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42 | Environmental and social transparency under the Companies Act 2006Chapter 2: The ‘Company Law Review’ | 43reporting practice. It is led by a small coordinating secretariat. Theprimary focus of its work is its ‘Sustainability Reporting Framework’, 125which provides guidance for organisations to use as a basis for disclosureabout sustainability performance, and provides a universally-applicable,comparable framework within which to understand disclosed information.More than 1,500 companies have declared their voluntary adoptionof the Guidelines worldwide, including many of the world’s largestand most controversial mining and extractives companies such as Shell,Vedanta Resources and Anglo American. Therefore, using a voluntaryapproach, the GRI has improved the amount of environmental and socialinformation that companies disclose, and the attention they give to theissues. However, the extent to which the GRI has stimulated reportingwhich gives a true and fair reflection of companies, including informationwhich might reflect the company in a negative light but which it is necessaryfor shareholders and other users to be party to, should be questioned.Furthermore, as an aspirational process, rather than one tied to specificstandards and subject to monitoring and compliance, it cannot be reliedupon to ensure a high or consistent standard of transparency. Nonetheless,it has an important place in the overall governance landscape ofcorporate reporting of these issues, one which must be complemented bymore robust and unambiguous reporting obligations at national level.The Carbon Disclosure Project gathers and disseminates voluntarily disclosedclimate change data from the world’s largest corporations, to informthe global market place. It has made considerable progress in engagingcompanies to be transparent about carbon emissions and climate changeimpacts. However, as well as remaining a voluntary scheme, and thus tosome extent unreliable, it relates only to climate change, not to any of theconsiderable range of other environmental or social issues that companiesneed to report on. Therefore while it has been instrumental in enhancingcorporate disclosure of climate change related data, and corporateengagement with the issue, it plays but one role in the broader spectrumof governance tools that are needed to ensure appropriate corporate transparencyon environmental and social issues.The International Accounting Standards Board (IASB) 126 is currentlydeveloping non-mandatory guidance for reporting of non-financialforward-looking information. It is aiming to develop principles andcontent requirements to make ‘management commentary’ reporting (theequivalent of directors’ reporting) useful to investors. It is expected to becompleted in the second half of 2009.Chapter 2:The ‘Company Law Review’ and the policyunderpinning the Companies Act 20062.1 An overview 432.2 Key concepts in review and reform 442.2.1 ‘Enlightened Shareholder Value’2.2.2 Enhancing shareholder engagement and dialogueThe Companies Act 2006 was the result of a long process of review, knownas the ‘Company Law Review’. Key themes and policy goals to emergefrom the Company Law Review are directly relevant to the resultingenvironmental and social reporting requirements. These policy goalswere restated as priorities by the UK government’s White Paper, whichled directly to the Companies Act 2006. The need (i) to enshrine in lawand develop in practice the idea of ‘enlightened shareholder value’, andthe importance of management’s long-term vision for a company’s success,and (ii) to enhance the engagement of shareholders with the businessof the company and increase their dialogue with company management,were seen as central priorities for company law. When read together, thesepolicy objectives demand effective and extensive company reporting ofenvironmental and social matters. The current lack of clarity in legalobligations for environmental and social reporting and the weaknesses inthe regulatory mechanisms that scrutinise such reporting undermine theachievement of the UK government’s policy objectives.2.1 An overviewThe Company Law Review (CLR) was launched in March 1998 by MargaretBeckett, then Secretary of State for Trade and Industry, with the publicationof the Department of Trade and Industry (DTI 127 )’s consultationpaper, ‘Modern Company Law for a Competitive Economy’: 128“[T]he Government commissioned the Company Law Review (CLR),an independent group of experts, practitioners and business people,to take a long-term and fundamental look at our underpinning systemof company law, to see how it could be brought up to date.” 129