John Lewis, Iceland, Brewdog and Bulb among 400 firms calling on government to amend Companies Act to put environmental responsibilities on statutory footing
Over 400 leading British businesses have this week called on the government to strengthen the Companies Act to help ensure environmental and social issues are given due consideration by company directors.
The Better Business Act coalition, which counts the likes of John Lewis, Iceland, Brewdog and Bulb, yesterday presented a package of proposed reforms to Parliament designed to help UK businesses both 'build back better' from the coronavirus pandemic and accelerate progress to net zero emissions.
Specifically, the group is calling for an amendment to Section 172 of the Companies Act which would establish a new principle of fiduciary duty to ensure "interests of shareholders are now advanced alongside those of wider society and the environment".
The proposed reforms have secured support from hundreds of businesses, the Institute of Directors, trade unions, and a cross party group of MPs.
They would aim to put a number of overarching principles on a statutory footing, including measures to empower directors to exercise their judgement in weighing up and advancing the interests of all stakeholders and enhance reporting requirements so that businesses must report on how they balance people, planet, and profit in a strategic report or impact report.
The government has backed a wave of reforms in recent years to improve climate risk disclosures and ensure financial regulators have a mandate to support the net zero transition.
However, responsible business campaigners have long argued that clarifying fiduciary duty requirements to ensure directors have to account for environmental and social considerations could help remove one of the main barriers to the development of more sustainable business models.
The group said a May 2020 poll also revealed strong public support for the campaign proposals with 72 per cent of the UK public believing business should have a legal responsibility to people and the planet, alongside maximising profit, while 76 per cent of the UK public think business should have a legal responsibility to protect the natural environment.
"The Better Business Act campaign is an important movement for change, where leaders of businesses of all types and sizes are coming together united by a clear purpose - to set a higher standard for ourselves and create a clear and consistent regulatory framework that puts aligning the needs of all stakeholders: our shareholders, our people and our planet as its central principle," said Douglas Lamont, CEO of Innocent drinks and co-chair of the Better Business Act. "With this in place we are confident we can accelerate the much-needed journey towards a fairer and more sustainable future for all."
His comments were echoed by Jon Geldart, director general of the Institute of Directors, who argued that "directors have a crucial part to play in creating and running better and more sustainable businesses".
"As we emerge from the pandemic, the IoD is pleased to back the Better Business Act, which will empower directors to advance the purpose of their businesses in a way that benefits all stakeholders," he added.
Chris Turner, executive director of B Lab UK and campaign director of the Better Business Act, said that a simple change to the law could have a far-reaching impact that would deliver a major boost to the government's wider net zero emissions goals.
"The world needs business at its best - creating good jobs, helping fix big problems and adding value to society," he said. "The best way to do this is to change the law that governs how businesses act. The Better Business Act is a unique opportunity to demonstrate UK leadership on the global stage - creating a competitive advantage, driving innovation, accelerating progress to net zero, and aligning with the government's ambition to build back better."