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Companies Bill [HL]

My Lords, I support the government amendments and oppose Amendment No. 245C. I must declare an interest. I am the vice-chair of the Ethical Trading Initiative, but today I am speaking in a personal capacity. I welcome the government amendments as an acknowledgement that there are issues of labour standards, environmental, social and human rights that impact down company supply chains. I listened with interest to those who have expressed concern about that. In their annual reports, most companies declare themselves committed to corporate social responsibility. I welcome that. Of course, they should be judged by the level of commitment that they apply in practice. It is interesting that some companies declare quite a surprising amount of detail about their supply chain. Somehow they manage to survive the competitive risk. It is a well known fact that in the global environment in which companies operate today, many of them share the same suppliers. They may not publicly admit that, but they do. I commend those who have said that what the Government are doing is a worthwhile but modest step in the right direction. I do not share the foreboding of Cassandra, alias the noble Lord, Lord Patten, on the terrible effects that the provision may have. It is important to note that this is a modest amendment. All it does is require 1,300 quoted companies to do what responsible companies were doing in the 1990s. According to the Minister's statement on Report, it will remain the directors’ judgment what is relevant in the supply chain for them to report on and will not require companies to list their suppliers. Some NGOs were calling for the Government to go a lot further. Like many others, I do not see anything wrong with that. I am struggling to get my head round a scenario where the Institute of Directors and the CBI and not being effective in their lobbying. Some of my trade union colleagues would say that they are far too effective. I leave the House to judge where the balance of evidence lies on that front. I cannot believe that they do not have the ear of the Government. NGOs were calling for the Government to go a lot further in strengthening the rules in the Bill on companies’ social and environmental impact, including stronger reporting requirements—several noble Lords, including the right reverend Prelate, referred to that—and a positive duty on directors to minimise negative impacts. Personally, I do not see a problem with allowing directors to withhold information that might put individuals at risk to their privacy, safety or security from threats by animal rights or other extremist organisations. That is not a theoretical threat or risk; we know that it exists and I welcome the Government for acknowledging that. However, I would welcome clarification about the circumstances where directors could legitimately withhold information about suppliers and examples of where that would be seriously prejudicial to a person or contrary to the public interest. I would welcome the Minister expanding on that. He gave some clarification, but it is important that that does not become a get-out clause. In particular, I am concerned that the amendment will be open to abuse by directors who want to withhold information about supply issues that should be in the public domain, as other noble Lords have said. I should like reassurance from the Government that the drafting of the provision does not leave it open to abuse in that way. Also, I believe that the amendment could be improved by introducing a ““comply or explain”” principle, as under the combined code on corporate governance: that is, requiring directors to make a statement in their business review indicating that information about suppliers has been withheld under that provision. I oppose the amendment tabled by the noble Baroness, Lady Noakes. Despite her assurances, I believe that it would seriously weaken the government amendments. With this caveats, I welcome what the Government have done.