Corporate Responsibility MPs Briefing

Why new laws are needed to make companies value people and the planet, as much as they value making a profit

MP Briefing
February 2005
Introduction
We believe the voluntary only approach to Corporate Responsibility has failed. Many companies and the Government claim that corporations will meet their environmental and social obligations voluntarily; they say that pressures from the market place will ensure businesses behave better.
Prime Minister Tony Blair challenged the top 350 companies to publish environmental annual reports by the end of 2001, but only 23 per cent of companies had risen to the challenge by the deadline. We don't think this is good enough. If rules, consistency and transparency are good enough for the financial side of a business, then they're good enough for the Corporate Responsibility side too.
What Are We Calling For?
SPEAK, as part of the Corporate Responsibility (CORE) Coalition and the Trade Justice Movement, believe the only way Corporate Responsibility will succeed is through new laws, which would ensure that companies are held legally accountable for their social, environmental and economic impacts both at home and abroad. SPEAK’s Big Dress Campaign is calling for new laws in 3 key areas:
• make reporting of the global social, human rights and environmental impact of companies mandatory.
• make directors of companies who do not take all the necessary steps possible to limit the negative social and environmental impact of their businesses accountable for the damage they cause.
• allow communities to bring cases against companies in the home country, if justice fails them in the country in which an abuse took place.

What Can You Do?
Raise SPEAK’s and CORE’s concerns with the Secretary of State for Trade and Industry. Ask them for their response and urge them enact the three new laws detailed above and to use their influence to ensure that UK and international law make companies fully accountable for their impacts overseas.

The Big Dress Campaign
SPEAK has been campaigning on trade justice for 4 years now, looking at the injustices that many countries suffer because of biased trade rules, which favour rich countries and companies over the needs of the poor and the environment.
During this time we have been creating the biggest dress in the world standing over 9m high, 22m wide and containing 14km of stitching. Thousands of people have decorated fabric squares with their hopes and prayers for trade justice to contribute to this huge creative petition. The Big Dress is now sewn together and ready to tour the UK, and so we are launching our Big Dress Campaign.

Who Are SPEAK?
SPEAK are a network connecting together students and young adults to pray and campaign on issues of social justice. Through bringing change to situations of injustice, we aim to share our faith in our all loving, all powerful creator: God.
SPEAK connects over 4,000 students and young adults who believe passionately in changing injustice in our world and believe that their Christian faith calls them to speak out for the voiceless and to share our hope for change in Jesus. SPEAK is a member of the CORE coalition of over 100 charities, unions, faith groups and businesses, and also a member of the Trade Justice Movement.

Why New Laws Are Needed
Today the number of multinationals and affiliated companies has risen to over 800,000 worldwide. Many companies are now bigger than governments, and UK companies are some of the world’s biggest foreign investors. The power, wealth and global influence of business is greater than ever before. While efforts to encourage the

positive impact of companies should continue, and some companies are making real progress, the way for Corporate Responsibility to truly succeed is through new laws being put in place on:
• Reporting - requiring all UK companies to report annually on their social and environmental impact, in the UK and abroad, using comprehensive social, environmental and economic performance indicators. A standardised approach brings the ability to measure and compare companies’ impact. Currently under UK law businesses must complete financial reports, with rules about what is in them, but this is not true for social and environmental impact reports.
• Duty of Care - expanding current legal company directors' duties to include a specific ‘duty of care’ for both communities and the environment. This would mean that a director would have to consider the consequences to communities, the environment, and employees (as they must already legally do for shareholders) before making a business decision, and take reasonable steps to reduce any significant negative social or environmental impacts. Current laws mean profit is the most important factor for directors and so social and environmental accountability struggle to be considered. We need a more balanced, real-world approach.
• Liability - for communities abroad to be able to seek compensation in the UK, if unable to do so in their own country, for serious environmental damage or human rights abuses committed by UK companies or their overseas subsidiaries (such cases are well documented – see the CORE website). If a company had a burst oil pipe in the UK they would be legally accountable and required to pay for clean up work, and reimburse people for any loss. Too often this is not the case in the developing world or where environmental legislation is lax, or not enforced.

New Laws To Protect Communities And The Environment in Nigeria
In Nigeria companies including Shell, Total and ExxonMobil make profits from huge oil reserves but 70% of the population, 84 million people, still live on less than US$1 a day. Local communities in areas with oil live alongside non-stop gas flaring where the gas from oil extraction is burnt off into the atmosphere, which causes sickness, local pollution and contributes to climate change.
Gas flaring by oil companies in Nigeria is greater than anywhere else in the world despite 20-year-old regulations to ban it. This marks a serious but unnecessary contribution to climate change. By 2002 flaring in Nigeria had produced more greenhouse gases than all other sources in sub-Saharan Africa combined. Climate change already impacts the region through food insecurity and the rising costs of extreme weather damage.
Flares also contain toxins, such as benzene, which pollute the air. Local people who live and work alongside the flares with no protection complain of asthma, bronchitis, the intense heat and roaring noise from the flares.

