UK PLC: FIT FOR PURPOSE?
Sarah Nicholas, account director, Gong Communications
Will ‘business as a force for good’ become part of UK company law?
“Companies should state precisely their purpose – their role in the world from which profit results – in their articles of association and regularly report on the delivery of that purpose.” This is the first recommendation to promote purposeful companies put forward by The Purposeful Company Task Force, a consortium of FTSE companies, investment houses, business schools, business consultancy firms and policy makers at The Big Innovation Centre.
Listening to the report’s authors debate with an audience at the London School of Economics last month (podcast of the event here), corporate law was firmly under the spotlight. How likely is this change? And will it really deliver the coveted sustainable long term value for stakeholders that it is pursuing?
At Gong Communications, we are firm believers in the power of purpose and how communicating this effectively can help companies to gain a competitive edge. Some question whether mandating businesses to declare their purpose undermines some of its potency. But whether it is written in law or – even better – engrained in company culture, having clarity of purpose can propel a business forward and bring many benefits beyond simply profit, although it has been shown to help with that too.
Will Hutton, the co-chair of the Purposeful Company Task Force, said: “The evidence is clear, companies with a declared purpose, adhered to by their leaders and understood by their employees, perform far better over time than their less purposeful peers.”
Going through the process of B Corporation certification ourselves, we had the fabulous Scott Drummond of B Lab UK join the Gong London team for a learning lunch and share the story of their successful efforts to define a new type of for-profit entity in the US. A Benefit Corporation, now legislated in 30 States, is a company that has a positive impact on society, workers, the community and the environment in addition to profit as legally defined goals.
Other countries, such as Italy and Australia are following suit. And with May’s Business, Energy and Industrial Strategy Select Committee looking into how modern companies can better serve their shareholders, employees and wider society, it is not hard to imagine the UK being next in line.
Bring it on.
Look out for a follow-up blog on how stakeholder communications and employee engagement are vital to fully realise the potential of purpose in the private sector.