The Better Business Act presents an opportunity for all UK businesses to unite behind, and build a trajectory towards, a more sustainable and resilient economy. The campaign is calling for an amendment to Section 172 of the Companies Act, giving all UK businesses the freedom to think for the future by aligning shareholder interests with those of employees, customers, local communities and the environment. 

The specific changes in the law fall under four principles:

1. The interests of shareholders are now advanced alongside those of wider society and the environment. This establishes a new principle of fiduciary duty within Section 172 of the Companies Act.
2. This change must empower directors to exercise their judgement in weighing up and advancing the interests of all stakeholders.
3. This change must apply to all businesses by default. It must no longer be optional to benefit wider stakeholders beyond shareholders.
4. Following this change, businesses must report on how they align people, planet and profit in a strategic report or impact report, where one is currently required.

Why are we backing this?

Pensions for Purpose is a B Corp and our vision is to embed people and planet in how investors and businesses think, operate and invest. We have therefore built our member base across these stakeholder groups, recognising that we need to bring pensions and business together through the creation of aligned systems.

Since 2017, we have been working with pension funds, their advisers and asset managers (the latter two categories being businesses subject to company law) to get more capital into investments that have a positive impact on people and planet while making a profit. We have built this into the way we operate as a business and in everything we offer to our members – our membership, research, events, training and consultancy. We are being the thing we advocate for.

Impact investing has struggled to scale for a number of reasons not to do with financial performance, as our research shows - Impact investment performance – a UK asset owner & investment consultant perspective – but often to do with systemic barriers, such as legal frameworks, culture and misaligned incentives between stakeholders. As a result of our research and working with our members, we have focused on pushing policy changes that will help investors and businesses to do the right thing and act in the interests of their beneficiaries. We have also set up specific Ecosystem Themes to push work on impact integration and systems and governance change.

Our work on impact investing includes the Impact Investing Principles for Pensions with the Impact Investing Institute and The Global Impact Investing Network (GIIN), and case studies drawing together the most recent legal updates to provide a guide on how pension funds can create impact priorities and get these integrated across their mandates. Our work has included reviews on how investment consultants and fiduciary managers (those who advise/manage assets) are integrating sustainability/impact - Adopters’ evidence 2022 and Adopters' evidence 2023. It is from these interviews, research and data collection, as well as the case studies with pension funds, that we realised there was a disconnect between what pension funds would like to do on impact, and how they are being supported to do so by the firms they rely on to advise and manage their assets.

We see Better Business as fundamental to driving systems change and that is why our support has been integrated in our work:

- Pensions for Purpose joins the Better Business Act Coalition – press release

- Pensions for Purpose CEO calls for clarity on fiduciary duty and changes to the Companies Act – press release

- 14 May 2024 – How do better business and fiduciary duty link together? Event

- This way forward! – B Corp Month 2024 – video

- Pensions for Purpose 2024/5 B Corp Report

- Ecocide may soon be one of the world’s most serious crimes – by Charlotte O'Leary