Reporting standards the answer to CBI's worries

10.00.00am GMT Sun 29th Oct 2006

David Howarth MP, who led the Liberal Democrats in the Commons on the controversial Companies Bill, has today answered critics of the Government's supply chain amendment.

The amendment (introduced by the Government at the last minute, in response to backbench pressure) requires businesses to list their suppliers in their annual reports as part of the Business Review. The Business Review replaces the more stringent Operating and Financial Review which was unceremoniously scrapped by Gordon Brown last year and aims to make public the social and environmental effects of company's activities. It has been criticised by the CBI and the Institute of Directors as "an interpretive nightmare".

Mr. Howarth has proposed an answer to this problem:

"Large businesses are concerned that they don't know what is needed for the business review and that they don't know where they stand.

"The way to solve this problem is to restore the reporting standards that were in the original Operating and Financial Review. Without proper auditing and standards businesses are confused and there is the potential for unscrupulous businesses to 'greenwash'.

"Accurate information on a company's social and environmental effects, including their supply chains, is crucial to encouraging the growing market in ethical investment and consumption. There is already a £10 billion market in the UK for ethical investment. Consumers and investors are boycotting companies which damage the environment or use child labour. The Government needs to accept an auditing standard which will give investors and customer the information they need not just provide some companies with a marketing tool."

The Companies Bill will be debated in the House of Lords on Thursday 2nd November where it is likely that an amendment may be introduced to reintroduce the reporting standards and auditing requirement.