Lord Moynihan
Main Page: Lord Moynihan (Conservative - Excepted Hereditary)
Lord Moynihan
My Lords, I thank the noble Lord, Lord Harrison, for securing this debate. I declare an interest as a director of the US-based Rowan Group of companies and chair of its health, safety and environment committee.
I agree with my noble friend Lord Patten that the vast majority of companies see a clear alignment between social and environmental issues and their overall business strategy. However, some companies have a gap between their board’s aspirations with regard to social and environmental issues and the way they are enabled and enacted within their own organisations. I hope that tonight’s debate will enable government to work afresh with companies to close the gap between companies’ stated social and environmental policies and the actions and investments they make to pursue those objectives, particularly where the objectives may lack a clear financial return on investment or drive long-term rather than short-term benefits.
As my noble friend Lord Newby said, Deloitte, in its impressive analysis of sustainability and business today, concluded that while many companies promote the sustainability concept of the triple bottom line—pursuing performance in economic, social and environmental spheres—most companies primarily invest in environmental initiatives out of the three. I believe we live in a generation where there is an imperative for companies to consider broadening their efforts in the communities in which they operate as well as in the physical environment. In this context, I support the proposal for companies to drive for competitive advantage by helping them establish or maintain a voluntary social licence to operate in their target communities and markets; that is, to gain the support of the people who live and work in those communities and markets.
These objectives and principles can be embedded in the corporate governance criteria followed by all companies and, of course, in their reporting policies, not least where social and environmental issues are usually considered alongside safety within the remit of HSE committees. I agree with the noble Lord, Lord Harrison, that social, environmental and safety issues should all meet the legal and voluntary requirements to be fully and appropriately covered in annual reports and, I would add, in internal reporting to employees and, as the noble Lord, Lord German, has just said, to the investment community as well.
From my experience the energy sector, human safety and environmental protection, regulatory oversight of licensing, energy exploration and production require reforms and a new priority within corporate governance, even beyond those significant improvements already made by the sector and this Government. This is an area where co-operation and dialogue with government should be preferred to further primary legislation at this time.