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Company Law Reform Bill [Lords]

Many of the hon. Lady’s constituents work at Heathrow, so there will be differences of opinion among her constituents. Corporate social responsibility—and the Bill, if it is toughened—will ensure that companies have to take note of the diverse views of her constituents. I hope that she will support the toughening of the Bill that I am suggesting. Just before the recess I met two campaigners from Honduras—Rosa Giron and Pedro Landa—who were working with the Catholic aid agency known as the Catholic Fund for Overseas Development to reform mining laws in their country. As we heard in an earlier speech, mining multinationals, some of which are based in the UK, bring investment to developing countries, but we have to acknowledge that they also bring environmental destruction and slave wages. CAFOD wants to ensure that the people of Honduras and the Democratic Republic of the Congo benefit from their mineral wealth, rather then paying a heavy price for it. It is just one of several NGOs that are part of the Trade Justice Movement coalition, which is campaigning to support and to improve the Bill. I was pleased to be able to sponsor a meeting of the Trade Justice Movement today, and in the light of it, I would like the Minister to clarify a couple of issues. The Bill makes it clear that the directors of a company must look at the long-term viability of the company and the future interests of shareholders, and that, in running the company for the long-term benefit of shareholders, they must have regard to factors such as the impact on employees and the environment, and report on the wider context in a business review. I would like some clarification of the nature of the business review, and to know what steps will be taken to ensure the quality of, and coverage of, the non-financial aspect of the reporting. The TUC and the Trade Justice Movement are asking for further amendments to ensure that there is a legal benchmark. All I would ask is that the Minister set out before us her benchmark for the acceptable quality and coverage of the business review. The Secretary of State said that there would be too much litigation if we agreed to the Trade Justice Movement’s proposals. Arguably, that is wrong for two reasons. Section 309 of the Companies Act 1985 gave directors a duty to have regard to the interests of employees. Only about three cases were brought in 15 years. That definitely did not open the floodgates to litigation, and it is analogous to what is being proposed here. The prospect of a company or shareholders suing a director is unlikely to happen under the extended proposals from the Trade Justice Movement. A company would not ever take action against its own directors lightly.