Why New Laws Make Sense
There are sound business arguments for new laws to be put in place:
• it would prevent the ‘free-rider’ syndrome which allows those who do nothing to get away with it
• simplifying the process would help to clarify what governments and society expect of businesses
• to ensure long-term opportunities as consumer become increasingly aware of how products they consume have been produced.

Red Tape Or Road Signs?
Some companies argue against new laws as red tape. In fact effective regulation has lead to some of the greatest advances in social conditions in modern times from air quality to industrial emissions. We believe that the new laws would act as a road sign to provide companies with clear signposts rather than increased red tape.

Why The Voluntary Approach Has Failed
Over the last 10 years the business and Government focus on companies meeting their social and environmental obligations voluntarily has lead to a plethora of different codes of conduct being drawn up. Some companies are using these codes positively but too many are not which can be explained for four reasons:
• too many competing standards and codes has lead to a range of codes requiring a varying level of compliances
• lack of incentive meaning that firms are often only likely to adopt policies when they believe there is a risk to a brand
• lack of enforcement measures means that voluntary codes have little to ensure they are adhered to
• short-term pressures for profit mean that few companies consider long-term sustainability issues

Time For Change
Are we anti-business? No. We believe that there are many positive impacts of the private sector, and that some companies are genuinely trying to be responsible and to develop good practice socially and environmentally. However the current system isn’t working. The bulk of UK company law governing accountability was written over 150 years ago and since then the world has changed unrecognisably. We believe it is time for those laws to change too.

What Can You Do?
• Use your influence to bring about changes in UK Company Law to protect the world's poorest people. Contact SPEAK and the CORE Coalition for ways to be involved. We can provide information and updates on law review, Bills and EDMs in particular.
• Express your support, by signing up as a MP supporter of the SPEAK Big Dress Campaign and the CORE Coalition.
• Assist the campaign by helping to bring pressure to bear on the Secretary of State for Trade and Industry (as mentioned previously) and other key Ministers to make these changes to UK Company Law.
• Ask other MPs and contacts in business, unions, churches, universities or your local community, to sign up to the campaign and to get in touch about taking action.
• Pray for the campaign and for SPEAK and the CORE Coalition. Pray for other MPs to get involved and for the Government to change the law.
• Wear the Trade Justice badge to show your support for the campaign

For more information and to discuss our proposals contact Ben Gilchrist at the Manchester details below or email:
SPEAK is a network connecting together students and young adults to pray and campaign on issues of global injustice. Through bringing change to situations of injustice, we aim to share our faith in our all loving, all powerful creator: God.
SPEAK, The Crypt, St Peter's Church, Northchurch Terrace, London N1 4DA
Tel: 020 7249 4309 Fax: 020 7241 3248
SPEAK, 16 Bedwell Street, Moss Side, Manchester, M16 7LN Tel: 0161 232 8685
www.speak.org.uk

What Can God Do?
‘Here is my servant, whom I uphold, my chosen one in whom I delight; I will put my Spirit on him and he will bring justice to the nations. He will not shout or cry out, or raise his voice in the streets. A bruised reed he will not break, and a smouldering wick he will not snuff out. In faithfulness he will bring forth justice; he will not falter or be discouraged till he establishes justice on earth. In his law the islands will put their hope.’ Isaiah 42 v 1-5
This passage from the Bible was written about Jesus and what he would do. We believe that to act for social justice, to pray and campaign for change in the structures that hold so many in poverty is a noble cause, but without Jesus at its centre it is hollow. To put Jesus at the centre of all that SPEAK is and does, requires Jesus to be at the centre of each one of us that makes up the SPEAK network. This is why we are committed to learning more about what it means to be disciples of Jesus and to follow him. Through this, in combining our prayers with our campaigning, we believe that we add a powerful dynamic to our struggle for justice.
There is the potential danger for us in supporting a campaign to become so busy looking at the unjust structures of the world that we fail to deal with the injustice in our own hearts, and relationships. We need to recognise that God changes us in order to change society. With this in mind, in a SPEAK context we need to keep coming back to the importance of a relationship with Jesus as central to all that we do.
It is our hope in Jesus’ power to transform unjust situations that we look to and rely upon, not our own strength, wisdom or power.
Information sources
Corporate Responsibility (CORE) Coalition
www.corporate-responsibility.org
Trade Justice Movement, www.tradejusticemovement.org
Behind the Mask: The real face of corporate social responsibility, Christian Aid (2004). Why the CORE bill is good for business, New Economics Foundation (2002). The World for Sale – An introduction to Corporate Globalisation, Friends of the Earth (2003). Corporate Globalisation – a briefing, Friends of the Earth (2003).