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The Government has introduced an amendment into the Companies Bill to require disclosure of supply chain relationships. One of Ecumenical Council for Corporate Responsibility (ECCR) members, Traidcraft, has had the letter below published in the FT indicating that it supp orts the change. We understand that the DTI is interested to know if there is investor support for this amendment, which is opposed by some business groups. The House of Lords is due to vote on the amendment next Thursday 2 November, so action would need to be taken in the next few working days.
The amendment strengthens the non-financial reporting provisions in the Bill by requiring quoted companies to report on persons with whom they have contractual relationships, i.e. their suppliers, where this information is necessary for an understanding of the company's business. (The exact amendment see link below)
This appears to represent a modest improvement to the reporting provisions in the Bill that will help give all shareholders access to information about impacts and risks down the supply chain. We understand that this provision goes no further than a previous requirement in the Operating and Financial Review regulations which was widely supported in the business and investor community.
Traidcraft's view is that responsible companies already closely monitor and manage risks and practices down the supply chain; that increasingly decisions made within UK companies impact on suppliers and poor people abroad; and that supply chain relationships are also crucial to businesses success, since no company can deliver its goods or services until its suppliers have delivered. Traidcraft has accessed legal advice which indicates that the new amendment does not lead to contradictory legal implications.
It is suggested that ECCR investor members wishing to support the amendment write, first, to Margaret Hodge, cc'd to Gordon Brown & Tony Blair, supporting the amendment. And secondly send a letter for publication to the FT, indicating that there are investors who support the amendment. As stated above, action would be needed in the next few days.
The Bill amendments are numbers 245 and 246, see
http://www.publications.parliament.uk/pa/ld200506/ldbills/155/06155.35-39.html
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