Although the Companies Act makes business reviews mandatory⁽¹⁾, initial analysis of FTSE100 company reviews shows:

• 8% have no clearly identifiable business review⁽²⁾, leading to confusion for shareholders and stakeholders alike.
• 17% made no reference to environmental issues⁽³⁾, despite wide acceptance that climate change is a business risk.
• 8% completely failed to include any social issues⁽⁴⁾ in their business review; 14% failed to include any social issues other than labour.

And of the FTSE100 company accounts reviewed, AstraZeneca, Friends Provident, Hammerson, HSBC and Thomson Reuters were deemed to be the worst performers in terms of the level of non-financial information reported.

These high level findings, by report author and leading social accounts auditor Professor Adrian Henriques, of Middlesex University, show that compliance with the Companies Act is far from comprehensive, with many companies not acting in the spirit of the reporting requirement.

Professor Henriques said: “The reporting of non-financial information in business reviews was surprisingly inadequate. Not a single company mentioned adaptation to climate change. And extractive companies were silent on known areas of human rights risk, such as security around facilities.”

The results also indicate there is a significant lack of clarity in what companies are legally required to report. This is despite Lord Goldsmith’s comment that the new directors provisions were designed to “… make what is expected of directors clearer and to make the law more accessible to them and to others”.

The Companies Act (2006) requires all large, publicly-listed companies to produce a business review to help inform shareholders how directors have performed their new statutory duty to promote the success of the company, having regard to a range of environmental and social factors, as well as on their supply chain impacts.

But now, more than two years after the first annual reporting cycle of the new requirements, the Government has not put in place adequate monitoring of this legislation.

Hannah Ellis, Coordinator of CORE said: “The results of this analysis clearly indicate why the law should be reformed. Much greater clarity and consistency is needed on the way companies should report on their environmental and social impacts.  The Government should ensure these requirements are fairer.

“The law should be reformed to ensure directors, whether they be of private or public companies, all report using one standard, so what they are doing is comparable – and that it is clear to all who are interested,  how the company has (or hasn’t) minimised, managed and mitigated their environmental and social impacts.”

Fiona Gooch, Traidcraft senior policy advisor, added: “As one of the earliest companies producing audited social accounts Traidcraft has benefitted substantially from the insights gained as a result of preparing comprehensive social reports. Based on this experience we advocate strongly that companies produce accounts of their social, economic and environmental impacts.

Footnotes

“The responsibility to ensure business reviews meet stakeholder demands falls on both the Government to make the requirements clearer and on the companies to report comprehensively. The Government’s review of this embryonic legislation is critical and must result in changes that ensure The Companies Act ultimately does what it was intended to do.”

(1) Section 417 of The Companies Act specifies the need for large public companies to produce a Business Review and Section 172 of The Act requires directors to have regard to environmental and social issues in order to promote the success of the company.

(2) Companies without an identifiable Business Review were: Balfour Beatty, BP, Carnival, Legal & General, Randgold, Smith & Nephew, Vodafone and WPP. Vodafone and BP are anomalous: while they did not have identifiable Business Reviews, Professor Adrian Henriques gave them (and the others) the benefit of the doubt and looked at the information in their Annual Reports more widely. Judged by the information which is available throughout their Annual Reports, those companies are among the best reporters. This contradiction supports the finding that the whole area is very confusing.

(3) Companies which did not include environmental issues in their business review are: Amlin, AstraZeneca, BAE, Compass, F&C, Friends Provident, Home Retail, HSBC, Old Mutual, Petrofac, Serco, Shire, Standard Life and Thomson Reuters.

