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Businesses call for Companies Act to be amended to account for stakeholder values

The call follows the P&O Ferries scandal which has seen around 800 employees fired without noticed to be replaces by overseas agency crew

The Better Business Act campaign is hosting the first mass business lobby of the UK Parliament since Covid restrictions were eased today (20 April). Delegates from the coalition are asking the Government to include the Better Business Act in the Queen’s Speech, which sets out the legislative agenda for the next term.

The Better Business Act calls for an amendment to Section 172 of the Companies Act, which places directors under a fiduciary duty to benefit shareholders through the company’s performance. The Act does pertain some “regard” to the “the impact of the company’s operations on the community and environment”, but the campaign is calling for this to be rewritten.

Specifically, campaigners are calling for the Act to “empower directors to exercise their judgement in weighing up and advancing the interests of all stakeholders”, other than just shareholders, that places environmental and social considerations into the heart of the business.

The campaign is being led by high street champion Mary Portas and Douglas Lamont, chief executive of innocent drinks, with support from businesses and trade groups including Anglian Water, the Chartered Management Institute, Iceland, the Institute of Directors and Suez.

Innocent’s Douglas Lamont said: “As the Companies Act currently stands company directors have the option to profit maximise for shareholders whatever the cost to others, we think it is time that legal hiding place is removed and the legislation is updated to make it crystal clear to all UK company directors that they are accountable to find an appropriate balance between their responsibilities to people, profit and planet.”

The call follows the P&O Ferries scandal which has seen around 800 employees fired without noticed to be replaced by overseas agency crew. This has sparked a backlash from businesses, the public and MPs alike, who are calling for company law to be reviewed.

Mary Portas, creative founder of Portas Agency, said: “British entrepreneurs and businesses are the backbone of our communities up and down the country and many are responsible businesses that look after their staff, give back to the communities that support them, and reduce their environmental footprint.

“But as things stand, the Companies Act still allows some companies to pursue profits at the expense of workers, communities and nature. We saw this most clearly recently with the horrendous behaviour of P&O Ferry executives. We need to update our laws so that a decision like that can never be made in a British boardroom ever again.”

Julie Waddell, founder of Moorish Dips, recently penned an opinion piece for edie, on behalf of the coalition, outlining how and why corporate purpose needs to change. Read the piece here.

The Better Business Roundtable: Business models, systems change and sustainable growth

edie’s Better Business is about making that change happen, from the top. This series of quarterly roundtable discussions will unite CEOs and board-level directors for much-needed dialogue around the future of sustainable business.

The second in this series of reports looks at business models, systems change and sustainable growth.

This report provides a detailed summary of our second discussion in the Better Business series, hosted in association with our session sponsor, Centrica Business Solutions. The discussion took the theme of “systems change” with a total of 15 UK-based business leaders coming together at The Montcalm East, Hotel in London on the 8 March during the Sustainability Leaders Forum.

Click here to read the report.

© Faversham House Ltd 2022 edie news articles may be copied or forwarded for individual use only. No other reproduction or distribution is permitted without prior written consent.

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