Friends of the Earth expressed shock at the Chancellor's announcement at CBI annual conference today that the Government will abandon its only policy measure to date requiring more environmentally responsible corporate behaviour.

The decision to abandon the Operating and Financial Review (OFR), which contained modest measures to promote more responsible green behaviour from companies, is a clear signal that the Chancellor is willing to allow communities and the environment to suffer at the hands of British companies. The move appears calculated to enable the Chancellor to trumpet ‘pro-business’ credentials.

Friends of the Earth's Corpoarte Accountability Campaigner, Sarah Jayne Clifton, said: “The OFR, flawed though it was, contained the only concrete action this Government has taken to require at least some modest moves toward corporate responsibility. Now Brown has said that the benefits of the OFR would not have been worth the extra cost to business.

“What about the costs to people and communities around the world whose health and livelihoods are destroyed by irresponsible British businesses? Now UK companies operating overseas won’t even have to report on any environmentally and socially damaging activities they are involved with. “It is about time the Government stopped bowing down to CBI scaremongering and recognised that regulation is essential to tackle market failure and protect people and the environment from the negative impacts of corporate activity. Skimping on measures now to improve business impacts will mean much greater costs in the long-term.”

Mandatory social and environmental reporting has been repeatedly been called for by NGOs, progressive businesses and large parts of the investment community and the Operating and Financial Review, due to come into force in April 2006 for all stock market listed companies, was a modest step in the right direction. It had already been significantly watered-down, so that the final regulations introduced in March 2005 failed to require companies to report on a wide range of risks.

The OFR has been held up by the Government as a catch-all solution to irresponsible behaviour by British business. It has used the OFR to justify its reluctance to take other measures such as strengthening directors’ duties in relation to the environmental and social impacts of business. Now it plans to abandon the only action it has taken, signalling that the protection of the environment and human rights are less important that the delivery of profits for UK businesses.


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