Question to the Department for Business, Energy and Industrial Strategy:

To ask the Secretary of State for Business, Energy and Industrial Strategy, what steps the Government has taken to encourage Directors to have regard to the (a) workers, (b) customers, (c) communities and the (d) environment when making decisions.

The Government introduced new obligations under the Companies (Miscellaneous Reporting) Regulations 2018 effective from 1 January 2020. These included new reporting requirements designed to give shareholders and stakeholders more information with which to hold boards of directors to account and more visibility for good boardroom practice.

The UK Corporate Governance Code was also revised to include methods of engagement that boards should use to engage with their workforce. These include a director appointed from the workforce, a formal workforce advisory panel and/or a designated non-executive director. Companies are also able to explain what alternative arrangements they use and demonstrate that these are effective. Some information as to how companies have responded so far can be found in the Financial Reporting Council’s November 2020 report on the Corporate Governance Code. The FRC has also commissioned research on this aspect of the Code which will be published shortly. We will continue to monitor progress and consider any further changes needed.

Climate change is one of the biggest risks to both our society and our economy, and the Government is working both for a ‘green recovery’ from the pandemic and to achieve the target of net-zero greenhouse gas emissions by 2050. The Government, as part of its approach, plans to introduce mandatory disclosure requirements for large businesses of financially relevant information related to climate change. This will allow investors and businesses to better understand the material financial impacts of their exposure to climate change, price climate-related risks more accurately, and support the greening of the UK economy. The UK will become the first country in the world to make Task Force on Climate-related Financial Disclosures (TCFD) aligned disclosures fully mandatory across the economy by 2025, with many of these requirements coming into force over the next three years.