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Friends of the Earth is to seek a judicial review of last month's
controversial UK government decision to abolish regulations that would
have required large companies to produce Operating and Financial
Reviews (OFRs) covering their social and environmental impacts.
The pressure group wants a judge to consider the lawfulness of the decision, which was announced as a red tape saving measure by chancellor of the exchequer Gordon Brown at last month's Confederation of British Industry annual conference. The judicial review will consider whether Brown was entitled to make his decision without consultation. It is unclear how strong a case the NGO has, but it would have to pay costs if it loses. If the move is successful, the government may have to backtrack and reintroduce the OFR regime some other way - perhaps in the Company Law Reform Bill now in the House of Lords.
Elsewhere, mainstream and SRI investors have begun to urge companies to produce OFRs anyway, and there is now talk of trying to include provision on the subject in the UK's corporate governance code.
Meanwhile the government has tried to launch its own attempt at a damage limitation exercise, claiming that although the OFR regime will go, the requirements of the European Union Accounts Modernization Directive, which come into effect in April 2006, will still require companies to produce annual 'business reviews' that can take account of social and environmental issues. However, the requirements of the directive are less precise than the OFR and more easily side-stepped.
The pressure group wants a judge to consider the lawfulness of the decision, which was announced as a red tape saving measure by chancellor of the exchequer Gordon Brown at last month's Confederation of British Industry annual conference. The judicial review will consider whether Brown was entitled to make his decision without consultation. It is unclear how strong a case the NGO has, but it would have to pay costs if it loses. If the move is successful, the government may have to backtrack and reintroduce the OFR regime some other way - perhaps in the Company Law Reform Bill now in the House of Lords.
Elsewhere, mainstream and SRI investors have begun to urge companies to produce OFRs anyway, and there is now talk of trying to include provision on the subject in the UK's corporate governance code.
Meanwhile the government has tried to launch its own attempt at a damage limitation exercise, claiming that although the OFR regime will go, the requirements of the European Union Accounts Modernization Directive, which come into effect in April 2006, will still require companies to produce annual 'business reviews' that can take account of social and environmental issues. However, the requirements of the directive are less precise than the OFR and more easily side-stepped.
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