Firms may be forced to pay for pollution

Members of the European Parliament have backed far-reaching moves to call to account multinational companies for the environmental and social cost of their businesses.

Yesterday's vote increases pressure for legislation that would force all big firms to file annual reports accounting for the way they treat employees and the environment in the same way as they are obliged to disclose their financial accounts. The proposal now goes to the European Commission, which could decide to add the requirement to an updated directive on company law due to be unveiled this year.

Firms could be forced to give new information and meet internationally agreed guidelines. These would, for example, prevent the release of toxic chemicals or the use of child labour, and guarantee some minimum standards such as the right to join a trade union.

Supporters say one advantage of the scheme is that it would simplify the present system under which many international bodies have their own standards which mean little.

The Labour MEP Richard Howitt, who steered the proposals through Parliament, said a clear standard that was guided by compulsory reporting to national authorities would help end the problems of "corporate irresponsibility".

He said: "There are lots of companies which already report voluntarily. They are being undermined by other companies which profit from abuse."