December 2005
Is The Government Serious About The Environment? – What Has Happened To The Need For An Operating And Financial Review (OFR)?
If the need for companies to prepare an annual operational and financial review was a good idea for the past twelve months, what happened just before the CBI Conference at the beginning of December to make it a bad one?
At the conference, Gordon Brown, the Chancellor of the Exchequer, announced the Government would be scrapping the proposed requirement for businesses to publish an annual operating and financial review (OFR), a document which would look at a company's social and environmental performance. The OFR was the only piece of Government legislation to date that sought to regulate socially and environmentally responsible corporate behaviour.
The Chancellor sought to justify this move by claiming that he wanted to reduce the burden on business; what about the burden on the environment! He said "The better, and in my opinion the correct, modern model of regulation - the risk based approach - is based on trust in the responsible company, the engaged employee and the educated consumer, leading government to focus its attention where it should”. It may well be correct to take a risk based approach, but this must be a full risk assessment and this must include the potential impact on the environment.
Friends of the Earth is among the groups that have expressed shock at the announcement. The pressure group said the OFR had contained only modest measures to promote more responsible green behaviour from companies in the first place and claimed dumping it was 'a clear signal that the Chancellor is willing to
allow communities and the environment to suffer at the hands of British
companies'.
FoE's corpoarte accountability campaigner, Sarah Jayne Clifton, said:
"The OFR, flawed though it was, contained the only concrete action this Government has taken to require at least some modest moves toward corporate responsibility.”
If the Government is serious about the environment it needs to show it by following up on the pledges it makes and ensuring that everyone is accountable for the actions they take.
Many companies will have already made significant progress towards the compilation and publication of their initial OFRs. We would encourage them to continue to complete these and publish them despite the Governments u-turn. As discussed in last months article, legislation is not the only driver for Corporate Social Responsibility (CSR); socially aware organisations are starting to insist that members of their supply chain are able to demonstrate their credentials as organisations that are committed to a sustainable economy. It is these organisations who will ultimately benefit from a positive approach to CSR and the OFR or its equivalent is a step in the right direction.
For more information on CSR or an appropriate replacement for the OFR, contact Steve Stones on 024 7632 3260.
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