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Column 915"(d) an indication of the company's policy regarding pollution control and particulars of any fines or other penalties, if any, incurred by the company in respect of breaches of the Public Health Acts 1936 and 1961, of the Clean Air Acts 1956 and 1968, of the Health and Safety at Work Etc. Act 1974 and of the Control of Pollution Act 1974.".'-- [Mr. John Garrett.]
Brought up, and read the First time.
The aim of new clause 3 is simply to give prominence to the urgent need for pollution control by companies, and to make them more accountable for any environmental pollution that they cause. It would oblige companies to have a written statement of their environmental policies, and to disclose breaches of environmental statutes and particulars of any judgments against them for having broken pollution control law. I am pleased that the Government are moving in our direction and I hope that the Minister will see fit to accept new clause 3.
On 1 September, an article in The Guardian stated that the Government proposed
"New rights of access for the public to information about companies breaching pollution control laws".
We seek to extend access to such information to shareholders and potential investors. If the Government feel that they should legislate to inform the public about pollution by companies, I am sure that it will follow automatically that they are in favour of informing shareholders and investors.
The article continued :
"The Department of the Environment announced that it would be introducing urgent legislation requiring registers to be drawn up on companies involved in both industrial and air pollution Her Majesty's Inspectorate of Pollution and local authorities are to be required by law to establish public registers giving details of the issue of licences to companies, the track record of the compliance of companies with the terms of their licence and any details of the failure by companies to comply, including a court action." That is exactly what we are proposing in the new clause which suggests that that information shall be in the company's annual report.
The article went on :
"This kind of information is seen by green groups as vitally important if they are able to bring public pressure on companies which pollute."
Of course, we want to see the results of the consultation, but, if the Government honour their obligation, that proposal seems to us to be a step in the right direction. If implemented, the proposal would inform a local community of the record of companies in regard to pollution locally. We seek to give the same information to shareholders, many thousands of whom nowadays are strongly conscious of environmental issues.
Since this issue was discussed in Committee progress has been made in that the CBI has had an interesting change of heart. The March CBI News contained a frosty reception for the EC directive on public disclosure of information by companies on the environmental effects of their activities. The CBI graciously said that it fully agreed with the idea that the public should be given adequate information to allow them to be confident that their environment was being properly protected. However, it said that any new legislation should not go beyond what the public "needs to know", which may be costly or
Column 916burdensome to provide. It said that legislation also should not prejudice the voluntary flow of information from the controlled to the controller. That was hardly a position of openness on environmental matters.
At that time, the CBI disagreed with the EC directive stating that companies should disclose the environmental effects of their policies and the extent to which they might pollute. However, by the October CBI News, the CBI had launched a "major new environmental initiative", an "action plan" called "Environment Means Business" and an environment management unit had been set up to work alongside the CBI's environment policy group. Warning "environmentally apathetic industries", the CBI's plan included the aim that businesses should have environmental improvement objectives, which is what we propose in the new clause, and should promote environmental performance and a high, sustainable reputation for environmental excellence. If the CBI believes that, it would not disagree that individual companies should disclose their performance in this regard. The Government should also welcome such a step. At present, we are in agreement with the CBI. In May, the DTI launched a campaign to alert companies to environmental challenges and opportunities, and warned companies of tougher environmental controls.
Our intention in new clause 3 is to enable shareholders to be informed and companies to be more easily accountable to their shareholders on environmental matters. There is a growing concern among shareholders about environmental issues. As the Minister said in an earlier speech, there are now a number of investment trusts that invest only in companies that are environmentally sound. Ethical investment is growing rapidly and now accounts for more than 10 per cent. of the stock traded on Wall street.
Throughout the western world there is a realisation that companies must be publicly accountable for their activities that may endanger the environment. Institutional investors are also taking a stronger line on environmental issues with the companies in which they invest. In my constituency, Norwich Union is requiring information from its invested companies on what steps they are taking to control pollution. In particular, the investment management of the Norwich Union wrote to ICI asking for details on its 40 breaches of pollution control laws last year on the discharge of effluent.