(4) Companies which did not include social issues in their business review are: 3i, AstraZeneca, Friends Provident, Hammerson, HSBC, Reed Elsevier and Thomson Reuters

Notes to editors

1. “The Reporting of Non-Financial Information in Annual Reports by the FTSE100” by Professor Adrian Henriques of Middlesex University, is available for download here
2. For further information contact Hannah Ellis +44 (0) 207 566 1601 (direct) +44 (0) 7952 876 929
3. Available for interview: report author Professor Adrian Henriques, Traidcraft senior policy advisor Fiona Gooch, CORE co-ordinator Hannah Ellis.
4. The Corporate Responsibility (CORE) Coalition works to make changes in UK company law to minimise companies negative impacts on people and the environment and to maximise companies’ contribution to sustainable societies.  CORE represents over 130 civil society groups including Amnesty International UK, Traidcraft, Friends of the Earth and Action Aid.

“The Joint Committee for Human Rights was damming of the Government’s failure to address corporate wrongdoing overseas. The Government has in no way answered the JCHR’s criticisms and instead has signaled business as usual for companies whose concern for profit is put way ahead of the interests of the communities and environment in which they operate.”

She continued…

“Only by offering coherent guidance to companies and allowing proper access to redress for overseas victims of corporate abuse will this problem be resolved. By failing to take the JCHR’s criticisms seriously, the government has lost an opportunity to make Britain a global leader on corporate responsibility.”

The Enquiry, commissioned in spring 2009, involved a major review of human rights impacts of UK companies.  It concluded that UK companies operating overseas often have no incentive to prevent their operations from leading to human rights abuses, leaving them open to risks such as litigation or damaging public campaigns. This is often the case in developing countries where enforcement of human rights standards is less stringent than in the UK. The Committee also found that the UK Government’s current approach to business and human rights is incoherent and letting business down by failing to provide enough guidance to companies on how to avoid abusing human rights.

The CORE Coalition believes the Government’s response to the Enquiry today has been disappointing.  Although the Government acknowledge, in their response, that there is a need for greater clarity for companies on the distinction between respecting human rights and acts of general philanthropy, they fail to commit to taking any concrete action to improve accountability mechanisms that would ensure human rights standards are respected by UK companies, such as through the introduction of a UK Commission for Business, Human Rights & The Environment.

The Corporate Responsibility (CORE) Coalition – a group of NGOs, ethical businesses and trade unions – are calling on the Government to put in place a new UK Commission on Business, Human Rights and the Environment to oversee the conduct of British companies operating overseas.  This Commission would be mandated to ensure UK companies adhere to international human rights and environmental standards and have a duty to provide remedy to victims to whose rights have been violated.

Evidence submitted to the Committee by The CORE Coalition included the following examples of UK company abuses overseas:

• Bangladeshis paid far less than a living wage making clothes for Tesco, Asda and Primark.
• indigenous communities’ livelihoods threatened by mining giant Vedanta’s operations in India
• communities in the Niger Delta forced to endure Shell’s hazardous gas flaring despite a legal ban.

 Find out more about The JCHR enquiry here

Further Information:
Hannah Ellis, Coordinator, The Corporate Responsibility (CORE) Coalition
Tel: +44 (0) 207 566 1601
www.corporate-responsibility.org

The Committee Report and Governments Response is available here http://www.publications.parliament.uk/pa/jt/jtrights.htm

CORE, Leigh Day & Co, The TUC, Amnesty International, Rights & Accountability in Development (RAID), One World Action, Global Witness and The Cornerhouse wrote to the European Commission , raising concerns regarding the UK Government’s position in relation to the European Court of Justice ruling in Owusu v Jackson.

The submission sent by these organisations can be downloaded here:

Submission from CORE and Others

CORE believe any reversal of the Owusu ruling would be a significant step back for corporate accountability.  This ruling has been essential in enabling justice to be carried out in relation to such cases such as those against Trafigura, BP (Colombia) and Monterrico (Peru); unimpeded by the enormous delay, aggravation, cost and aggravation experienced in the cases against eg Cape PLC (5 years spent on fnc, during which time 1000 claimants died).

Responding to the publication today (16 December) of the Joint Parliamentary Committee on Human Rights’ long-awaited report on Business and Human Rights, The Corporate Responsibility (CORE) Coalition – a group of NGOs, ethical businesses and trade unions – called on the British Government to acknowledge the findings, and put in place a new Commission on Business, Human Rights and the Environment to oversee the conduct of British companies operating overseas.

