Is the UK model working?

consistent information provided by the company would make their decisions easier.

What makes a company responsible?

Although the institutions play down the importance of corporate responsibility (CR) as a value driver, the wider stakeholder audience increasingly profess themselves to be concerned with CR and the accountability of management. However, caution is required in interpreting such data, as only 8 per cent of all companies submitted their results for external verification. It may be some time before consistency and comparability can be assumed. There has, however, been a year-on-year increase in the quality of CR disclosure, perhaps a reflection of the increased awareness and management of reputation risk. Corporate responsibility reporting in 2006 saw more attention being spent on providing quantified results and obtaining verification of disclosures. Over half of all companies provided quantified data to support their disclosures.

All current governance codes do not touch upon CR, including ethical and environmental issues. Should comprehensive, best-practice international corporate governance guidance include CR disclosure requirements? In the UK, the proposals for the Operating and Financial Review sought to raise the profile of such reporting, but the requirement was suddenly withdrawn by the Government in late 2005. However, this was repackaged into the Companies Act 2006 to incorporate EU directive provisions. The new requirement is in the form of a Business Review, where CR issues are among the list of matters to be addressed. This is covered in more detail in Chapter 7.

There is no single document which is recognised as the standard guidance for CR disclosure. Some available recommendations for CR are general, such as the United Nations Global Compact19 which suggests best practice in areas of human rights, labour, the environment and anti-corruption. Others are more specific; for example, the ‘Equator Principles’ are the benchmark for the finance industry to manage social and environmental issues in project finance.20 Furthermore, there are bodies prescribing best-practice approaches, such as Business Relationships, Accountability, Sustainability and Society (BRASS21) and Business for Social Responsibility (BSR22), together with Accountability Rating,23 which analyses and ranks the CR statements of the world’s largest companies.24

Some industries have informally developed standards for CR disclosures. For example, those companies which have chosen to trade in carbon emissions to meet environmental targets now disclose environmental information, such as carbon units, but this is likely to be as much a response to commercial and financial pressures as for CR purposes alone.

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