UK General Election 2019: Corporate Accountability Commitments

Political parties contesting the election UK General Election (to be held on 12 December 2019) recently released manifestos or priorities detailing their policy commitments. We examined what each had to say on holding businesses accountable for their impacts on human rights and the environment. Here is our corporate accountability guide to each manifesto, with parties listed in order of their current numbers of MPs.

Conservative Party

The Conservative Party commit to “free market” policies, a “high-wage, high-skill, low-tax economy” and an “ambitious environmental programme”  for Britain when it leaves the EU – pledging to “Get Brexit Done.”

The party does not commit to introduce new corporate accountability legislation, instead committing to “legislation and regulations that maintain high standards but which work best for the UK” and ensuring through a “Red Tape Challenge” that regulation is “sensible and proportionate”.

On business and the environment, the party commits to “legislate to ensure high standards of workers’ rights, environmental protection and consumer rights” in future trade deals and that there will be no “compromise” on environmental protection standards in such deals. However, they also pledge to “redouble our efforts to promote British business and UK exports and dismantle barriers to trade” and with regard to climate change, state that “we believe that free markets, innovation and prosperity can protect the planet.”

The Conservative party does not commit to new measures on business and human rights but will “continue campaigns to eradicate human trafficking and the scourge of modern slavery”. While they state the UK will “continue to be an outward-looking country that is a champion of […] the rule of law” and “human rights,”, they also pledge to “update the Human Rights Act to ensure that there is a proper balance between the rights of individuals, our vital national security and effective government.” They also commit to an “independent Magnitsky-style sanctions regime to tackle human rights abusers head on”.

Regarding corporate governance, they pledge to reform insolvency rules and the audit regime to protect customers and suppliers when firms go into administration, and to “improve incentives to attack the problem of excessive executive pay and rewards for failure”.

Commitments on workers’ rights cover the creation of a single enforcement body, a crack- down on employers abusing employment law and ensuring that workers have the right to request a more predictable contract. They also state “we can, for example, include provisions” in trade deals “that promote the fair treatment of workers”.

Measures for combating tax evasion and avoidance of corporations include “a new package of anti-evasion measures” such as a crack down on illicit tobacco packaging and “further measures to avoid profit-shifting by multinational companies to avoid paying taxes.”

Labour Party

The Labour party’s manifesto pledges to “rewrite the rules of the economy, so that it works for everyone.” Their pathway to this economy includes to “reign in corporate power” and “take on short-termism and corporate greed, making sure good businesses are rewarded, not undercut.”

On corporate accountability legislation, Labour commit to “support ongoing UN efforts to introduce a binding international treaty on business and human rights, and make companies legally accountable for failing to prevent human rights abuses or environmental damage in their operations and supply chains, including criminal liability in the most serious cases.”

Their manifesto includes further measures to tackle corporations fuelling the destruction of the environment and climate change, including industrial “transition” through their Green New Deal. They commit to measures to reduce the financial sector’s “short-sighted investment in polluting assets” and to de-list companies that fail to tackle the climate and environmental emergency from the London Stock Exchange. They also pledge to end all UK Export Finance support to fossil fuel projects.

Further measures on business and human rights include: rejecting any trade agreements that undermine labour standards or environmental protections, implementing UK arms export controls, ensuring government procurement contracts are not granted to companies that are complicit in serious human rights abuses and ruling out export finance support to companies engaged in bribery or corruption, and ensuring measures to tackle unfair medicine pricing by pharmaceutical companies. They also commit to a co-ordinated, cross-Governmental approach to protect human rights.

Regarding corporate governance, workers will be given “a stake in the companies they work for – and a share of the profits they help create” with up to 10% of a company owned collectively by employees and one-third of boards reserved for elected worker-directors. The manifesto also commits to “more control over executive pay.” Workers will also be given a voice on public bodies such as the Competition and Markets Authority.

To combat short-termism, they pledge to amend the Companies Act to require companies “to prioritise long-term growth while strengthening protections for stakeholders” and introduce “a broader ‘public interest test’ to prevent hostile takeovers and asset-stripping”. They pledge more robust rules on auditors and to tackle regulatory capture (as well as streamlining regulation) by creating a new Business Commission, responsive to Parliament.

On workers’ rights, they pledge that sectoral collective bargaining would be rolled out across the economy and UK law brought law into line with the International Labour Organisation standards it has ratified. Labour also commit to “support trade unions internationally in their efforts to promote collective bargaining for better pay and conditions” including binding social chapters in trade agreements to safeguard workers’ rights.

They commit to increasing corporation tax and to make multinational companies pay tax based on where they employ workers and do business – rather than where they say their headquarters is. They will also implement “a windfall tax on oil companies” so that the costs will be recovered from companies damaging the environment.

Labour also pledge to introduce measures to clamp down on corporate funding of politics and overhaul the rules that govern corporate lobbying.

Scottish National Party

The SNP pledge to press for an independent Scotland and to remain in the EU, stating that Brexit will “cost jobs, hit living standards and threaten environmental standards and workers’ rights.” They will campaign for a reshaped economy, “tackling economic and environmental injustice at source.”

On corporate accountability legislation, they state “whilst it is always better to work collaboratively as partners, the SNP supports direct intervention when firms fail to meet their legal and social obligations.” They commit to new standards and measures to protect users of social media, gaming and technology organisations, including “a statutory duty of care and mandatory obligations to tackle unsuitable content that can lead to self-harm and suicide, sexual exploitation, grooming, abuse and extremism” and appointment of new online regulator funded by a levy.

On workers’ rights, they support fines for businesses that fail to meet an agreed “Equal Pay Standard” and pledge to ensure that workers in the gig economy get access to the same employment rights as those in secure work. They also support “a devolution of employment law so that the Scottish Parliament can protect workers’ rights”.

