A new economic model needs good business - why the UK needs a race to the top
Today thousands of UK B Corps are demonstrating that higher standards and commercial success can go hand in hand. As the government sets out its vision for a new economic model that enables growth across the country, B Lab UK calls for a race to the top for how we do business, building on what B Corps have already proved possible.
The UK’s business advantage
In his speech to Labour Party Conference, Andy Burnham’s rallying cry – “All together now!” – sought to paint a vision of hope again in the UK built on a new economic model, one that works for all people, in every part of our country.
To make that ambition a reality, the way businesses operate must change. Building an economy that genuinely works for all people and our shared planet requires more than public investment and devolution. It requires changing the rules of our economic system - ensuring businesses work for people, places, and environment around them.
The day before the Prime Minister's speech, B Lab UK hosted an event with Mariana Mazzucato, Dame Anneliese Dodds MP, and Riverford CEO, Rob Haward, which shared a clear case for change: fundamentally purpose-driven businesses are more resilient and outperform their peers. They offer a blueprint for good growth.
Across the UK, more than 3,000 B Corps are already showing the way. Independently verified to meet the highest standards of business practice in stakeholder governance, environmental stewardship, and fair work practices, they show that growth and purpose can go hand in hand, benefiting all people and our shared planet. All whilst outperforming other businesses. They are real life examples of what good businesses and a good economy looks like.
Why the current economic model fails UK workers and communities
The UK economy is not fit for purpose. Growth is low, real wages have barely changed in 20 years, income inequality is higher than in any other large European country, and the UK is one of the most regionally unequal large economies in the world. The costs land on households in every postcode, while the benefits reach only a few.
These pressures are all connected. At its heart is an economy which puts the interests of shareholders and other asset owners above everyone and everything else. An economy in which the costs of doing business are too easily pushed onto workers, communities and our environment. This system rewards short-term gains for a few over long-term benefits for everyone.
Left unchecked, the result is an uneven playing field and a race to the bottom.
How B Corps provide a blueprint for responsible business
Every day, across our country, B Corps are showing that responsible business works. They go beyond what the law requires of them while remaining commercially successful. They embed purpose from the start, and achieve great results for their business as well as the people and environment around them.
Household names such as Danone, Tilda, Candy Kittens, and COOK sit alongside thousands of small and medium businesses doing the same.
Together, the UK’s B Corps employ more than 200,000 people, turn over more than £51 billion a year, span 120 industries, and demonstrate higher growth and resilience than other businesses. All whilst paying fairer wages and reducing their environmental footprint. Plus, over half of all UK B Corps operate in at least one of the government’s priority sectors, laid out in its Modern Industrial Strategy.
This gives the UK something truly valuable: a real-world sandbox for better business practice. The government should turn this evidence into action.
Government raises the floor. Business races to the top
The answer is not to certify every British business as a B Corp. Indeed, not every business can reach the high standards B Corps reach day in and day out.
We’re asking the government to set stronger minimum expectations of business, creating a level playing field from which companies can compete to go further, and embedding a long-term mindset for business across the UK.
B Lab UK continues to make the case for stakeholder governance through the Better Business Act (BBA). Backed by more than 3,000 organisations, the BBA campaign calls for a simple change to the Companies Act so that directors must consider people and planet alongside shareholders when making decisions.
This change would provide the foundations for growth in every postcode. But there are other practical areas where the government can begin raising standards now to facilitate the race to the top.
Five priorities for the government
Human rights: legislating for mandatory human rights and environmental due diligence, so that every business takes action against human rights abuses across its supply chain.
Equal opportunities: ensuring businesses develop, use and report data to deliver fairer outcomes for all their workers, pay people fairly and transparently, and do not exploit workers new to the workforce or from lower socioeconomic backgrounds.
Circular economy: ensuring UK product standards are aligned with the EU on delivering the circular economy and actively promoting and encouraging circularity in product design.
Emissions reporting: lowering existing Greenhouse Gas Emissions reporting thresholds and bringing Scope 3 reporting into the floor for large businesses, so all businesses are disclosing their environmental impact.
Tax transparency: requiring large multinationals to publish country-by-country tax reports.
Find out more in our policy paper here.
None of this is revolutionary. Nor does any of it require business to do something unprecedented. Thousands of businesses are already doing it. That is the point.
Just the start
The UK has genuine advantages. It has the largest B Corp community in the world, thousands of businesses already proving better ways of operating, and a government that says it wants to build an economy in which growth reaches further and works for everyone.
But voluntary leadership can only take us so far.
Our argument is simple. The government can and should facilitate a race to the top so that responsible business practice, that puts people and planet first, becomes the norm rather than the exception. Doing so will ensure that the government’s ambition for the economy actually becomes reality.
If the government backs better business, the UK won’t just be leading the movement to a new economy that genuinely ensures, equitable, regenerative growth, it will be setting the global standard on shared economic prosperity that other countries could follow. The UK can become a genuine global leader again, not just through voice but by compelling action.