Businesses call for ‘better’ corporate law

Some 3,000 UK businesses have joined support for a change to UK company law – 10 times the number when the Better Business Act coalition was launched in 2021.

Those signed up, which include food wholesalers, restaurants and manufacturers, want business to become a solution to a system that currently prioritises short-term gains over long-term responsibility.

With social inequality widening amid economic uncertainty and corporate governance scandals like Royal Mail and Thames Water undermining public confidence in business, the wide-ranging and snowballing support for the coalition marks an “important milestone”.

“The Better Business Act presents an opportunity for the UK’s future, enabling businesses to accelerate long-term, sustainable growth that doesn’t come at the expense of people and the planet,” explained Chris Turner, CEO of B Lab UK.

UK law currently encourages businesses to operate under a legal regime of shareholder primacy, which means company directors too often prioritise profit over people and the planet, said the campaign’s organisers. 

The campaign is calling for an amendment to Section 172 of the Companies Act, giving all UK businesses the freedom to “think for the future” by aligning shareholder interests with those of employees, customers, local communities and the environment. 

The news comes as the UK government ramps up its efforts to strategically partner with business, drafting an update to the Audit Reform & Corporate Governance Bill and setting out corporate governance reform as one of the priorities of the Business & Trade Committee.

Companies backing the Better Business Act now span over 15 sectors, including food, hospitality, technology, finance, insurance, science and communications. 

The coalition comprises a mix of local firms and SMEs, as well as high-street brands and publicly listed companies. Notable businesses include Iceland, Tony’s Chocolonely, Oddbox, Olio, Bidfood, Charlie Bigham’s, Danone, Jamie Oliver Group, Honest Burgers and Divine Chocolate, as well as non-profits and membership organisations like ShareAction and RSPB.

The UK now hosts the largest B Corp community in the world which is outperforming ordinary businesses on multiple metrics, including revenue growth, noted the coalition.

Public support is also strong: three-quarters (76%) of people believe business law needs to change to ensure companies have a legal responsibility to consider people and the planet alongside profit. 

Turner said the growth of the coalition from 300 to 3,000 businesses in just three years is “testament to the increasing shift in mindset from business leaders that ‘business as usual’ isn’t working and we need to challenge the status quo”.