18 October 2006 | Rebecca Ellinor
Quoted companies will have to incorporate details about their suppliers in their annual business review, following an amendment to the Companies Bill.
Department of Trade and Industry (DTI) minister Margaret Hodge highlighted the change this week.
The Companies Bill is designed to improve engagement with shareholders, ensure better regulation and make it easier to set up and run a company.
As part of the bill, all companies, other than smaller concerns, must produce an annual business review that helps shareholders assess how the directors have performed their duty.
This review must include details on environmental matters (including the impact of the company's business on the environment), employees, and social and community issues where they are relevant to the business.
As a result of the amendment, listed firms must now also include pertinent details on suppliers. The DTI told supplymanagement.com it is not "prescribing" what should and should not be included - that decision is being left to companies. It suggests relevant details might include where a company has a sole supplier of a product or service that is core to its business, or where suppliers fit with its branding. The DTI says companies must answer to their shareholders if they fail to disclose important information.
Hodge said: "We have listened carefully to the issues raised around the supply chain. I believe this requirement fits naturally with the information on environmental matters, employees, social and community issues and it is right that it should be included. Greater transparency will bring greater market confidence and trust, enabling companies to prosper."