Environmental and social transparency under the ... - ClientEarth

4 | Environmental and social transparency under the Companies Act 2006Proposal 1: Regulations to supplement section 417(5) Companies Act 2006 | 5(iii)(iv)(v)(vi)climate change (without prejudice to any obligations under otherRegulations specifically addressing the reporting of climatechange impacts);diversity in company management and workforce;community opposition or support, including details of the consultationand engagement processes undertaken;impacts on local communities including but not limited to directpersonal injury, adverse health impacts, infringement of humanrights;(vii) details of indigenous peoples’ rights in areas of current or prospectiveoperation;(viii) policies in relation to local employment content, procurement andtraining;(ix) contracts with or payments to military or security personnel, andany associated issues or incidents;(x) payments or donations made to Host State authorities or personnel;(xi) general political and social climate in Host States;(xii) departure from internationally recognised environmental practicestandards or other voluntarily undertaken codes of practicerelating to environmental issues;(xiii) departure from internationally recognised human rights standardsor Conventions, or other voluntarily undertaken codes ofpractice relating to social issues;(xiv) exemptions from Host State laws;(xv) evidence of non-compliance with Host State laws;(xvi) legal judgements;(xvii) any other environmental or social issue as relevant.• discussion of these matters in the directors’ report should include details of:(a)(b)(c)the specific risks and opportunities for the company;company policies or responses relating to the circumstances; andthe process and justification for decisions made relating to the circumstances.• where any of the above may result from the activities or impacts of any legalperson with which the company has a contractual or economic relationship,joint venture, minority shareholding or other relevant association, those risksmust also be disclosed, subject to section 417(11) Companies Act 2006.General requirements• the content of the annual reports relating to section 417(5) Companies Act2006 and any other environmental or social matters must give a true and fairview of the development, performance or position of the company’s businessduring the financial year.• where company policies, systems or achievements relating to environmentaland social matters are reported, they must be evidenced in a manner that givesa true and fair view of development, performance or position of the company’sbusiness during the financial year.• where non-financial Key Performance Indicators are used:(a)(b)they should be used consistently across all company reports within andbetween financial years;where they are not, explanation must be given.• the directors’ report must clearly state the scope and nature of the audit undertakenin relation to the report, and must state an opinion as to the extent towhich that ensures the accuracy of the report.• where audit or assurance has not been sought beyond minimum legal requirements,that fact must be clearly stated in the directors’ report.Environmental and social content of the summary financial statement• the summary financial statement of a quoted company preparing:(a)(b)(c)(d)Companies Act individual accounts (other than a banking or insurancecompany);Companies Act group accounts (other than a banking or insurancecompany);IAS (International Accounting Standards) 10 individual accounts; orIAS group accounts;must include a summary of information disclosed in the directors’ reportunder section 417 Companies Act 2006, as relating to environmental or socialissues as required by [these Regulations], to the extent necessary to give a trueand fair view of development, performance or position of the company’s businessduring the financial year.These requirements, in the context of ClientEarth’s other proposals, wouldhelp to ensure meaningful and detailed reporting under section 417(5)Companies Act 2006, providing clear direction to companies as to whatfactors must be considered. They would also create certainty and consistencyin the law, and ensure that more reliable and comparable informationis reported by quoted companies.