Why it pays to be purpose-driven
B Lab UK Executive Director and Better Business Act Campaign Director Chris Turner reflects on our latest research - and the urgent need to reorient our economy towards a cleaner, greener future.
This month has seen three seemingly disconnected events that should be keeping UK policy makers awake at night. As world leaders gather for COP28, the UN warned that the climate is on track to warm by 3 degrees without aggressive action. The OBR’s forecast for growth sees the UK facing the biggest hit to living standards on record. Meanwhile, the impact of unscrupulous business practice and how to address it reared its head once again as P&O Cruises announced a ‘fire & rehire’ of over 900 UK staff, in a strong echo of P&O ferries corporate scandal.
The problems of supporting a thriving economy, demanding better for people and protecting the planet we all inhabit have historically been seen by Governments as separate, with solutions traditionally sought in silos.
Yet as this polycrisis unfolds, threatening the health & wealth of all of us, we must urgently come to see them as interdependent - and look for solutions which address the structural issues at the heart of our economy.
B Corps know this. They make a legal change committing to align the interests of all stakeholders, rather than just shareholders. This gives them the freedom to make better decisions - as evidenced by a recent report from B Lab Global that shows that B Corps are faster growing and more financially resilient than their counterparts.
Yet up until now we’ve had limited understanding of what this way of doing business would look like at scale, and what the impact would be for our economy. That’s been the driving force behind B Lab UK’s most recent project with Demos, ‘The Purpose Dividend’.
Demos found that reorienting business away from shareholder primacy could have striking benefits for the economy, generating a £149bn (or 7%) boost to the UK GDP per year, a seven-fold increase in R&D expenditure and a £5.3bn pay rise for the lowest paid - worth £44 a week for minimum wage employees.
They argue that enacting the corporate governance reform proposed through the Better Business Act would be the answer to stagnant growth and falling living standards. And while this is an important medium term-benefit, we know that this change is also what is needed if business is to contribute to the immense problems facing our planet as climate change takes hold.
Over 2,400 UK business leaders, many of them B Corps themselves, and many experts have already pledged their support for our campaign.
Economic growth is just one measure of success. Yet it is the one that policymakers are grappling with in the here and now, as they enter a period in which they must convince the electorate that they have the answers.
Reforming corporate governance is an important step on that journey.
Complex problems rarely have simple solutions. As COP28 begins, and those in power debate how to help the UK economy out of the doldrums, they must reflect on the interdependent nature of the challenge - and seek out a pathway that will benefit us all, including people and the planet.