The latest study in the Academy’s ‘Future of the Corporation’, the focus of this research is on ways in which companies can effect change at a time when the need for businesses to marry profit with purpose has never been greater.
As a sponsor of this report, Bates Wells wholeheartedly welcomes its insights and believes that it will serve as a useful guide for CEOs, policymakers and lawmakers as they look for ways in which business can harness its significant potential to address many of the planet’s key challenges. Luke Fletcher, Partner and co-lead of our Impact Economy practice, was a member of the report’s Deliberation Group, a gathering that was instrumental in the study’s development. This Group sifted, analysed and contributed evidence which was reflected in the report’s wide-ranging conclusions.
The principles mapped out by the report are as follows:
- Corporate law should place purpose at the heart of the corporation and require directors to state their purposes and demonstrate commitment to them.
- Regulation should expect particularly high duties of engagement, loyalty and care on the part of directors of companies to public interests where they perform important public functions.
- Ownership should recognise obligations of shareholders and engage them in supporting corporate purposes as well as in their rights to derive financial benefit.
- Corporate governance should align managerial interests with companies’ purposes and establish accountability to a range of stakeholders through appropriate board structures. They should determine a set of values necessary to deliver purpose, embedded in their company culture.
- Measurement should recognise impacts and investment by companies in their workers, societies and natural assets both within and outside the firm.
- Performance should be measured against fulfilment of corporate purposes and profits measured net of the costs of achieving them.
- Corporate financing should be of a form and duration that allows companies to fund more engaged and long-term investment in their purposes.
- Corporate investment should be made in partnership with private, public and not-for-profit organisations that contribute towards the fulfilment of corporate purposes.
Luke Fletcher, Partner and co-lead of Bates Wells’ Impact Economy practice, said:
“The economist Milton Friedman is widely credited as setting the corporate governance agenda for the last half century with his New York Times article in 1970 which proclaimed that the “social responsibility of business is to increase its profits”. This report from the British Academy and Professor Colin Mayer has the potential to set the corporate governance agenda for the next half century with its focus on the wider impacts of business on society and the environment and the role of purpose in aligning wider stakeholder interests with the corporate governance of the firm. Bates Wells has been delighted to sponsor, support and contribute to many of the arguments set out in Principles for Purposeful Business – which provides a compelling and coherent vision for the Future of the Corporation.”
About Bates Wells
- We’re Bates Wells, a City firm with a difference. We strive to make a positive impact in all aspects of our work, be it through achieving legislative change around sustainability or working on landmark cases of national significance.
- Our clients are diverse – from global household names, to public bodies, to start-ups. We’re also the firm of choice for thousands of charities and social enterprises.
- As a values-driven firm we show commitment to our clients, our people, the environment and society. We’re the first UK law firm with a B Corp certification.
This information is necessarily of a general nature and doesn’t constitute legal advice. This is not a substitute for formal legal advice, given in the context of full information under an engagement with Bates Wells.
All content on this page is correct as of November 28, 2019.