last week's annual Business in the Community conference, has said he would introduce lighter regulation for businesses that sign up to responsible practices.

"A modern, compassionate Conservative Party has to engage in the debate about the role of business in society," he said at the event. "If we don't, we run the risk of ending up with left-wing approaches, such as excessive regulation, that do more harm than good.

"The more business voluntarily adopts responsible business practices, the more compelling is the case for a lighter touch on regulatory enforcement."

KEY POINTS

- New clauses in the Company Law Reform Bill state that the Government will not be reinstating the OFR, which would have introduced mandatory reporting standards

- NGOs including Friends of the Earth, ActionAid and WWF have expressed their disappointment at the Government's failure to introduce tighter regulation to tackle trade injustice

- Tory leader David Cameron has said he would introduce lighter regulation for businesses that sign up to more responsible practices.

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