Environmental and social transparency under the ... - ClientEarth

vi | Environmental and social transparency under the Companies Act 2006| viirequirements of section 417 Companies Act 2006, and explain the contentof ClientEarth’s proposed regulations.The review also explains why it is in companies’ self-interest to report onthese matters accurately and fully.The Annexes contain detailed examination and explanation of relevantlaw, governance and practice, to supplement the analysis presented in themain body of the review.In this review, the information and analysis is presented in an increasinglevel of depth and complexity as the book goes on. The most importantpoints are set out in the proposals and chapters, in summary. The annexesthen provide background and further detail to the main body, going backover some of the content of the main body with supplemental detail andlegislative quotation, as well as presenting some new subject matter. Theannexes will primarily be of interest to those wishing to go into considerabledepth, and to consider the broader analysis that has informed ClientEarth’sconclusions and proposals.ScopeThe Companies Act 2006 is the legislative foundation of UK company law.This review focuses on the legal framework that it establishes to governcompany reporting. 3The review focuses on the annual reporting of public, ‘quoted’ companiesbased in the UK. The review is an examination of UK law, and whilethe reporting obligations of unquoted companies are discussed to someextent, quoted companies are the primary focus, and the subject of theproposed regulation.Quoted companies are required to produce annual accounts and reportscovering a wide range of company activities. This review examinesthe extent to which environmental and social matters fall within theserequirements. Reporting of these matters is explicitly required in relationto the narrative, contextual annual directors’ reports. Reporting of someenvironmental and social matters is also required in company financialaccounts (e.g. large liabilities for environmental clean-up). However, thisreview does not lay out in complete detail the complex rules and contentrequirements relating to financial accounting, or analyse how such mattersrelate to them. Instead the broad framework is outlined, and the focusof analysis is on narrative reporting.The key legal requirements for environmental and social reporting, the‘business review’ of section 417 Companies Act 2006, only came into effectfor company reports for financial years beginning on or after 1 October2007. At time of writing, the first reporting cycle subject to these requirementswas yet to be completed. Therefore this review lays out the relevantlegal frameworks and a range of relevant contextual material, but doesnot in any detail analyse reporting in practice, as most existing reports attime of writing were not prepared in relation to current legal standards.For details of what ClientEarth is doing in relation to reporting practice,please see our website for updates.The review addresses the issue of annual accounting and reporting.Companies are required by law to provide a range of less detailed interimreports – these requirements are not examined here.