Focus: Policy and Politics - Pressure mounts on company law Bill

Bill would place corporate responsibility on the statute book, writes Nathalie Thomas.

The Trade Justice Movement is rallying support to amend the Company Law Reform Bill so that companies would be legally obliged to keep their social and environmental impacts to a minimum.

It is working with the Corporate Responsibility Coalition (Core) to encourage supporters to lobby parliamentarians during the Bill's forthcoming report stages in the Lords.

Peers will vote on amendments that will place duties on directors to ensure any negative effects from the company's operations on local communities and the environment are kept at the lowest possible level.

"The Bill is the first opportunity in about 150 years to change what these responsibilities are," says Sharon McClenaghan, senior policy officer at Christian Aid, a Trade Justice Movement member.

Core and Trade Justice argue that the Bill in its current form requires directors to prioritise the financial success of a company, negating any consideration of the social or environmental consequences. They have enlisted the support of peers from both the Labour and Liberal Democrat parties to table amendments that will redress this balance.

The coalition is seeking to amend clause 156 of the Bill, which decrees that, in fulfilling his or her duty to promote the success of the company, a director must "so far as reasonably practical have regard" to the company's influence on communities and the environment.

"We think this is highly ambiguous and open to interpretation," says McClenaghan. "It creates a loophole for potential conflicts." McClenaghan fears corporations could exploit the wording of the clause to justify prioritising a company's financial concerns, even if it meant its operations could have extreme and damaging effects on both the environment and local populations.

"What we want to introduce is a mandatory obligation for directors to take reasonable steps to minimise any negative impact," she says.

"We know from previous examples of our work on corporate social responsibility, and the problems companies run into in operations such as mining and tobacco, that when there is a conflict, the interests of the company will come first."

McClenaghan believes it is important to place corporate social responsibility in legislation because voluntary codes have proved insufficient. She says: "If it's left to market forces, these things aren't going to be addressed properly."

Key members of the movement, including Christian Aid, ActionAid and Friends of the Earth, have set up lobbying kits on their websites, urging members of the public to email their MPs and Alun Michael, industry minister, before the Bill completes its passage through Parliament in the summer.

The kits include further analysis of the Bill, advice on how to argue the various points and MPs' contact details.

Have you registered with us yet?

Register now to enjoy more articles and free email bulletins

Already registered?
Sign in

Before commenting please read our rules for commenting on articles.

If you see a comment you find offensive, you can flag it as inappropriate. In the top right-hand corner of an individual comment, you will see 'flag as inappropriate'. Clicking this prompts us to review the comment. For further information see our rules for commenting on articles.

comments powered by Disqus