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Company Law Reform Bill [Lords]

Notwithstanding what has been said from the Front Benches so far, I should like briefly to urge the Government to think again and respond more positively to the calls from the Trade Justice Movement and the Corporate Responsibility Coalition to use the Bill to ensure that companies can be held responsible for how their practices and policies affect people and the environment. It has been suggested that that could be done, first, by requiring corporations to report on their social and environmental impacts in the same way as they have to make financial reports. I heard what the Secretary of State said about clause 399, but I share the scepticism of others about the robustness of business reviews. It would be much more sanguine if operating and financial reviews were still on the agenda. Secondly, companies could be held responsible by obliging directors to minimise damage to communities and the environment rather than just to have regard to them. The obligation is the clearest way of going forward. I do not believe that it would cut across the accountability of directors to shareholders. Thirdly, we should allow people from overseas who are harmed by the activities of a UK company to take action against them in UK courts if they cannot secure justice at home. I understand the Government’s reluctance, but if we do not make this sort of change, we shall effectively condemn victims in the poorest parts of the world to no or at best inadequate redress. We have only to think back to Bhopal and the years after it and the fact that the victims of that tragedy have still not been compensated properly to realise what such a change would mean. I appreciate the fact that in some ways the calls go against the grain of the Bill, which is essentially deregulatory. Much of the simplification and clarification of the Bill is good and welcome. However, unlike the hon. Member for Eddisbury (Mr. O'Brien), I do not subscribe to the view that regulation is always bad and deregulation is always good. Sometimes we need regulation in order to move forward and in particular to provide a level playing field so that those who want to do the right thing do not find themselves unable to compete with those who are prepared to sacrifice planet and people in the scramble for profits. My right hon. Friend the Member for Cardiff, South and Penarth (Alun Michael) and the right hon. Member for Suffolk, Coastal (Mr. Gummer) mentioned the delegation of prominent business leaders who went to see the Prime Minister earlier today to talk about the threat of climate change. From the news coverage that I heard, it seems that they told him that companies needed more than encouragement and fine words; they need a stronger steer and in some areas of policy stronger and tighter regulation. That argument transfers over to the subject of this legislation. I do not believe that we will get the level of transparency, responsibility and accountability that is needed across the board on the basis of the neo-voluntary approach that the Government appear to advocate. While the concept of enlightened shareholder value, including social and environmental values alongside financial ones, is admirable in its way, I am not convinced that without regulation it will make a significant change in current practice. Current practice, of course, is what has led the coalition of environmental groups, charities, unions and Churches to mount the campaign that they have over the past months to seek to improve the Bill in the way that I have described. One of the business leaders who met the Prime Minister today to discuss climate change was apparently the UK chair of Shell. Shell is lauded by some as a company that willingly embraces corporate social responsibility. In particular, it is claimed that Shell adheres to the Organisation for Economic Co-operation and Development guidelines for multinational enterprises—a set of international voluntary guidelines. Yet Friends of the Earth, local groups and others have provided example after example of where Shell has behaved anything but responsibly and has cheerfully ignored those very OECD guidelines. I cite, for instance, the impact of its underwater liquefied gas terminal on the local fishing industry in Louisiana; the damage to wild salmon spawning areas and the last western pacific grey whales that will be caused by work on the Sakhalin II project in Russia; oil spills and air pollution from illegal flaming in the Niger delta in Nigeria; and emissions of massive quantities of toxins damaging to the human cardiovascular and respiratory systems from Shell’s joint venture Motiva refinery in Port Arthur in South Africa. Shell workers are subject to toxic pesticides and oil waste at São Paulo in Brazil. The company still does not guarantee medical treatment for affected employees. There are many, many more examples from around the world. There is strong evidence that this acclaimed corporate leader in the international community is not delivering what it promises using the voluntary approach. Shell is not alone, of course. Our supermarkets, in their rush to push down prices, are trampling on the rights of workers in the developing world. Women workers picking fruit in South Africa exclusively supplying Tesco report dangerous exposure to pesticide, lack of protective equipment, poverty wages, long hours and increased insecurity. Similarly, research in south-east Asia shows that palm oil plantations are replacing natural forests at a horrifying rate, destroying orang-utan habitats and leading to violent conflict and human rights abuse. Palm oil is used in one in 10 supermarket products, but few of our very profitable supermarket chains have responded positively to the call for them to ensure that palm oil comes from sustainable, non-destructive sources. Tobacco farmers in Brazil and Kenya have suffered health problems linked to the use of harmful pesticides sold to them by British American Tobacco. Those are the sorts of abuses that the changes for which we are calling could help deal with by introducing a legal right to information, legal responsibility and legal redress. Other countries such as Sweden, Finland and Denmark have higher levels of business regulation and are still ranked in the top five in the national competitive index. One fact supplied by members of the World Development Movement who lobbied me on this issue recently really convinced me that the voluntary road would not take us very far at all. Out of 61,000 multinational corporations, fewer than 2,000 produce annual reports on their social and environmental impacts. When we remember that two thirds of global trade is carried out by multinationals and that some of those who produce social and environmental impact reports do so as a cynical public relations exercise, we have to conclude that we need, and more importantly, the most vulnerable people and places on this planet need, good robust regulation. I hope that Ministers will think on that as the Bill proceeds through the House.