Businesses call for Companies Act to be amended to account for stakeholder values
More than 1,000 UK businesses are calling for the upcoming Queen’s speech to amend legislation to ensure that companies align their social and environmental impacts with stakeholders needs.
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.
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