All large companies should have to release environmental reports detailing their green credentials.
That’s according to the Institute of Environmental Management and Assessment (IEMA), which has responded to the UK Government’s consultation on corporate governance reform by saying the sector urgently needs to restore public trust, particularly in environmental matters.
The IEMA’s Chief Policy Advisor, Martin Baxter, said a tendency for businesses to focus on short term financial goals was undermining long-term strategies for enhancing long term value.
He argued sustainability should be recognised as a critical area and should be at the centre of reforms.
Currently, the Companies Act requires only businesses on the stock market to publish a report detailing their environmental matters.
Mr Baxter said the government should extend this legislation to cover all privately owned firms with more than 250 employees.
He added: “If there is a genuine desire from government to improve trust in companies, then underpinning transparency and accountability safeguards need to apply equally to public and private companies.
“This means extending non-financial reporting requirements, including mandatory carbon reporting, to all large companies.”
He suggested executive pay should reflect the board’s overall success in all areas, rather than simply focussing on short term financial performance and share price.
The Environmental Audit Committee says the Treasury’s approach of “consistently favouring” short term priorities over long term sustainability is potentially increasing future costs and harming investor confidence.