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When the UK government embarked on its reform of corporate law, Google
was operating out of a garage. More than eight years should have been
long enough to achieve a reasonably decent result. But in so far as the
Companies Bill concerns corporate social responsibility, no one is
happy with the outcome, and no one has emerged with much credit (see
page five).
As so often in CSR, the focus throughout has been on process, not substance: the actual clauses relating to CSR have always appeared less important than the way they were produced. For all its talk of stakeholder involvement, the government is the main culprit. Gordon Brown’s high-handed dismissal of the Operating and Financial Review effectively cancelled out six years of consultation. The Business Review now required from companies is not underpinned by the reporting standards that the chancellor threw out, which – crucially – provided indispensable guidance on key performance indicators.
Business, too, has not come out smelling of roses. The CBI’s complaint last month about ministerial tinkering by Margaret Hodge was valid. But its melodramatic condemnation of the industry minister’s eleventh-hour proposal that directors disclose contractual and other arrangements essential to their business was hardly constructive. Throughout the bill’s long gestation, even companies at the forefront of CSR failed publicly to support greater disclosure of corporate social and environmental performance, confining their backing to obscure documents and behind-closed-door discussion.
As the curtain falls on what from a CSR viewpoint has ended up little short of a farce, all interested parties need to meditate on the causes of the debacle. At least two things are obvious. First, while CSR has moved on in these eight years, it still lacks clearly defined, robust and generally accepted concepts and definitions. More intellectual rigour is needed all-round. Second, in the absence of such agreed concepts and definitions, to devise omnibus legislation in a complex and dynamic field that embraces supply chain management, ethical marketing, employment practices and greenhouse gas emissions, probably was and remains overly ambitious. With more modesty and realism, some disappointment could surely have been avoided.
We are left to see how the business review provisions now enshrined in the Bill will be implemented, without standards and guidance to inform their reach and application in practice. Hopefully, the lawyers won’t be the only beneficiaries, though their role should not be disparaged if legal challenges lead to appropriate amendments. The objective, after all, is to forge suitable instruments to ensure corporate sustainability and improve the efficiency of the market.
As so often in CSR, the focus throughout has been on process, not substance: the actual clauses relating to CSR have always appeared less important than the way they were produced. For all its talk of stakeholder involvement, the government is the main culprit. Gordon Brown’s high-handed dismissal of the Operating and Financial Review effectively cancelled out six years of consultation. The Business Review now required from companies is not underpinned by the reporting standards that the chancellor threw out, which – crucially – provided indispensable guidance on key performance indicators.
Business, too, has not come out smelling of roses. The CBI’s complaint last month about ministerial tinkering by Margaret Hodge was valid. But its melodramatic condemnation of the industry minister’s eleventh-hour proposal that directors disclose contractual and other arrangements essential to their business was hardly constructive. Throughout the bill’s long gestation, even companies at the forefront of CSR failed publicly to support greater disclosure of corporate social and environmental performance, confining their backing to obscure documents and behind-closed-door discussion.
As the curtain falls on what from a CSR viewpoint has ended up little short of a farce, all interested parties need to meditate on the causes of the debacle. At least two things are obvious. First, while CSR has moved on in these eight years, it still lacks clearly defined, robust and generally accepted concepts and definitions. More intellectual rigour is needed all-round. Second, in the absence of such agreed concepts and definitions, to devise omnibus legislation in a complex and dynamic field that embraces supply chain management, ethical marketing, employment practices and greenhouse gas emissions, probably was and remains overly ambitious. With more modesty and realism, some disappointment could surely have been avoided.
We are left to see how the business review provisions now enshrined in the Bill will be implemented, without standards and guidance to inform their reach and application in practice. Hopefully, the lawyers won’t be the only beneficiaries, though their role should not be disparaged if legal challenges lead to appropriate amendments. The objective, after all, is to forge suitable instruments to ensure corporate sustainability and improve the efficiency of the market.
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