Environmental and social transparency under the ... - ClientEarth

90 | Environmental and social transparency under the Companies Act 2006Annex 2: Environmental and social reporting in review: the OFR | 91(b) must be kept available throughout the period specified in subsection (1)(b).(5) A failure to make the annual accounts and reports available on a website throughoutthat period is disregarded if—(a) the annual accounts and reports are made available on the website for partof that period, and(b) the failure is wholly attributable to circumstances that it would not be reasonableto have expected the company to prevent or avoid.(6) In the event of default in complying with this section, an offence is committed byevery officer of the company who is in default.(7) A person guilty of an offence under subsection (6) is liable on summary convictionto a fine not exceeding level 3 on the standard scale.Quoted companies are required to publish their full annual accountsand reports, including the directors’ report and business review, on anopen website maintained by or on behalf of the company, available freeof charge and at least until the next financial year’s annual accounts andreports are made available.Annex 2:Environmental and social reporting in review:the Operating and Financial ReviewA.2.1 Environmental and social reporting in review 92A.2.2 The ‘Operating and Financial Review’ 92A.2.3 The removal of the OFR requirement 98A.2.4 The removal of the OFR requirement as relating to ClientEarth’s 98proposalsA.2.3.1A.2.3.2Substantive requirements for reporting on environmental andsocial issuesScrutiny requirements for environmental and social reportingIn 2005 a major change was made in law with the introduction of themandatory Operating and Financial Review (OFR) for quoted companies,which included the first explicit legal requirements for the reporting ofenvironmental and social matters. However, the OFR requirement wasswiftly removed by the UK government, primarily justified on the groundsof the OFR’s cost to business and the regulatory burden.In this context, it is important to stress that regardless of what substancemight have been lost, ClientEarth’s proposed Regulations to supplementsection 417(5) Companies Act 2006 would not impose further reportingobligations on companies than currently exist in law; the Regulationswould simply give detail to existing legal requirements. Therefore thesubstantive differences between the OFR and the Companies Act 2006 arefor the most part irrelevant to ClientEarth’s proposal.The main difference between the requirements of the OFR and the CompaniesAct 2006 is in relation to audit requirements. Under the CompaniesAct 2006, auditors are required to undertake an audit of non-financialreporting which is considerably less extensive in scope than that whichwas required for the OFR. The broader audit requirement of the OFR wasassessed by the UK government to be the primary source of the OFR’scost burden to business, and this was the primary grounds on which theremoval of the OFR was recommended. 262 ClientEarth does not consider