As I said in Committee, some of the worst industrial pollution in Britain is committed by household names that pride themselves on their openness to their shareholders and the informativeness of their annual reports. They include ICI, Coalite and the Rio Tinto-Zinc subsidiary Staveley Industries which grossly pollutes the River Rother, and Coats Viyella which regularly discharges pollutants into the River Goyt. Express Foods group, a subsidiary of Grand Metropolitan, has been convicted 25 times in the past six years for discharging pollutants. Shareholders should know about that, as it might influence their investment decisions. There is no reason why Grand Metropolitan should conceal it. British Petroleum, a company which boasts of its green credentials, British Tissues, British Gas and many others frequently breach discharge limits. Prosecutions are few and not particularly onerous for the polluting company. It is cheaper for a company to pollute and pay a fine if it is caught than to install equipment to clean up the
Column 917environment. The fines for pollution are very low with a maximum penalty of £2,000, whereas in the United States the fine is $25,000 per day.
We ask that companies should set out their environmental policies and state what they are doing to produce environmentally sound products and operate environmentally sound processes. In West Germany, company chairmen usually devote part of their annual reports to what the company has done to clear up the environment.
The pollution control legislation to which we refer in new clause 3 is pretty comprehensive. The Public Health Act 1936 covers a wide range of statutory nuisances, including the state of premises, dust and effluent discharges and waste accumulation. The Public Health Act 1961 covers the discharge of trade effluents. The Control of Pollution Act 1974 covers waste disposal, and the Clean Air Acts deal with atmospheric pollution. If the new clause were enacted, any shareholder would know a company's policy and record on environmental pollution. The new clause goes with the grain of public and shareholder concern.
As we know from our own constituencies, more and more people throughout the country are concerned about the polluting activities of companies. They want them controlled or stopped, and they want those companies to be publicly accountable for what they discharge. When we raised this issue in Committee as part of a series of amendments concerned with disclosure to shareholders, we were accused of jumping on a bandwagon. I understand that since then we have been joined on that bandwagon by the Government. The control of pollution is much more than a bandwagon ; it is a concern widely and deeply felt by many people. The new clause improves just a little the accountability of companies in a very important area of public policy.
Mr. Redwood : I am grateful to the hon. Member for Norwich, South (Mr. Garrett) for his remarks about the search for an adequate pollution control system. I am sure that all hon. Members agree with him. There must be adequate control of pollution, and information must be available to ensure that that occurs. I accept that laws are necessary to identify certain Acts as pollution control Acts. There must be a register of information so that the public are aware of what is happening, and a clear enforcement mechanism.
A range of laws already govern a wide variety of pollution issues, some of which were mentioned by the hon. Member for Norwich, South and are mentioned in the new clause. Additional legislation may be necessary. The Government are always reviewing the adequacy of pollution laws, and will bring forward whatever measures are necessary to ensure that the laws are strong, clear and meet the clear requirement of people for adequate and strong protection against hazardous and other types of pollution.
The Control of Pollution Act 1974 provided for registers to be available for public inspection. We need new registers to cover integrated pollution control, local authority air pollution control, and so on. The Government will be working on proposals for such new registers over the next few months.
The new clause should be withdrawn because it would clash with the idea of a register open for public inspection, and because there are other problems with it. For example,
Column 918it does not cover all the laws that should be mentioned, such as the Alkali etc., Works Regulation Act 1906. It is selective, although the laws chosen are some of the most general and well known on pollution legislation.
The purpose of companies' reports and accounts is to inform shareholders, investors and creditors. They are not generally available to the public, unless people go to considerable lengths to request them. The information suggested in the new clause would be an overburden on accounts, which primarily have a financial purpose.
Mr. Campbell-Savours : I am sorry to intrude, but I was not on the Committee that considered the Bill and was therefore unable to follow the debate. The Minister referred to a register. Will he say what is implied in that and how it would work?
Mr. Redwood : The register would be maintained by the relevant pollution control authority and would be available for public inspection. The proposal in the new clause would be less satisfactory, because fewer people would have access, it would be more difficult to gain access and it would clash with the idea of using registers as the buttress to pollution control legislation.
I urge the hon. Member for Norwich, South to withdraw the new clause and to see the Government's proposals in the wider context of the general policies on the control of pollution.
