Companies Bill A Missed Opportunity - Liberal Democrats

1.41.19pm BST (GMT +0100) Thu 19th Oct 2006

The Liberal Democrats today expressed deep disappointment at the Government's rejection of any independent verification of companies' claims of social and environmental impact.

The debate was part of the report stage of the Companies Bill last night.

Liberal Democrat Shadow International Development Secretary, Susan Kramer MP, said:

"Companies know shoppers will boycott goods made in sweatshops with child labour, or that are unfair to farmers.

"This Bill was a chance to give consumers that important. Instead, companies will be able to offer the public spin, not hard audited facts."

Liberal Democrat Member of Parliament, David Howarth, commented further:

"There is already a £10 billion market for ethical investment in the UK. Investors and consumers clearly care about the social and environmental impact of the products that they buy but they need accurate information on whether they really are investing ethically.

"Without an auditing requirement there is a chance that cynical firms will give ethical investment and consumption a bad name. The Business Review should not just be a marketing tool. Independent auditing is crucial to develop the market for ethical consumption and further develop the ethical investment market."

ENDS

Notes to Editors

Labour and Conservative MPs yesterday voted against New Clause 75 submitted by David Howarth MP in the controversial Companies Bill (formerly known as the Company Law Reform Bill). Under Liberal Democrat plans, auditors would be required to report any anomalies in the information provided by a company's Business Review.

Auditing would have provided investors and consumers with an independently verified Business Review giving potential investors and consumers reliable information to make ethical investment decisions.

Gordon Brown last year dumped the Government's mandatory Operating and Financial Review (OFR) and replaced it with the Business Review which is narrower in scope and weaker than the original OFR.

The aim of the original OFR and the new Business Review was to make companies report annually on the risks and challenges to the company caused by the impact of their activities on the environment and society.