The Better Business Act

Bates Wells supported the Better Business Act campaign by preparing a draft of the proposed legislation, to help demonstrate how company law could change in order to set a more sustainable foundation for companies across the UK.

The Better Business Act campaign is led by B Lab UK and a coalition of more than  650 business and other organisations. The campaign proposes legislative developments that, if enacted, would displace the doctrine of ‘shareholder primacy’ as the guiding principle of boardroom decision-making.

In short, the Better Business Act is based on the premise that the ‘triple bottom line’ approach to business is the only solid foundation for a sustainable economy. A triple bottom line would require the business to be operated not just for the benefit of its members, but also wider society and the environment.

The Better Business Act would replace s172 of the Companies Act 2006, which sets out that the default purpose of companies is to benefit their shareholders, with a mandatory triple bottom line purpose for all companies. If passed, it would be a world first. The triple bottom line is essentially the same model of purpose that companies choosing to certify as B Corps already adopt on a voluntary basis, but the Better Business Act would work by setting a new floor for all UK companies.

The Better Business Act is supported by a range of businesses, business leaders and other organisations. We are calling upon others to join the Better Business Act Coalition and to show their support.

Recently, as the world continues its path to post-pandemic recovery, B Lab UK commissioned a public opinion poll to hear from the public about their attitudes towards our current economic system, and the role of business in addressing our profound economic, societal and planetary challenges. The responses are fascinating and show that 76% of the UK public think business should have a legal responsibility to the planet and people, alongside maximising profit. Click here to find out more about these poll results.

This is only the first step in the Better Business Act campaign, which urges businesses to reflect on the wide-ranging problems generated by an economy which focuses excessively on shareholder returns, and to call for an economy in which all businesses need to operate a triple bottom line.

We very much welcome your thoughts on the proposed legislation and the Better Business Act campaign. If you’d like to get in touch, or lend your support to the campaign, please contact Luke Fletcher. You can follow the latest updates on this campaign using #BetterBusinessAct, on @BatesWellsTweet and our LinkedIn page.

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