Make provision for certain companies to produce and publish reports on
environmental, social and economic and financial matters; to consult on
proposed operations of the company; to specify certain duties and
responsibilities of directors; to establish a right of access to information held
by companies; to specify the powers and duties of the Secretary of State; to
provide for remedies for aggrieved persons; and for related purposes.
Be it enacted by the Queen’s most Excellent Majesty, by and with the advice and
consent of the Lords Spiritual and Temporal, and Commons, in this present
Parliament assembled, and by the authority of the same, as follows:—
For the avoidance of doubt, any duty under this Act to report on or to minimise
the economic impact of any operations or proposed operations does not apply
to the effect of those operations or proposed operations on other companies.
2 Activities of companies
A company shall carry out its activities in accordance with administrative
practices and laws of the countries in which it operates, as well as international
agreements, responsibilities and standards, including but not limited to, those
(a) the preservation of the environment;
(b) public health and safety;
(c) the goal of sustainable development;
(e) human rights; and
(f) consumer protection.
3 Duty to prepare and publish reports
(1) It shall be the duty of every company to prepare and publish a report annually
(a) an assessment the company’s policies and performance in regards to
environmental, social and economic impacts of any of its operations in
the preceding year;
(b) an assessment the company’s policies and performance in regards to
environmental, social and economic impacts of any proposed activities;
(c) an assessment of the company’s employment policies and
performance, such an assessment to include the effects of its operations
and any proposed operations on its employees;
(d) the amount, or a reasonable summary thereof, of—
(i) taxes and other payments made to governments for any country
(ii) grants, tax dispensations or other benefits received from any
government or government agency in any country of operation;
(iii) any donations or contributions to any political party either
directly or indirectly;
(e) any relevant training, qualifications and experience the company’s
directors have as regards—
(i) the environment; and
(ii) social matters; and
(f) the way in which the directors of a company have discharged their
duties under section 7(1); and for the avoidance of doubt it is hereby
stated that this shall include any measures taken by the company
pursuant to that section.
(2) A company shall take reasonable steps to make the report under subsection (1)
(1) Companies shall take reasonable steps to consult and respond to opinions
expressed by stakeholders who may be affected by any proposed projects that
may have significant effects on them.
(2) A company shall produce as part of any consultation an environmental, social
and economic impact assessment of the proposal.
5 Right of access to information
(1) The Secretary of State shall by order made by statutory instrument specify the
circumstances under which companies must disclose commercial information.
(2) The Secretary of State shall by order made by statutory instrument prescribe
the manner of access to information and information to be treated as
confidential pursuant to section 1.
(3) Any person who is refused access to information following a request made in
the prescribed manner shall have a right of appeal.
(4) The Secretary of State shall by order made by statutory instrument nominate
an existing body or establish a new body to determine the right of appeal
pursuant to this Act.
6 Parent company liability and applications to subsidiaries, mergers, disposals,
acquisitions and other restructurings
(1) A parent company of a corporate group shall be liable to pay compensation in
respect of the classes of damage set out in subsections (1)(c)(i) to (iii) below
(a) the manner in which the group’s activities are organised managed or
undertaken falls below the standards that can reasonably be expected
of the group in all the circumstances of the given case; and
(b) the manner in which the group’s activities are organised managed or
undertaken fails to ensure—
(i) the health and safety of persons working in or affected by those
(ii) the protection of the environment; and
(c) such a failure may be regarded as a cause of—
(i) serious physical or mental injury to persons working in or
affected by those activities;
(ii) serious harm to the environment; or
(2) For the purposes of this section it shall be immaterial whether the injury to
persons or harm to the environment occurred within the United Kingdom.
(3) It shall be the duty of a company to which subsection (1)(a) applies to ensure
(a) any other entity which is under that company’s operational control
wherever registered or domiciled complies with sections 3, 4, 5, 7 and
this section; and
(b) any subsidiary undertaking of that company wherever located
complies with sections 3, 4 and 5.
(4) The Secretary of State shall within one year of the passing of this Act, after
taking such steps as he considers reasonable to consult companies and their
stakeholders, lay before Parliament a report regarding companies to which
subsection (1)(a) applies.
(5) In this section—
“corporate group” shall mean a parent company and its subsidiary
undertaking or undertakings as defined in section 258 of the
Companies Act 1985 (c. 6) (as substituted by section 21 of the
Companies Act 1989 (c. 40));
“parent company” shall have the meanings set out in section 258 of the
Companies Act 1985 (as substituted by section 21 of the Companies Act
“subsidiary undertaking” shall have the meaning assigned in section 258
of the Companies Act 1985 (as substituted by section 21 of the
Companies Act 1989).
7 Environmental and social duties of directors
A director of a company shall, when considering any matter or taking any
decisions, act in the way which in his opinion would be most likely to promote
the success of the company, but in so doing it shall be the duty of the directors
of any company—
(a) to consider—
(i) the environmental, social and economic impacts of their
operations and any proposed operations; and
(ii) the interests of all their stakeholders
when making any decision in respect of those operations or proposed
(b) to take all reasonable steps to minimise any negative environmental,
social and economic impacts of any such operations or proposed
(c) to prepare a annual report which identifies any risks to the company as
a result of the company’s environmental, social and economic impacts
and how any such risks would be managed.