The Joint Committee on Human Rights commissioned a major inquiry into the human rights impacts of UK companies in spring this year and has heard evidence from a range of individuals and organisations including the Trade Union Congress (TUC), the Confederation of British Industries (CBI), the UN Special Representative on Business & Human Rights, Professor John Ruggie, and CORE.

The Committee heard how UK companies operating overseas often have no incentive to prevent their operations from leading to human rights abuses, leaving them open to risks such as litigation or damaging public campaigns. This may especially be the case in developing countries where enforcement of human rights standards is less stringent than in the UK. The Committee also heard that the UK Government’s current approach to business and human rights is incoherent and letting business down by failing to provide enough guidance to companies on how to avoid abusing human rights.

The Committee’s final report acknowledged all of these concerns and encouraged the UK Government to explore the proposal for a Commission for Business, Human Rights and the Environment. It added that a number of multinationals operate to double standards when it comes to their policies at home and overseas. There was also an acknowledgment that current UK procedures for receiving complaints against companies – called National Contact Points – are “falling far short” of providing an effective remedy. It also said that implementing a human rights approach to business would have “no impact” on UK business competiveness.

Emily Armistead of the CORE Coalition said:

“This report brings real pressure on the government to address the harm done by British companies overseas. Even business leaders agree that companies’ obligation to respect human rights extends beyond the UK’s borders.

We now urge the Government to take the plunge and establish a Commission for Business, Human Rights and Environment. Thousands of CORE’s supporters will be pressing them to do so.”

Evidence submitted to the Committee by The CORE Coalition included the following examples of UK company abuses overseas:

• Bangladeshis paid far less than a living wage making clothes for Tesco, Asda and Primark.
• indigenous communities’ livelihoods threatened by mining giant Vedanta’s operations in India
• communities in the Niger Delta forced to endure Shell’s hazardous gas flaring despite a legal ban.

Find out more about The JCHR enquiry here

Villagers in Ikot Ada Udo survey the damage caused by a Shell well head that sprayed toxic oil and gas onto their farmland in August 2006 and August 2007.

The Nigerian farmers and fishers, who lost their livelihoods after oil from leaking Shell pipelines streamed over their fields and fishing ponds, are claiming compensation from the Anglo-Dutch oil giant. They also want Shell to clean up the oil which remains in the land, so that they can return to farming and fishing.

The four victims of the leaks are from three Nigerian villages.

They have subpoenaed both Shell’s subsidiary in Nigeria and Shell’s Dutch headquarters. They allege that as the result of Shell’s negligence, agricultural lands have been devastated, drinking water polluted, fish ponds made unusable and the environment and health of local people harmed.

Shell denies all responsibility and contends that the Dutch court has no jurisdiction over its Nigerian subsidiary. Therefore, at Shell’s request, the court will first address the question of whether Shell Nigeria can be called to account before the Dutch court. Then it will consider whether the Shell parent company is liable for the pollution in Nigeria, something which the oil giant disputes.

Geert Ritsema of Milieudefensie said, ‘Shell earns billions in profits. At the same time, the company does not comply with law, is responsible for environmental pollution and harms the interests of farmers and fishers in Nigeria, who have no other means of earning a living. It is sad but predictable that Shell is resorting to legal technicalities to avoid taking responsibility for the environment.’

According to Milieudefensie, the oil leaks in the three Nigerian villages are not just isolated incidents. For the people of the Niger Delta, oil spills are a daily occurrence, part of Shell’s systematic routine of pollution and contempt for the rights of the local population over four decades.

Speaking on behalf of the victims in Nigeria, Lawyer Chima Williams of ERA, Milieudefensie’s Nigerian sister organisation, said: ‘These people have tried in many ways to get Shell to clean up the mess, but they have got nowhere. Now, as a last resort, they are trying to obtain justice in the Netherlands.’

