In a report published yesterday, the advisory panel to the Cabinet Office’s Mission-led Business Review is recommending, amongst other interesting proposals, that the government explores the possibility of creating a new “benefit company” legal status in English law.
The government has also committed to promote the flexibility offered under English law for companies to act with a social purpose, as well as creating clear entry points for entrepreneurs.
This review and its recommendations comes at a time of greater public scrutiny of bad corporate behaviour and an increased desire on the part of employees, customers, suppliers and other stakeholders to engage with purposeful businesses.
As outlined previously, the aim of the review was to understand what is happening in the mission-led business sector (“profit-driven businesses that make a powerful commitment to social impact”) and make recommendations on how the market and its impact can be grown.
BWB welcomes these developments. As a firm, we have played an active role in the review through responding to HMG’s initial Call for Evidence and proposing the introduction of the “benefit company” status; as well as seconding senior associate, Louise Harman, to the Cabinet Office to support the government on the legal and governance aspects of the review.
As a certified B Corporation, BWB has already amended its partnership deed to embed social and environmental purposes. A “benefit company” legal status, as in Italy and 32 US states, would help mission-led businesses to advance such purposes in a framework of accountability and transparency.
Luke Fletcher, head of Social Ventures and Social Finance at BWB comments, “It is hugely encouraging to see that – as well as encouraging businesses to use the flexibility under the law to act with a social purpose – the government is actively exploring the creation of a benefit company.
We need to reframe the concept of success in business if we are going to harness the tremendous power of the profit motive to create a more inclusive economy. This is a landmark review and, if the government follows through on its commitments, it has the potential over time to change the way the economy works – and showcase a different way of doing business which creates real shared value. We are excited to be supporting this agenda by working with UnLtd to create an online portal which will help businesses to articulate and embed social purpose.”
David Davies, a partner in Corporate at BWB comments, “We have seen a big increase in the number of companies created over the past few years with a social purpose at the heart of the business. Many business leaders are realising that there is a big opportunity here for entrepreneurs and businesses to distinguish themselves from the competition and to show leadership by fully committing to create positive social and environmental value, alongside profit for shareholders.”
Posted on 06/12/2016 in BWB NewsBack to Knowledge