Companies Act: UK public backs calls for Government to reform board requirements
The majority of UK citizens are backing the demands of the Better Business Act campaign, calling for legislative changes that would require companies to focus on value creation for society and the environment over just profitability for shareholders.
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 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, which places environmental and social considerations into the heart of the business. MPs including Caroline Lucas, as well as thousands of businesses, have publicly backed the Act.
Today, (25 April), the campaign has released the findings of a poll of the UK public, to uncover attitudes towards corporate stewardship. The survey of more than 2,000 UK adults found that 78% support the call to change company laws to account for better social and environmental stewardship. This is a 6% increase on 2020 levels of support.
UK citizens cited the cost of living crisis, how Amazon workers have been treated, and the windfall profits generated by energy companies as examples of why the Companies Act needs an overhaul.
The Better Business Act campaign’s co-chair Mary Portas said: “We know business is about profit. But the values of biggest, fastest, cheapest no longer resonate — and are no longer tenable. We need a new value system in which businesses don’t just grow and mindlessly make more money, but thrive.
“They have to find ways of creating profitable solutions for the problems people and the planet face, rather than profiting from them. That’s every business’ brief today. And this small change to the law could drive a big impact.”
Last year, the Better Business Act campaign hosted the first mass business lobby of the UK Parliament since Covid restrictions were eased when more than 1,000 UK businesses called for an amendment to legislation to ensure that companies align their social and environmental impacts with stakeholders’ needs.
A recent report released by the Better Business Act campaign and B Lab UK, the UK’s B Corp body found that B Corp-certified firms and other purpose-led businesses are more confident in their ability to remain financially successful in the coming months, and more likely to be helping stakeholders cope with cost-of-living pressures.
The research also found that purpose-led businesses are more likely to be supporting suppliers through current economic challenges, as they are twice as likely to maintain good relationships with suppliers.
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 last year during the Sustainability Leaders Forum.
Click here to read the report.
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