The movement to take benefit corporation governance from a nice-to-have to a must-have is advancing in the United Kingdom, where business leaders are joining forces to advocate for legislation to align company practices and policies with long-term benefit for people and planet as well as profit. By requiring public companies and their directors to weigh and advance the interests of all stakeholders, the proposed legislation known as the Better Business Act (BBA) would help U.K. companies address the climate crisis and social inequality as part of larger systems change, according to its supporters.
The BBA has the support of more than 900 companies as well as 76% of people in the U.K. who want businesses to be legally responsible for their impact. Among the organizers and proponents of the BBA is B Lab U.K. Executive Director Chris Turner, who oversees the nearly 600 companies in the U.K. Certified B Corporation community as well as collaborations with other organizations advocating for purpose-driven business. The Better Business Act is a needed step in reshaping economic systems to help address global challenges, he says, and B Corps have demonstrated the positive impact of operating to create value for stakeholders.
When it comes to governance, all B Corps have to make a legal change depending what jurisdiction they’re in. They are the living, breathing proof-of-concept that stakeholder governance, which we call “aligned interests”, is not just working — it's a better way of growing a business, quicker and more sustainably, as well as caring for people and planet,” he says. “The campaign is therefore designed say: there is proof that this works as a model of governance. It is good for business growth as well as positive impact.
Chris Marquis: Share a bit about the history and motivations behind the Better Business Act and the businesses advocating for it.
In the U.K., our community of B Corps is now about 600, and growing faster than ever, but there are over 5 million businesses in the U.K. So the fundamental and obvious challenge is harness this core group of leaders to effect much wider change. Our strategy is designed around pulling those levers for scale, and one of those levers is policy work
When it comes to governance, all B Corps have to make a legal change depending what jurisdiction they’re in. They are the living, breathing proof-of-concept that stakeholder governance, which we call “aligned interests”,is not just working — it's a better way of growing a business, quicker and more sustainably, as well as caring for people and planet,” he says. “The campaign is therefore designed say: there is proof that this works as a model of governance. It is good for business growth as well as positive impact.
Our core theory of change for the campaign was for it to be the voice of business saying this is where business culture is heading, and actually what’s needed is for the law to catch up with what good leadership looks like in business. So we wanted that voice of business to be at the core of the campaign.
We were inspired by the work on the benefit corporation legislation in the U.S. and in various other places around the world. By 2019, though, it was clear that what we need now is for stakeholder governance — our aligned interest — to not be an option anymore. It needs to be the default; it needs to be the minimum expectation that we have of business.
Thousands of businesses around the world have adopted benefit corp as an optional framework, so again it's all adding to the proof of concept. But the time now is right, and indeed it’s necessary, for us to go beyond that option and make it the default.
Marquis: Making it the default rather than voluntary is a bold move. Can you explain a bit more about how that decision came about and how you’ve brought other business leaders — especially those who aren’t at B Corps — into the campaign?
Turner: That is the big shift here, going beyond proof of concept to say “let’s change the system”. The imperative is clear from the crises that we face — the climate emergency, rising levels of social inequality and unrest. While 2021 was an apposite time for us to launch the BBA in the U.K. We had COP in Glasgow last year, amid the pandemic recovery our government – like the US - had the ‘build back better’ ambition.Meanwhile the government here also has an agenda of “Leveling Up”, which is all about leveling up those regions of the U.K. that have been economically left behind.
It’s a powerful narrative for us to say that for the U.K. to achieve any of its goals — including very ambitious net zero commitments — as a government you need to be doing that in partnership with business – actually in partnership with every business in the country. The only way of doing that is by redefining the contract between business and society, and the Better Business Act will amend the core piece of corporate governance that does that. We describe this as the ‘job description’ for the Director, outlining their responsibilities in law. In current legislation this incredibly ambiguous, and we need to clean this up. We’re supported by one of our core partners, the Institute of Directors, which is one of the bigger and more influential business membership organizations in the U.K.
We now have over 950 businesses on board in support of the BBA, and the majority of them now aren’t B Corps. What we hear from the vast majority of those businesses is this is how we run our business anyway.These are just good business principles. For the millions of SMEs across the U.K. you're not placing any additional burden on them, you're not asking them to do anything different. What the legislation needs to do is level the playing field for these businesses.
Marquis: What are some of the steps you’ve taken to create and advance the legislation?
Turner: There are all sorts of ways in which a bill can be introduced in the U.K.. In the current political context we need to build our base of support within the governing party, the Conservative Party, and within government. We were speaking to a lot of Conservative members of Parliament, a lot of civil servants. And of course we’re also building a really broad base of support within Parliament because this is not a partisan issue.
It could be a government bill or it could be a private member’s bill, which is a more unpredictable way of passing legislation. There is a piece of corporate governance reform in the works at the moment, which could also be a vehicle for this change. There are various routes, and they all rely on a broad-based coalition of supporters in Parliament. In terms of the campaign strategy we’re working back from that: Building this coalition means we build our profile and we create an amazing range of business ambassadors from all over the U.K. who have meetings with politicians, speak at events with us, speak to the press, and spread the word.
Our campaign asks are to see four principles — for aligned interests, empowered directors, default status, and reporting changes — reflected in legislation. Rather that asking for specific text changes, this approach gives us the room to achieve that in a number of different ways.
Marquis: What role have U.K. B Corps played in the development of the Better Business Act and those four principles? How has the global B Corp community served as a resource in advocacy for the Better Business Act?
Turner: We’ve spoken with people at other regional B Lab organizations. One of the things we’re emphasizing with the Better Business Act is this is a world-first action. The U.K. has an amazing tradition of leading and innovating in corporate governance. This is an opportunity for us to keep doing what we do best.
Supporters include businesses and their leaders such as John Lewis, Waitrose, Iceland; Innocent Drinks and Douglas Lamont, who is co-chair of the campaign; and Holly Branson at Virgin. People see these names and realize this is serious. It’s also important for us to have this kind of representative coalition, highlighting all the small businesses that are backing this as well. It’s relevant to every size of business, every actor.
Any business that signs up plays a role in building that overall case for credibility. Over the summer, we ran a program to encourage businesses all over the country to invite their local members of Parliament to come and visit the business and hear how they bring the principles of better business to life. That’s one of the most powerful things our coalition businesses can do — demonstrate them in practice.
This year will bring some big milestones. In May there’s the Queen’s speech, written by the government, that sets out the legislative agenda. Our big goal for this year is to get the Better Business Act into the Queen’s speech. That will involve a big push in March and April to get as many of our businesses, and people who work for our businesses, to write to their local members of Parliament in support of the BBA in the Queen’s speech.