8 Responsibilities of directors
The directors of any company to which this Act applies shall be liable for any
significant adverse social, environmental or economic impacts of their
operations which arise from—
(a) any negligence by them;
(b) any wilful misconduct by them in relation to the duties of any company
under this Act; or
(c) any wilful misconduct by them relating to the disclosure of information
required by this Act.
9 Functions of the Secretary of State
(1) It shall be the duty of the Secretary of State to issue guidelines regarding—
(a) the matters to be included in a report published pursuant to section
(b) the meaning of the term “significant” in that subsection of that section;
(c) what are to be regarded as “reasonable steps” under section 3(2);
(d) persons to be considered to—
(i) have an interest in, or
(ii) be affected by,
any operations to which a report applies;
(e) matters to be included in any assessment produced under section 4(2);
(f) matters to be included in any considerations made under section 7;
and in the making of such guidelines the Secretary of State shall have regard to
any existing standards or guidelines in operation for the time being.
(2) The Secretary of State shall have the power, if in his opinion his guidelines are
being seriously breached or ignored, to issue directions to any company or
companies in respect of any of the matters in subsection (1) and different
directions may be issued to different companies or different types of
companies and it shall be an offence for a company to ignore or contravene any
(3) For the purposes of enabling the Secretary of State to determine whether his
guidelines are being seriously breached or ignored he shall have the power to
investigate the matter in question and this power includes the right to summon
any person to give evidence and the right to require the provision of such
information by any person as may be reasonably required for that
(4) For the purposes of ensuring compliance with the provisions of this Act it shall
be the duty of the Secretary of State to carry out random audits of companies
to which this Act applies and the powers given to the Secretary of State by
subsection (3) above shall apply to any such audit.
(5) It shall be an offence for any person to obstruct any investigation by the
Secretary of State under this section.
(6) The Secretary of State shall publish an annual report on the way in which he
has discharged his functions under this section during the preceding year.
(7) The Secretary of State may by regulation nominate or establish a body (“an
appointed body”) to carry out his functions under this section and in such a
case references to the Secretary of State in this section shall be construed as
references to that body.
(8) Regulations made under this section shall be by statutory instrument which
shall be subject to annulment by resolution of either House of Parliament.
10 Remedies of stakeholders
(1) If a stakeholder is of the opinion that a company is in breach of this Act he may
make a complaint to the Secretary of State (or to any appointed body) and the
Secretary of State (or appointed body) shall subject to subsection (2) consider
any such complaint.
(2) The Secretary of State (or appointed body) need not consider a request made
under subsection (1) if it considers it to be frivolous or without merit and in any
such case the Secretary of State (or appointed body) shall publish the reasons
for that decision.
(3) Where the Secretary of State (or appointed body) receives an application under
this section the powers given to him or it under section 9(3) shall apply as if
they were powers under this section.
(4) Any stakeholder shall subject to any provisions of this Act have a right of
action against a company to which this Act applies and any directors thereof
for any breach of duty owed towards him as a result of this Act and the courts
in the United Kingdom shall have jurisdiction to hear any such case.
(1) A person who breaches any provision of this Act commits an offence.
(2) An offence under this Act shall as appropriate be punishable by—
(a) imprisonment or a fine or both;
(b) a person being prohibited from being a director of a company for a
specified period of years;
(c) a person being required to make redress to any other person who has
suffered as a result of any offence;
(d) a company being suspended from trading on the Stock Exchange; or
(e) in cases of persistent serious breaches of this Act a company being
directed to cease operations or certain of its operations.
(3) The Secretary of State shall, after consulting such persons as he considers
appropriate, specify in regulations the scale of punishments that shall apply in
relation to offences under this Act.
(4) Regulations made under this section shall be made by statutory instrument
and no such regulations shall be made unless a draft of those regulations has
been laid before and approved by a resolution of each House of Parliament.
(1) In this Act subject to this section “company” means—
(a) all companies registered in the United Kingdom, and
(b) all companies operating within the United Kingdom
but with the exception of subsection (3) does not include a company with an
annual turnover of less than £5 million.
(2) It shall be the duty of the Secretary of State to determine a transitional period
for which this Act shall apply to certain UK companies.
(3) In the case of—
(a) subsection (1)(a) this Act shall apply to all operations of those
companies wherever taking place;
(b) subsection (1)(b) this Act shall apply to those operations of those
companies taking place in the United Kingdom.
(4) Subject to this section this Act shall apply to any subsidiary of any company.
(5) In this Act a stakeholder is an individual, community or organisation that is
materially affected by the operations of a company.
(6) The Secretary of State shall by order specify the definition of “materially
(7) In this Act, “transitional period” means the period beginning with the
commencement of this Act and ending on such date as the Secretary of State,
after consultation, may determine.
(8) An order made under this section shall be by statutory instrument which shall
be subject to annulment by resolution of either House of Parliament.
There shall be paid out of money provided by Parliament—
(a) any expenditure incurred by the Secretary of State in consequence of this Act;
(b) any increase attributable to this Act in the sums payable out of money so
provided by virtue of any other Act.