On April 20, Gong Communications founder, Narda Shirley joined other signatories to the Better Business Act at the House of Commons to lobby MPs for a change in the law. If passed, the Better Business Act would amend section 172 of the Companies Act so that businesses are legally obliged to consider all stakeholders. As it stands, company directors are accountable to shareholders with profit maximisation as their primary fiduciary duty.
This change would mean companies are no longer able to pursue profit at the expense of workers, communities or the environment. It could help transform the way we do business and free decision-makers to act in favour of balancing in long-term interests, rather than chasing short-term financial gain.
Better Business Day kicked off with a panel discussion featuring CEOs from graze.com, Pukka Herbs and Ella’s Kitchen, moderated by Financial Times journalist Joy Lo Dico. Innocent Drinks CEO Douglas Lamont, co-chair of the Better Business Act Campaign, told the audience: “We must remove that hiding place for directors that all they have to do is maximise profit in today’s world. Companies must now balance the interests of people, profit and planet.”
Mary Portas, the campaign’s other co-Chair added her remarks and shared anecdotes about her early career as a young female company director at the luxury retailer, Harvey Nichols. She reflected on the role she and other company Directors played, believing it was their responsibility in the ‘80’s ‘greed is good’ culture to encourage consumer consumption of brands without thinking about the effect on the environment or the workers in global supply chains.
The campaign has already gained over 1,000 supporters, including The Body Shop, Oddbox and Virgin StartUp. It was initiated by B Lab UK, which serves the growing community of UK-based companies which are certified B Corporations.
Gong founder Narda Shirley says. “We know from the work we do with our clients that lots of businesses are already acting in a way that takes care of their employees, communities and the environment. But the law has not kept up with this change in business culture – that is what we’re trying to address with this act.”
One of the key actions of the campaign is to get signatories to write to their MP. There is a template letter on the Better Business Act web site that cites a survey of members of the Institutes of Directors as finding a majority think the current Companies Act focuses too much on shareholders and not enough on wider stakeholders.
It also references Research by the Better Business Act which shows that companies run in line with the principles of the Act can expect faster growth in turnover and headcount; greater levels of employee retention and diversity, and higher levels of innovation.
The same research found that 76 per cent of people in the UK want businesses to be legally responsible for their impact. They think that business has a responsibility to protect the environment and the majority favour brands that do good in the world.
At Gong, we urge businesses to add their voice in calling on the government to change section 172 of the Companies Act to make this official. Let’s ensure that all businesses are held to account and are legally required to make decisions that benefit workers, communities and the environment, while delivering profit.
To join the campaign, click here.