Mission-led Business: Suggestions to help make the Panel’s prediction come true David Hunter 22 November 2017

As we are Technically possible to meet the mission-led business definition now According to Deloitte there are around 123,000 UK mission-led businesses, which have a combined turnover of £165 billion and employ 1.4 million people Yet default assumption is businesses are about profit maximisation

Aim of proposals To make it easier: to identify mission-led businesses for their directors (and wider stakeholders) to understand what is expected of them in running mission led businesses for mission-led businesses to be able to gain trust as MLBs to make it happen

Focus of proposals (1) Statement of Purpose Currently, not explicit so tend to look at the duty of directors to promote the success of the company for the benefit of the members as a whole A public statement provides a reference point for all dealing with a company Generic: “to have a material positive impact on society and the environment taken as a whole” Specific: “nature-friendly organic farming, for a local market, where all people can get on the land for learning, work, and play, pioneering an ethical and socially motivated business” Alternatives may be to state how commit to conducting themselves (eg B Corp Declaration of Interdependence; Big Society Capital Statement of Responsible Business Principles; commitment to treating all stakeholders equally)

Focus of proposals (2) Directors’ duties and Company objects Might involve one or a combination of: - to promote the success of the company for the benefit of the members as a whole - to further the explicit purpose of the company - to have a material positive impact on society and the environment taken as a whole Primacy becomes significant where a combination, eg: - purpose is primary and secondary object is one, other or both of the other two - so priority is A, then / as a result B [and C] - one or more have equal status – so it is about A and B [and C] Taking stakeholder interests into account will remain – and needs to be consistent with the above

Focus of proposals (3) Transparency and Reporting Where to look and learn possibly: B Corp Impact Assessment Latest Non Financial Reporting requirements Increasing expectations of institutional investors to see integrated reporting Proposals from the government to require large companies to report on how they exercise their s172 duties (around taking stakeholder interests into account)

Focus of proposals (4) Bringing it about Relatively easy for government to introduce new models articles through secondary legislation In turn, becomes easy for businesses wanting to be identified as mission-led to adopt them B Corps provide useful examples of the path to follow, and don’t need to wait for government to act – or offer incentives, though that would help Having a range of model articles would allow for companies to decide how committed to the concept they are Good to see increased minimum standards for non mission-led businesses

Thank you