Mr. Campbell-Savours : I shall intervene only briefly because I did not attend prepared to speak this evening. However, a number of the amendments and new clauses invite comment, of which this is one. I shall be reasonable, as I was in the debate on new clause 1, and press the Minister a little more about the register. As I understand it, he suggested that anyone who applied to the pollution inspectorate could be informed of judgments made against a company that had offended and been penalised.
Mr. Redwood : The Control of Pollution Act provides for the maintenance of registers, which contain information such as details of consents issued under the Act and effluent samples. If we develop the register approach more generally, it will have to be decided what should be recorded in the registers. I am urging the House to agree to public inspection registers rather than to try to include matters in company accounts--which are shown to a much more selective audience--that would be an unnecessary burden on financial statements.
If a company is found guilty of breaching the regulations, to what extent is that information communicated to the people who are in a position to influence that company's future policy? If a company breaches the regulations in the Minister's constituency or in mine, the breach and the damage to the environment would be reported within the locality by the local newspaper. Within the vicinity of the plant there may be a controversial debate about the nature of the pollution, its damage to the environment and the upset that it caused local people. It may develop into a mature debate, with letters being written to the editor, editorial comment, articles being written by interested journalists and perhaps television
Column 919programmes or magazine articles. That debate may be localised in a particular area. I live in Cumbria, and my constituency is in Cumbria. The debate that would arise following an incident and a prosecution may be confined to the area. Border Television does not transmit to London, where the annual general meeting of the company concerned may be taking place. The body of shareholders--we know that the majority of shareholders are based in the south-east--may not see that television programme or the local newspaper comment and may be unaware of the problem in the locality. They are therefore not informed, in so far as information about a prosecution or breach has not been communicated to them.
Will the information on the registers proposed by the Government, in addition to the information that arises from the debate in the locality, be communicated to people who attend the company's annual general meeting, who might be able to exert pressure on the directors of the company? It is unlikely that shareholders in a large company such as ICI will find out from the pollution inspectorate the nature of any prosecution and what penalty was paid, because they have other things on their mind. Institutional shareholders are too concerned with the general conduct of their affairs to preoccupy themselves with the business of investing. It may be that because information about a breach is not available from the register, and because knowledge of the breach is confined to the region, there will be no debate at the company's annual general meeting.
The new clause proposes a route whereby information can be communicated about an incident to people who are in a position to exert pressure on a company to secure change. That is crucial, and anything that restricts that flow of information is unnecessary, unreasonable and not what the public want.
The Minister has been generous in suggesting that there may be a way forward, but there is a better way forward. If the drafting of the new clause is not acceptable today, I hope that in the future the Minister will bring forward a similar proposal. I argue that because I believe that the public want it. When I say that information is not communicated, anyone observing today's debate will know that that is the truth.
If the Minister were to argue a case against a resolution, he should be prepared to provide examples of occasions on which shareholders set out to establish the environmental track record of their investment and when they referred to it at annual general meetings. If the Minister is not in a position to do that, in many ways he directs the House to support an amendment which ensures that the debate is on the agenda of the very group of people--apart from the board of directors, who are obviously involved-- who are in a position to influence events. I thank the Minister for his generous response, but he should go further and not necessarily write off the new clause. It is not dangerous ; it is moderate and sensible. Furthermore, if shareholders were aware of regular breach and abuse of regulation in companies in which they have made investments, in light of the developing debate on environmental protection, they would be likely to exert an influence, if only behind the scenes, to ensure that offences did not take place. I am thinking of a particular company to which I do not want to refer this evening. However, there are major polluters in the county of Cumbria. I should like to think that shareholders would want to raise these issues. Perhaps the only way that they
Column 920can be drawn to the attention of shareholders is by the approach that has been adopted by my hon. Friend the Member for Norwich, South (Mr. Garrett) as against the Minister's approach.
