A report suggests that amending UK business laws to prioritize social, economic, and environmental benefits in decision-making could potentially boost Britain’s economy by £149bn.
According to a study conducted by thinktank Demos, the UK is projected to have the second lowest growth rate among the G7 economies in 2023. The study concluded that neither tax cuts nor increased government spending have been successful in stimulating economic growth.
The report proposed that giving boardrooms the authority to consider more than just their shareholders could increase efficiency and result in a pay increase of £5.3 billion for workers with low incomes, equivalent to an extra £44 per week for the average individual earning the minimum wage.
The text suggests that policymakers should make changes to the governance of UK businesses by amending the Companies Act and implementing a requirement for directors to take into account the social, economic, and environmental consequences of their company in addition to its profitability and benefits for shareholders.
According to the statement, implementing this measure could promote growth by prioritizing all stakeholders, including B Corps, social enterprises, and co-operatives. These types of businesses have shown to outperform their competitors with quicker growth, increased innovation, higher investments, and better staff engagement.
The concept has garnered bipartisan backing and is endorsed by a group of over 2,000 companies, including Iceland supermarket, Tony’s Chocolonely, and the food sharing platform Olio, as well as business organizations like the Institute of Directors.
According to Andrew O’Brien, the individual responsible for creating the report and serving as the director of policy and impact at Demos, the common belief is that economic growth can be achieved through either reducing taxes or increasing government expenditures. However, our findings demonstrate that the most significant factor in boosting the UK economy would be to enhance the management and organization of businesses.
If we are successful, we have the potential to increase the UK economy by hundreds of billions through increasing investments, productivity, and wages for workers. This impact would be much greater than other measures often discussed in Westminster.