Over 200 business representatives arrived at Parliament in April to discuss with MPs the need for a small change to UK company law with a mighty impact - one that urges businesses to consider society and the environment as well as their shareholders.
Amongst those in attendance was Danielle Thompson, founder of Unthread Advisory and ethical business consultant to Second Mountain Comms. We spoke with Danielle about the importance of the Better Business Act and how it would help accelerate the shift towards a fairer, more environmentally considerate economy.
What is the Better Business Act?
It’s a campaign to make a small amendment to Section 172 of the Companies Act: basically, the law that dictates how we, as business leaders, are required to act to carry out our legal duties. At the moment, this law says that we need to deliver value to shareholders and that’s it. The Better Business Act (BBA) is campaigning to get this changed to align shareholder interests with that of society and the environment.
What does it mean for business leaders?
The amendment to the act is more than just a legal change; it's a vehicle to accelerate the adoption of fairer business principles. Those principles are:
We have aligned interests. Shareholders think of wider society and the environment when making company decisions.
Empowering Directors. It frees up directors to think much more widely than delivering on shareholder value. Obviously, many do this already, but this act would ‘give permission’ for more to do so.
Default change. This is the big one in my view. It makes this way of doing business ‘normal’. At the moment considering stakeholders is still very niche; this would make it Business as Usual.
Reflected in reporting. Where companies are currently required to report on their results (i.e an Annual Report), they would also need to report on their impact.
Another way to explain it is if you are a B Corporation you will already do all the above and your company articles of association will already reflect this change. The BBA is looking to make that approach the way that all businesses are run.
Why did you end up at Parliament?
The BBA campaign organised for hundreds of business people to attend Parliament on Better Business Day (20th April) to speak to their individual MP about its importance.
The purpose of these discussions was to ask them to support its inclusion within the Queen’s Speech. This was an important milestone as the Queen’s Speech sets out the Government’s agenda and priority bills for the future year. Inclusion in that would have been a significant step forward for this change becoming a reality.
So did you get your meeting? Did you meet with you MP?
Yes, I did! Some unfortunately didn’t, as the process was that you turned up and essentially asked to see them and they may or may not be present on the day. My local MP was and myself and other local business leaders had a good meeting with him, shared our concerns and explained what we were trying to achieve.
As a politician with a different political persuasion than perhaps I have, I was unable to get his support for the change but we did very much agree that social and environmental progress has to be at the top of the business agenda. We both agreed that in the future, it is these businesses that will succeed and that will force others to follow; my argument was that this will take years to happen without legislation, but I don’t think we were ever going to agree on that point!
But it didn't get into the Queen's Speech in the end, did it?
No, it didn’t. There was a commitment to a draft audit reform bill which is a nod to making change happen but really not enough or fast enough to force real change in how businesses operate in the here and now.
What happens next then?
More lobbying - I’m getting quite a taste for it now! More businesses supporting the coalition and making the need for change heard. More businesses leading the way by shouting about how they are making changes anyway and making shareholder consideration and impact reporting their BAU.
If someone wanted to get involved or find out more, what can they do?
The best thing would be to sign up to join the coalition, for free here. You will be adding your company name to a growing list of companies supporting this change plus you will be invited to future events and sessions to learn more and get involved.
If you want your company to adopt these principles anyway then you might want to consider learning about becoming a B Corp. I’m always happy to talk to people about what that involves and how to go about it. Just drop me a line.
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Danielle Thompson, ethical business consultant to Second Mountain Comms, founded Unthread Advisory with a mission to make balancing profit and purpose just business as usual. Inspired by creating a better working world for the next generation, she helps SMEs through consultancy and group programmes to create force-for-good operating models and ways of working.