Directors should act in the interests of ALL stakeholders, not just shareholders

Directors should act in the interests of ALL stakeholders, not just shareholders

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Simon Puleston Jones started this petition to UK Parliament

It's just one word!

Help create capitalism 2.0! If you want companies to act in the interests of all their stakeholders, not just their shareholders, then sign this petition!

Can changing just one word in English law change the world? We, the undersigned, believe so. 

WHAT WE'RE ASKING FOR:

That the word "members" in the opening paragraph of section 172(1) of the Companies Act 2006 be changed to "stakeholders".

WHY WE'RE ASKING FOR THIS CHANGE:

The current doctrine, enshrined in this provision of English corporate law (and elsewhere in other jurisdictions around the world), promotes the interests of shareholders above everyone else. This concept of "shareholder primacy" is increasingly recognised as having exacerbated inequality, caused social and environmental harm and acted against the overarching best interests of society.

WHY NOW?

Times are changing. People increasingly want to buy from, work for and invest in companies with purpose. Consumers, employers, investors, youth, government and the public at large all want the corporate sector to be taking more action on the social and environmental causes that matter to their stakeholders.

s172 works against that shift in societal expectations, as it expressly makes clear that directors ultimately have to prioritise shareholders' interests over everyone else. 

If we truly want companies to be part of the solution - for example, for companies to play their part in attaining the 17 United Nations Sustainable Development Goals by the year 2030 - then corporate law needs this one word tweak to better empower companies to deliver improved societal and environmental outcomes, for the benefit of us all

WHAT DOES THE LAW CURRENTLY SAY?

Section 172(1) states that:

"A director of a company must act in the way he considers, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole, and in doing so have regard (amongst other matters) to—

(a) the likely consequences of any decision in the long term,

(b) the interests of the company's employees,

(c) the need to foster the company's business relationships with suppliers, customers and others,

(d) the impact of the company's operations on the community and the environment,

(e) the desirability of the company maintaining a reputation for high standards of business conduct, and

(f) the need to act fairly as between members of the company."

Yes, paragraph (b) says "think of your employees!", (c) says "don't forget your supply chains and your customers!" and (d) says "have regard to your impact on the community and environment!", but the clause is clear - above all else, you need to (i) promote the company (ii) for the benefit of its members, whereas you merely have to "have regard" to (a) to (f) and more. In practice, many companies have complete disregard for communities and the environment.

WHY CHANGE THE LAW?

By changing the word "members" (i.e. shareholder) to "stakeholders" in section 172 of the Companies Act 2006, the UK Parliament can expressly make clear that UK companies and their directors now have to act in the interests of all their stakeholders - their shareholders, customers, employees, the people who live and work in the places that the company and its supply chain conducts their business (in the UK and abroad), and the public at large - not just the narrower interests of their shareholders.

By signing this petition, you're asking the UK government to amend the legal duties of directors of companies, so that rather than merely "having regard" to other stakeholders, directors have to promote the company for the benefit of its stakeholders, not just its shareholders.

YOU CAN MAKE A DIFFERENCE

This petition was launched by Simon Puleston Jones, the founder of WokenUp (www.wokenup.com): the new global social network for people and organisations with purpose that are taking action on the social and environmental causes that matter to them.

#JustOneWord 

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At 100 signatures, this petition is more likely to be featured in recommendations!