Thank you for contacting me about the campaign calling for a Better Business Act.
I understand that the Better Business Act campaign group seeks to amend Section 172 of the Companies Act to ensure every UK business aligns the interests of their shareholders with those of wider society and the environment.
Specifically, I understand that the campaign seeks to “align the long-term interests of people, planet and profit” by empowering directors to advance the interests of shareholders alongside wider societal and environmental interests. It also would make this the default position. Finally, a requirement would be introduced on businesses to report on how they are achieving these targets.
However, Section 172 of the Companies Act already requires directors to have regard to the environment, employees, customers and suppliers, among other matters. Since 2019, directors of large companies have been required to make an annual statement describing how they have had regard to these matters. One challenge of introducing changes to Company Law is that it is not at all clear how courts would seek to arbitrate novel wording.
There is nothing to prevent an existing business joining a private organisation such as the B-Corp which would allow them to sign up to additional conditions swiftly and voluntarily without the need for new legislation that will inevitably take time.
Thank you again for taking the time to contact me.
