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166 | Environmental and social transparency under the Companies Act 2006Notes | 16792s 495(3)(b) Companies Act 2006.93s 495(3)(a) Companies Act 2006.94Ibid.95s 498(1) Companies Act 2006.96s 498(1)(a) Companies Act 2006.97s 498(1)(b) Companies Act 2006.98s 498(2) Companies Act 2006.99s 498(3) Companies Act 2006.100s 496 Companies Act 2006.101Department for Business Enterprise and Regulatory Reform, ‘Companies Act 2006:Regulatory Impact Assessment’ (January 2007) p. 17.102At one point UK law was to require a higher standard of audit; Annex 2 explains in detailhow the UK government backed away from a higher standard of audit in relation to thiskind of information in 2005, with the removal of the Operating and Financial Review.103See Annex 4.2.3 for further details.104Interview Perry Rudd and Matt Crossman, Research Team, Rathbone Greenbank (Telephone,15 October 2008).105For example, where companies have put policies in place to screen contractors throughouttheir supply chains, proper scrutiny of those systems requires audit or research whichgoes out on the ground to verify the standard of practices on the ground, throughout thesupply chain.106ss 455-460 Companies Act 2006. Under the Companies Act 2006, the Secretary of Statehas certain powers to ensure that companies fulfil their reporting obligations. The Secretaryalso has powers under s 457 Companies Act 2006 to authorize a person for thosepurposes.107The FRC has a range of other operating bodies, including the Accounting StandardsBoard (ASB), which issues accounting and reporting standards, and the Auditing PracticesBoard (APB), which establishes and promotes standards of practice in the auditing profession.108s 459(2)-(3) Companies Act 2006.109s 459(4)-(5) Companies Act 2006.110s 456(1) Companies Act 2006.111FRRP website, ‘About the Panel’ (accessed Nov 2009) .112Ibid.113Also any private company not qualifying as small or medium sized and not excludedfrom being treated as such under ss 382-384 and 465-467 Companies Act 2006, or anyprivate company within a group which does not qualify as a small or medium-sized group.114Financial Reporting Review Panel website, ‘How the FRRP Works » Powers’ (accessedNov 2009) .115Financial Reporting Review Panel, ‘Review Findings and Recommendations’ (2008).116Ibid.117Although it is important to note that the new business review requirements of the CompaniesAct 2006 only applied to company reports for financial years starting on or after 1October 2007, and so the Panel’s work in 2007/08 related to the provisions of the CompaniesAct 1985, which did not include explicit requirements relating to environmental or socialmatters, nor to discussion of the main trends and factors likely to affect the future development,performance and position of the company (see Chapter 1.1.1, and further Annex 1,for details).118s 437(1) Companies Act 2006.119S Sheikh, A Guide to the Companies Act 2006 (2008) p. 3.120This function of the AGM was explicitly recognised by the Company Law Review when itwas preparing the framework that would become the Companies Act 2006 (Company LawReview Steering Group, ‘Modern Company Law: Completing the Structure’ (November2000) p. 116.121Pinsent Masons, ‘Companies – The basics: Company Meetings’ (August 2008).122Accounting Standards Board, ‘Reporting Standard (RS) 1 The Operating and FinancialReview’.123Department for Environment Food and Rural Affairs, ‘Environmental Key PerformanceIndicators: Reporting Guidelines for UK Business’ (January 2006).124Slaughter and May, ‘Companies Act 2006 - Practitioner Alert: Business Review’ (June2007).125Global Reporting Initiative website (accessed Nov 2009) .126The IASB is an independent international standard-setting for accounting and reportingstandards, responsible for producing International Accounting Standards, as seen above. Itis a body of the International Accounting Standards Committee Foundation (IASC Foundation).
