Filip Gregor
Head of the Responsible Companies Team
A proposal released today by the European Commission to require large European companies to report on environmental and social issues will not guarantee ethical corporate behaviour according to the European Coalition for Corporate Justice (ECCJ). [1]
The group, representing 250 organisations in 15 countries, has been saying for years that new rules to improve corporate transparency are needed. It says that whilst the proposal is a welcome initial step because it requires companies to be more transparent on the impacts of their activities, the current wording leaves companies too much flexibility. As it stands the proposal is a missed opportunity to ensure the needed transparency of European companies.
The Commission aims to oblige large companies to include a ’non-financial report’ in their annual report. It proposes to require companies to disclose their risks and policies related to the environment, social and human rights, but only in as far as the risks endanger the company and shareholders – not communities or the environment. The proposal would allow companies too much discretion about how to report and what on, it lacks concrete indicators and does not include sanctions to ensure companies actually comply with the requirement.
Jerome Chaplier, ECCJ coordinator, said: “There is a strong need for legislation with teeth – according to recent opinion polls 62% of European citizens do not feel well enough informed about the impacts of companies on the environment and their lives, and more than 4 out of 10 think companies have a negative impact on society overall. We fear companies will only identify and disclose the risks that affect their economic performance, and won’t take responsibility for the impacts they have on the people and the planet.” [2]
“Without clear guidance and sanctions attached to the proposal, the accuracy and reliability of the information companies provide cannot be guaranteed and citizens’ trust in companies cannot be restored,” he added.
Disclosure of environmental and human right impacts can make a big difference to the environment, people and businesses. However many European companies still do not integrate these considerations into their practices and reports in a meaningful way.
Examples include: Dutch oil company Shell which does not inform communities in the Niger Delta about the exact amount and status of pollution, and continues to mislead stakeholders about the cause of oil spills in its reports [3], food companies like Findus whose reputations have been damaged by the recent horse meat scandal associated with a lack of transparency in supply chains [4], and the European clothing industry which is also lacking in transparency– recent tragic fires in Bangladesh and reports in India show that it includes very serious safety issues and involves child labour. [5]
Richard Dyer, resource use campaigner at Friends of the Earth Europe, said: “Companies consistently fail to report on the issues that matter. We have discovered that the biggest smart phone brands are using tin that is damaging livelihoods and the environment in Indonesia, full supply chain reporting would have exposed this earlier. Europe needs to improve transparency and accountability for European companies wherever they operate.” [6]
Contact
Jerome Chaplier, ECCJ coordinator
coordinator at corporatejustice.org
Tel.: +32 (0) 289 310 26 mob. +32 (0) 477 184 753
Richard Dyer, Resource use campaigner at Friends of the Earth Europe
richard.dyer at foe.co.uk
Tel.: + 44 (0) 7940 850 328
Links
[1] http://ec.europa.eu/internal_market/accounting/docs/non-financial-report...
[2] http://ec.europa.eu/public_opinion/flash/fl_363_en.pdf
[3] http://www.foeeurope.org/Watershed-Dutch-court-ruling-against-Shell-300113
[4] http://www.guardian.co.uk/sustainable-business/supply-chain-transparency...
[5] Fatal Fashion: http://somo.nl/news-en/somo-news/companies2019-blind-faith-in-failed-aud... and Time for transparency: http://somo.nl/news-en/somo-news/time-for-transparency-in-the-garment-in...
[6] http://www.foeeurope.org/mining-smartphones-true-cost-tin-261112
In mid-December, the European Commission acknowledged a large part of the arguments put forward by the Czechia in an effort to prevent the expansion and continuation of illegal mining at the Turów mine in Poland, that endangers the sources of drinking water for thousands of people in the Liberec region and, according to new studies, has serious impacts on groundwater in Germany as well. Frank Bold's lawyers, who defend the interests of Czech citizens, have long been involved in the case.
The Frank Bold Society and the Neighbourhood Association Uhelná called on the Czech government today to be more consistent in its negotiations with Poland over mining at the Turów brown coal mine. According to both organisations, the government did not have enough information or time to prepare an agreement that would truly protect Czech interests. Moreover, the government has acted in a non-transparent manner by failing to inform the public in advance of the terms of the agreement being prepared, which should lead to the withdrawal of the action against Poland at the EU Court of Justice. The organisations have therefore drawn up a document with seven basic demands on which the Czech side should insist.
The European Commission recently introduced a draft of the revised EU ETS Directive which, among other things, proposes that 100 % of ETS revenues should be used for environmental measures. We welcome this idea but we’re also sceptical about how the ETS revenues are used in the Czech Republic. Therefore, we have prepared an analysis mapping the use of ETS revenues in Czech Republic and sent it to the European Commission as an input for the recent public consultation. The main conclusions are presented below.
