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International Labour Law

My hon. Friend rightly says that it is important that British companies operating abroad have regard to some of the things that she mentions. We would expect those companies to comply with the legal systems in which they operate. Some countries have ensured that basic standards are built into their employment law, although that is not the case in others. We would encourage British companies operating around the world voluntarily to apply the basic minimum standards. We cannot compel our companies to operate in that way in foreign jurisdictions, although we have instituted arrangements in our own corporate law and we are party to monitoring arrangements that provide for greater openness and transparency in this area. The Companies Act 2006 brings the regulatory framework up to date to reflect what we see as the modern business environment. It enshrines in statute the concept of enlightened shareholder value, which recognises that directors will be more likely to achieve long-term success for the benefit of their shareholders if their companies pay appropriate regard to wider matters such as the environment and their employees. The Government are committed to improving company reporting and transparency, and wish to encourage full and transparent corporate reporting to shareholders in both financial and narrative reporting. By improving the way in which companies report on their activities and by enhancing that transparency, shareholders will be able to hold directors to account more effectively. We made good progress in the Companies Act in bringing together this kind of commercial success with the kind of sustainability that we see in this shareholder value. The key instrument is the business review, which is designed to encourage directors to provide strategic and forward-looking information. All companies, other than small companies, must prepare a business review as part of the directors’ annual report. From October, quoted companies must disclose information—to the extent that it is necessary for an understanding of the company’s business—on environmental, employee, social and community matters, as well as on contractual and other arrangements. That is of value in adding to the quality of companies’ narrative reporting and promoting responsible business behaviour.