CLT envirolaw response.

Question 1: What more could Government do to encourage a greater number of companies to adopt internationally recognised principles and guidelines in their own corporate responsibility policies? How might Government, in a light touch way, measure this take-up?

Provide more education on the internationally applicable principles and guidelines. Education should include the differences between different principles and guidelines, and the reasons or business case for why companies should start using these approaches. It is likely that the take up by companies will only to be possible to measure through voluntary reporting, if a ‘light touch’ does not mean introducing legislation.  If the Government is thinking of adopting a similar Act to the California Transparency Supply Chains Act, thereby asking companies to disclose information on their websites, it is recommended that the wording is not simply adopted directly from the California act, but sits properly within the recent changes to reporting in the Companies Act and the Government considers how this fits within its Human rights action plan. 

The Government could introduce reporting requirements of internationally recognized standards for the public sector. For example, Sweden requires public-sector organisations to report according to the Global Reporting Initiative.

The Government uses a ‘comply or explain’ approach  to reporting on non-financial issues for quoted companies. However, there are instances where companies could explain that they consider an issue to not be material to its strategy, where their investors consider this to be otherwise.

The government should require engagement between the company and its investors on these issues, to ensure that investors agree with the company’s assessment. This type of engagement approach is promoted by principles and guidelines such as Integrated Reporting.

The Government could further promote the implementation of international principles and guidelines as a potential  legal defence to not providing material information under a comply or explain approach. Particularly where these are verificable such as the AA1000 standard.

The Government could introduce more certainty in this area. In Denmark, for example, a company has to report whether it has a CSR policy on or not, regardless of whether it is material.