Mr. John Garrett : I was deeply disappointed by the Minister's reply. He completely misunderstood the purpose of the new clause. It is complementary to the local register of polluters. It does not displace it in any way, nor is the purpose of the new clause met by a local register of companies which pollute. The local register will tell the local community that it has within it companies that pollute the environment, whereas the annual accounts will tell the owners of the company that they are investing in a company that has a bad record on pollution or no policy for protection of the environment. Although it is true that not everyone sees accounts, shareholders see company accounts. That is the point of the new clause. It is aimed at informing shareholders of what their companies are up to. Unfortunately, the Minister was not present in Committee, but his colleague the Under-Secretary of State was present, and we enjoyed his participation. His colleague will know that we tabled several amendments about energy use by companies, research and development, employment of the disabled and so on to improve the public accountability--the shareholder accountability--of companies. That is in the broadstream of endeavour on our part. Part of a company's accountability is that it should account to its shareholders for its environmental policies and should own up to its shareholders when it has been successfully prosecuted.
The other argument for our new clause is that it would focus the attention of boards of directors on environmental matters. It would make them think about the issue because they would be expected to state in their annual report, directors' report, or chairman's report their aims and objectives for the environmental impact of their companies' products and processes. That would make them reduce effluent because they would be shamed into doing so if, year after year, they had to own up to polluting a local river, for example. Although the list of environmental legislation in our new clause may not be comprehensive, as the Minister said, it is a good start. The Government will not hit polluting companies hard enough. They should be exposed, made accountable in public, and made accountable to their shareholders for their polluting activities. Therefore, I intend to ask my right hon. and hon. Friends to support the new clause.
Mr. Kennedy : I wish to speak for no more than one minute. I shall support the hon. Member for Norwich, South (Mr. Garrett) when he calls a Division. I underscore the point that was made by the hon. Member for Workington (Mr. Campbell-Savours). The psychology of many annual general meetings--they are generally in the south-east if not central London-- becomes all the more pronounced the further north and far-flung one moves. I can think of examples in the Highlands and Islands of Scotland. I suspect that, if some major shareholders are more conscious of damage or potential damage, they might want to do something about it.
Environmental issues now occupy a higher position on political agendas and in company reports. Companies are spending considerable sums telling us about what they are doing to be environmentally conscious and to reduce emissions, toxic wastes, pollution and so on. Through propaganda and public relations they recognise the importance of doing that, and have acted accordingly.
We should also recognise the other side of the equation--the embarrassment and awkwardness for a company if, along with providing information about its profits, losses, investments, developments and so on, it must make explicit its shortcomings in its pollution track record. The eagerness of companies rightly to demonstrate their environmental consciousness is a further justification for pointing out the potential disincentive of possible pollutant activities. The new clause makes eminent good sense.
I hope that, even if the Minister will not accept the specific wording of the new clause, we shall be able to get a commitment that the Government and the Department of Trade and Industry will try to take steps in this necessary direction, which is clearly a salient political and long-term issue, irrespective of our political viewpoint.
Question put, That the clause be read a Second time :
The House divided : Ayes 144, Noes 193.
Division No. 339] [7.58 pm
Abbott, Ms Diane
Archer, Rt Hon Peter
Ashley, Rt Hon Jack
Barnes, Harry (Derbyshire NE)
Benn, Rt Hon Tony
Bennett, A. F. (D'nt'n & R'dish)
Brown, Gordon (D'mline E)
Brown, Nicholas (Newcastle E)
Bruce, Malcolm (Gordon)
Buckley, George J.
Campbell, Menzies (Fife NE)
Campbell, Ron (Blyth Valley)
Campbell-Savours, D. N.
Carlile, Alex (Mont'g)
Clark, Dr David (S Shields)
Clwyd, Mrs Ann
Cook, Robin (Livingston)
Davies, Ron (Caerphilly)
Davis, Terry (B'ham Hodge H'l)
Dunwoody, Hon Mrs Gwyneth
Ewing, Harry (Falkirk E)
Ewing, Mrs Margaret (Moray)
Garrett, John (Norwich South)
Garrett, Ted (Wallsend)
Gilbert, Rt Hon Dr John
Golding, Mrs Llin
Griffiths, Win (Bridgend)
Heffer, Eric S.
Home Robertson, John
Howarth, George (Knowsley N)
Howells, Dr. Kim (Pontypridd)
Hughes, John (Coventry NE)
Hughes, Robert (Aberdeen N)
Jones, Barry (Alyn & Deeside)
Jones, Martyn (Clwyd S W)
Macdonald, Calum A.