April, 19, 2021 | Adam Garfunkel | B Corporation | Purpose Economy

Today’s Ceiling Must Be Tomorrow’s Floor

Businesses should consider stakeholders in their decision-making, take ownership of their impacts and support the Better Business Act.

Adam Garfunkel
has been advising companies on sustainability for over 20 years. Before that he was a campaigner for Friends of the Earth. If you want your business to perform better and credibly demonstrate accountability to its stakeholders, reach out to Adam at [email protected]

It’s Time to Flip the Default

COVID-19 has helped us all understand that none of us is safe until all of us are safe. That we are each in small ways, beholden to each other. Whether that’s making sure we get vaccinated and encouraging and supporting others to do so, or simply helping our friends and family through difficult times, we all have a role to play.

The other lesson from COVID-19 is our capacity for bold change is greater than we thought. We see this everywhere: from the small, local examples of the neighbourhood newsagent that apparently overnight becomes a grocery store to the business that reaches entirely new markets by expanding its online offer.

Where in the past, work from home was a rarity for most people, now in some sectors such as tech, professional and financial services, it’s becoming the norm. Facilities managers are reconfiguring office space, perhaps halving the square feet they need. In response, London’s population of 9 million is set to shrink for the first time in over 30 years in 2021 as 300,000 people are predicted to move out. The daily commute has morphed into a twice-a-week chore. Whereas even just two years ago, working from home might have been a soft option, now it’s taken for granted as part of an emerging new hybrid home/office model. That’s a big change in our working lives in a very short space of time. Can we extend the same willingness to change to tackle our climate crisis and rising inequality?

Change is Possible

There’s no doubt we need to change: our climate is headed towards about 3 degrees of global heating by the end of the century, based on current policies, while what we need to aim for is less than two and ideally 1.5 degrees. Human activities such as agriculture are putting 1 million species at risk of extinction. Economist Kate Raworth’s Doughnut model shows us that we are falling short of meeting any of the twelve social standards such as access to education or gender equality.

Similarly, Project Drawdown has curated an array of climate solutions for different sectors and is working with businesses committed to tackling climate change to encourage “faster, safer and more equitable climate action at unprecedented scale.”

A lesson from COVID-19 is that our capacity for bold change is greater than we thought.

Other examples of corporate leadership can be seen in the global community of Certified B Corporations. There are now about 4,000 around the world. These companies–including Junxion–have committed to running their businesses to make a material, positive impact on people and planet.

More than 900 B Corps have committed to being net zero by 2030, twenty years ahead of target. And now the B Corp community has curated a set of tools to help any business be net zero by 2030.

Far too many businesses remain stuck in an extractive mindset.

The Better Business Act Flips the Default

Despite all the examples, all the frameworks, and all the models, far too many businesses remain stuck in an extractive mindset. And that is where there is a role for government to set a floor on what is acceptable.

Last week saw the UK parliamentary reception for the Better Business Act. This proposed change to section 172 of the UK Companies Act 2006 would bring forward a duty on directors to advance the interests of stakeholders and the wider environment, alongside pursuing profit. It is a deliberate echo of the amendments to their articles of association that companies wishing to certify as B Corps have to make.

And there is precedent for this legislation as well. In some jurisdictions, including 40 US states, Italy and British Columbia in Canada, there is now Benefit Corporation legislation that allows companies to register to pursue purpose alongside profit. (Whether the legislation is necessary in Canada is a contentious point we have argued against in the past.)

However, Benefit Corporation legislation creates an alternative type of legal form for ‘good businesses’. It serves to ‘other’ them.

What is different about the Better Business Act is that it ‘flips the default’. It takes the leadership of the 4,000 Certified B Corporations in the world and says their best-for-the-world approach to considering stakeholders has to become what all businesses do.

Every business should consider stakeholders in their decision-making and take ownership of their impacts.

It should not be exceptional. Every business should consider stakeholders in their decision-making and take ownership of their impacts.

Today’s Ceiling Has to be Tomorrow’s Floor

More than 400 companies, including the supermarket Iceland and retail giant the John Lewis Partnership, along with the Institute of Directors are supporting the Better Business Act. More than half of the company supporters are not Certified B Corporations–they are simply businesses that know there is a better future for them and their stakeholders in a race to the top. These businesses know now is the time to act, to lead, to publicly call for something better.

The scale of the challenges we face is huge–the exponential changes in climate and the urgent need to address social inequality require us all to “act as if our house is on fire, because it is,” to quote Greta Thunberg. We know the solutions we need to implement, but collectively we need to move much more quickly. We need to act at the pace of the exponential changes happening in our world.

It’s time to step up. It’s time to flip the default. It’s time for today’s ceiling to be tomorrow’s floor.

Join the Better Business Act today.