Representatives of the Nigerian community in the Netherlands have announced that they will organise a courthouse rally in solidarity with the four Nigerian farmers during the legal proceedings on Thursday

Bhopal acts as a telling reminder of the devestating impacts of corporate wrongdoing and its long lasting effects. Responsiblity for the accident and the clean up has been highly disputed. Union Carbide’s current owners, Dow Chemicals claim the plant is now owned by the Indian government and therefore it should organise the clean up. Meanwhile, in 2009, the Indian government issued a warrant for the arrest of Warren Anderson, head of Union Carbide at the time of the disaster.

The Guardian published has published a set of powerful photographs of the disaster 25 years on.

The aim of the inquiry is to find out the ways in which businesses can affect human rights both positively and negatively; how business activities engage the relative responsibilities of the UK Government and individual businesses; and whether the existing UK regulatory, legal and voluntary framework provides adequate guidance and clarity to business as well as adequate protection to individual rights. A broad range of experts have submitted evidence to the enquiry, some of whom were then cross-examined by the committee.

• You can download a copy of all the evidence the Committee received at the JCHR website here.
• You can also listen to the enquiry sessions at Parliament tv website here.
• The Corporate Responsibility (CORE) Coalition presentation to the mini conference hosted by the Committee in February is available here.
• The Corporate Responsibility (CORE) Coalition evidence to the committee is available here.
• The Corporate Responsibility (CORE) Coalition oral evidence session can be scene here.
• CORE’s additional evidence given to the committee can be downloaded here.

Leading UK charities propose new Commission on Business, Human Rights & The Environment.

UK companies that have committed human rights abuses overseas far too often get away with it, a new report launched today (1 May) reveals.

Reviewing examples from Kenya, India, Bangladesh, Georgia and Nigeria. the report, entitled “The Reality of Rights: Barriers to accessing remedies when business operates beyond borders” [1], finds that in cases of alleged human rights violations, systemic failures have too often led to victims not receiving adequate redress.

Although previous research in this area has highlighted legal obstacles to victims seeking justice, this is the first comprehensive study of the very real political, social and economic obstacles that prevent victims receiving adequate remedy.

The report’s key findings include:

• Governments’ desire to attract foreign investment undermines their protection of the rights of those affected by the investment;
• A serious lack of trust in the independence of legal systems undermines victims’ desire to pursue claims;
• Victims are pressured not to act and those that still want to often can’t afford to.

The report concludes that the UK Government has a responsibility to ensure UK companies do not continue to get away with violating human rights abroad. A new UK Commission on Business, Human Rights & The Environment is proposed to provide guidance to companies on what standards they must adhere to when operating abroad, and act as a forum for hearing and resolving allegations of infringements.

The findings of this report will be submitted to The Joint Committee on Human Rights, who have just launched an Inquiry into Business and Human Rights (deadline for submissions today, 1 May).

Hannah Ellis, Coordinator of The Corporate Responsibility (CORE) Coalition said:

“Too many UK companies are breaching human rights when they operate abroad Our report reveals why so many companies continue to get away with it.

“The Government has no excuse not to act now. We believe the solution is a new UK Commission for Business, Human Rights & The Environment. We hope it will be discussed urgently by the Government..”

Mary Robinson, President of Realizing Rights: The Ethical Globalization Initiative and former President of Ireland, who contributed the foreword to the new report, said:

“The innovative approach this report puts forward is a significant contribution to ongoing debates which should be taken seriously by governments and businesses committed to responsible action at home and abroad.”

For more information, please contact:

The Corporate Responsibility (CORE) Coalition:

Hannah Ellis
Tel: +44 (0) 207 566 1601
Mob: +44 (0)7952 876 929
Email: Please complete our contact form

The London School of Economics and Political Science:

Sue Windebank
Tel: + 44 (0) 20 7849 4624
Web: www.lse.ac.uk

Notes

[1] The report “The Reality of Rights” was commissioned from the London School of Economics and written by Dr Kate Macdonald and can be downloaded here.

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