The SNP support measures to improve corporate governance including firms “taking a greater stake in the communities within which they operate.” They will “back moves to increase worker representation on company boards,” including greater representation of women and minority communities, and commit to ensuring the balance of salaries of all employees is considered when firms decide on senior pay packages.

The party support inclusion of climate change related disclosures in firms’ annual reports as well as climate-friendly auditing of firms, and “a reinstatement of the reverse burden of proof which […] required senior bank managers to demonstrate they had done the right thing where wrongdoing had emerged on their watch.”

Other measures on business, human rights and the environment include campaigning for the UK to remain aligned with EU environmental regulations on trade (even if Brexit takes place) and transitioning to a greener economy through a Green New Deal. They say they will “oppose any attempts by the UK government to scrap the Human Rights Act and withdraw the UK from the ECHR” and will press for the UK to introduce new rights. They pledge to support human rights defenders who “risk their lives to address injustices and protect others.”

On corporate taxation, the SNP pledge to support a crackdown on tax avoidance and evasion including action “to uncover the beneficial ownership of Scottish Limited Partnerships, other companies and trusts” and measures “to improve the transparency of tax paid by international companies.”

Liberal Democrats

The Liberal Democrats state that businesses can be a “force for good” but that currently the system “is not working as it should.” They pledge to “promote responsible capitalism that works for the future.”  

On corporate accountability legislation, they pledge to “introduce a general duty of care for the environment and human rights – requiring companies, financial institutions and public sector agencies to exercise due diligence in avoiding specified activities such as child labour or modern slavery, or specified products such as commodities produced with deforestation, in their operations and supply chains, and to report on their actions.”

Other measures on business, human rights and the environment include better regulation and scrutiny of international trade and investment treaties, improved control of arms exports, an end to UK export finance for fossil fuel related activities and an end to fossil fuel subsidies for companies. Pension funds and managers would be required to show that their investments were consistent with the Paris climate agreement and there would be “new powers for regulators to act if banks and other investors are not managing climate risks properly.” The party also pledge to create a new “Office of Environmental Protection” to enforce compliance with climate and environment targets.

Regarding workers’ rights, the Liberal Democrats commit to “a new worker protection enforcement authority” to protect those in precarious work, and modernising employment rights and strengthening union representation for workers in the gig economy.

The party pledge several corporate governance measures to be applied to companies with over 250 employees: giving “a right to request shares” which would be held in trust, ensuring that such companies have at least one employee representative on their boards, and an extension of the Equality Act to these companies. They also commit to “include staff representation on remuneration committees” and to “require binding and public votes of shareholders on executive pay policies.”

They pledge to ensure that large companies have “a formal statement of corporate purpose, including considerations such as employee welfare, environmental standards, community benefit and ethical practice, alongside benefit to shareholders” and to encourage “a diversity of business types” such as smaller firms who want to be both profit-making and have a positive impact on society, workers, communities and the environment. They also commit to extend the scope of the existing ‘public interest’ test regarding takeovers of “large or strategically significant companies by overseas-based owners.”

The Liberal Democrats also pledge to “take tough action against corporate tax evasion and avoidance especially by international tech giants and large monopolies.”

Plaid Cymru

Plaid Cymru’s manifesto includes a range of measures to ensure businesses protect the environment. They commit to work to ensure future trade policy will “uphold social, health and environmental protections.” They commit to “make trade terms explicitly subject to environmental and human rights commitments” with “specific protections for vital global ecosystems and habitats such as the Amazon, and for indigenous people.”

They will also legislate “to end the importation of goods that have caused deforestation,” “require that imported palm oil comes from sustainable sources” and “ban imports of soy, beef and other agri-commodities from illegally deforested land.” They argue for an “immediate moratorium on deep sea mining.” They also commit to a “Green Jobs Revolution” and transition to a low-carbon, nature-friendly economy through establishing a new “Ministry for the Future.”

On human rights, they pledge to publish “a human rights charter for Wales to protect the most vulnerable members of our communities” “against the backdrop of a Tory Party who are intent on undermining the Human Rights Act.”

Green Party

The Green Party states that “business will share collective responsibility for delivering the Green New Deal” and that “businesses that are currently obliged to maximise returns to shareholders will need to take account of other stakeholders […] and the impact of their activities on the climate and on communities.”

On corporate accountability legislation, they commit to create new international ‘ecocide’ law to make severe environmental damage a criminal offence. They also pledge to “require UK corporations to abide by the environmental, labour and social laws of their own country and of the country in which they are operating – whichever are the more stringent.”

Other commitments on business, human rights and the environment include the end of all subsidies for the UK arms industry’s exporting of weapons and systems, a carbon tax on fossil fuel companies and retaining the Human Rights Act. They also pledge to make trade terms explicitly subject to (and prevented from undermining) environmental and human rights make trade terms explicitly subject to environmental and human rights commitments (“including over protections for vital global ecosystems and habitats such as the Amazon, and for indigenous people”). As well, they pledge an end to investor-state dispute settlement mechanisms “which give too much power to investors”.

Regarding corporate governance and workers’ rights, they commit to close loopholes that allow employers in the gig economy to deny workers key rights.

On corporate taxation, the Greens plan to ensure corporation “pay what they owe and invest in the public services and infrastructure from which they benefit” by “clos[ing] down corporation Tax loopholes by widening the definition of ‘profit’ and clamping down on tax havens.

Brexit party

The Brexit Party’s manifesto focuses on a “Clean-Break Brexit” to “shape the future of our economy and society“. It does not mention corporate accountability measures but say they will “overhaul financial services regulation, cut red tape, increase competition and boost lending to Small and Medium Enterprises.​” The party also plan to exempt from Corporation Tax companies with profit before tax of under £50,000.