The Better business act aims to amend Section 172 of the Companies Act 2006 so that companies are legally obligated to operate in a manner that benefits their stakeholders, including workers, customers, communities and the environment, while seeking to deliver profits for shareholders. Currently a company director or directors are bound by section 172 to maximise shareholder return "shareholder primacy", amending this act would allow them to make a choice when deciding on something that impacts the environment or profits and choose the environment.
For the past half-century, some business has become separated from the communities they serve. The relentless pursuit of profit at all costs has contributed to a set of enormous challenges that threaten peoples’ health, wealth and the natural world. The Better Business Act will transform the way we do business, so that every single company in the UK, whether big or small, takes ownership of its social and environmental impact.
This means freeing decision-makers in business to act in everyone’s long term interests – combining traditions of good stewardship and responsibility with new ideas to meet the challenges of the 21st century.
The best way to do this is to change the law that governs how businesses act. It can no longer be optional for companies to consider their impact on the future.
This is why every member of the F2F alliance is committed to supporting the Better Business Act and working towards the principles of the act today.
Shouldn't all companies already do this?
Yes, they should but we know they do not. The F2F alliance believe that at all times companies should make decisions based upon stakeholders that include workers, customers (in our case clients & donors), the environment along with shareholders.
What would the act change?
Subsection 172(1) Companies Act 2006 allows directors to consider other stakeholders when making decisions, but this can only be in the course of pursuing the success of the company for the benefit of the shareholders; this is the default position of “shareholder primacy” for all companies.
The BBA would change the default position for all companies so that directors would be empowered to advance the interests of their shareholders alongside those of wider society and the environment. In situations where a director has to choose between the company’s intention to create positive social or environmental impacts and the interests of shareholders, the directors would no longer be compelled to default to prioritising shareholders.
You can make your pledge to support the act along with the F2F alliance and 850 other business here.
