Companies may be forced to disclose green credentials

Companies could find themselves compelled to reveal the impact of their environmental and social policies under a Commons bill on greater corporate responsibility, which was launched yesterday by MPs.

Under the bill, which is supported by pressure groups including Friends of the Earth and Amnesty International, companies would be required to disclose information on their social and environment performance in annual results. The bill's launch was supported by more than 160 MPs.

A spokesman for Friends of the Earth said the legislation would address the "clear failure of the voluntary approach from the corporate sector to deliver on these issues". Only about a quarter of the UK's top 350 companies met a Government deadline of the end of 2001 to report on environmental and social performance, he said.

The pressure from MPs for companies to clean up their corporate act comes as George Soros, the financier and philanthropist, launches a campaign today calling for greater transparency from oil groups such as Shell and BP regarding any payments they make to national government.

Mr Soros and Global Witness, an environmental watchdog, will today call on government regulators to make such disclosure a condition of being listed on major stock exchanges. The moves, which come in the wake of the collapse of Enron, the US energy trader, reflect the growing tide of pressure for companies to become more transparent.

"In the post Enron world, even US President, George Bush, understands that accounting and consultancy practices must be regulated and enforced to ensure high standards and good business behaviour. What is true for corporate finance is equally true for corporate responsibility," said Charles Secrett of Friends of the Earth.

Linda Perham, the Labour MP who tabled the bill, said the "weight of opinion in Britain and Europe suggests governments will have to act". Measures in the European legislative pipeline could require more social and environmental reporting by companies.

Proponents of the corporate responsibility bill hope some of its measures, which would also require companies to consult on big projects and would establish a new regulatory body to oversee environmental and social standards, could be introduced through the current government review of company law.

While Deborah Doane, of the New Economics Foundation, argued that regulation was the only way to achieve "wider sustainable development objectives", the CBI cautioned against compulsory disclosure. Philip McCrum, a senior CBI policy adviser, said: "It is vital that ministers continue to adopt a carrot-led rather than a stick-driven approach."