168 | Environmental and social transparency under the Companies Act 2006Notes | 169Chapter 2127Now the Department for Business Innovation and Skills (BIS), previously also theDepartment for Business Enterprise and Regulatory Reform (BERR).128Department of Trade and Industry, ‘Modern Company Law for a Competitive Economy’(March 1998).129Ibid., p. 9.130Electronic copies of which can be found at (at February 2009). These will be discussed below where relevant.131DTI, ‘Company Law Reform’ (March 2005).132Ibid.133SJ Berwin Press Release, ‘Company Law Review “A Superb Process”, says SJ Berwin’sPhilip Goldenberg’ (27 July 2001).134See Company Law Review Steering Group, ‘Modern Law for a Competitive Economy: TheStrategic Framework’ (February 1999) note 27, p. 37.135Proponents of the concept argue that as well as (properly) protecting the property interestsof shareholders, this is also in principle the best means of securing overall prosperityand welfare for society more broadly. After considerable debate and consultation throughoutthe CLR, the idea that company directors should have regard to the interests of anyoneor anything above or on the same level as those of their shareholders (labelled the ‘pluralist’approach) was rejected.136Company Law Review Steering Group, ‘Modern Law for a Competitive Economy: TheStrategic Framework’, p. 37.137s 172 Companies Act 2006.138DTI, ‘Company Law Reform’ (March 2005), pp. 16-17.Chapter 3139Allen L. White, ‘Business Brief: Intangibles and CSR’ (February 2006), p. 8.140Company Law Review Steering Group, ‘Modern Law for a Competitive Economy: TheStrategic Framework’ (February 1999), p. 13.141J Low and P Kalafut, Invisible Advantage: How Intangibles are Driving Business Performance(2002) p. 6.142Allen L. White, ‘Business Brief: Intangibles and CSR’, p. 5.143Darrell Bricker, ‘The Resiliency Concept’, from Ipsos, ‘Corporate Reputation: ConnectingFantasies with Reality’ (March 2006).144An MBA is a ‘Master of Business Administration’, an internationally recognised master’sdegree in business administration.145Business for Social Responsibility, ‘Human Rights’ (May 2002), quoted in D Neef, ManagingCorporate Reputation and Risk: A Strategic Approach Using Knowledge Management,p. 35.146Pierre Lassonde, ‘How To Earn Your Social Licence: Without local community support,your project is going nowhere’, Mining Review (2003) Summer.147Allen L. White, ‘Business Brief: Intangibles and CSR’, p. 7.148J Nelsen and M Scoble, ‘Social License to Operate: An Industry Survey’, Mineral Exploration(2003) Spring.149Business for Social Responsibility, ‘Emerging Trends in Corporate Social Responsibilityin the Mining Industry’, Materials for PDAC Short Course, Toronto, 2-3 March 2007.150J Nelsen and M Scoble, ‘Social License to Operate: An Industry Survey’.151Business for Social Responsibility, ‘Emerging Trends in Corporate Social Responsibilityin the Mining Industry’.152Oxfam America, ‘Breakthrough on Quilish’ (19 November 2004).153Hannah Hennessy, ‘Gold mine sparks battle in Peru’ BBC News (1 June 2005).154Shell Nigeria website, ‘Shell in Nigeria – History’ (accessed Nov 2009) .155For example, see R Boele et al, ‘Shell, Nigeria and the Ogoni. A study in unsustainabledevelopment: I. The story of Shell, Nigeria and the Ogoni people - environment, economy,relationships: conflict and prospects for resolution’ (2001) 9 Sustainable Development 2, pp.74-86. One of the most controversial practices in Nigeria is that of ‘gas flaring’, wherebyexcess gases and hydrocarbons are ‘burnt off’ from the production line. This practice hasbeen reported to: have heavily polluting effects in the local atmosphere; be seen by localcommunities to have brought ill health and crop damage; have provoked law suits fromlocal communities, and; in a ruling of 2005, have been found by the Federal High Courtof Nigeria to be a ‘gross violation’ of human rights. See, respectively: The Climate JusticeFoundation and Environmental Rights Action, ‘Gas Flaring in Nigeria’ (June 2005); TerryMacalister, ‘Shell faces flaring lawsuit’ The Guardian (21 June 2005); Gbembre v. Shell PetroleumNigerian Limited, et al., FHC/B/CS/53/05 (Federal High Court of Nigeria).156In particular, reports proliferated during the regimes of General Ibrahim BadamasiBabangida and General Sani Abacha. See Geoffrey Lean, ‘Shell ‘paid Nigerian military’’Independent on Sunday (17 December 1995); Cameron Duodu, ‘Shell Admits ImportingGuns for Nigerian Police’ The Observer (28 January 1996); Ken Saro-Wiwa, ‘CompleteStatement To Ogoni Civil Disturbances Tribunal’ (21 September 1995).
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