Backing purpose-led business will unlock good growth
The Treasury is facing a key challenge: how to address the public finances whilst achieving the sort of good growth Britons are desperate to see.
Purpose-led businesses can pave the way. And the Treasury can back a way of doing things differently: supporting stakeholder governance
Across the UK, a growing number of businesses are proving that success do not have to come at the expense of workers, communities, or the environment. These purpose-led businesses are thriving by doing things differently: paying fair wages, cutting emissions, reinvesting in their local areas, and building business models that work for the long term - not just the next quarter.
Many of these companies are part of the B Corp movement - more than 2,600 strong in the UK and growing fast. They include well-known names like ELEMIS, Tony’s Chocolonely, Oddbox, and Triodos Bank, but also hundreds of small and medium-sized enterprises operating in every corner of the country, from ethical retailers to local manufacturers. These firms are showing that aligning purpose and profit is not just possible - it is good business.
Research by B Lab UK shows that B Corps are more resilient, more attractive to talent, and often outperform their peers financially. SMEs within the B Corp community saw a 23 per cent increase in turnover last year - compared to the national average of 17 per cent.
At a recent roundtable, hosted by B Lab UK and the Good Growth Foundation, I heard directly from some of these businesses. They spoke about the challenges they face and the opportunities that lie ahead if policy begins to match the ambition already being shown by business leaders across the country.
One particularly powerful story from the group was B Corp Open Media’s. They described an initiative to recruit and upskill young people from communities across Liverpool, an initiative inspired by the wider B Corp community.
Supporting businesses to thrive are no doubt be a top priority for ministers but there are other ways to support good business growth. Supporting the growth of responsible business is not about picking winners or subsidising failure - it is about recognising the firms already driving economic renewal and removing the barriers that hold them back. It is about ensuring business growth benefits the wider community.
One of the most significant of those barriers is legal. Under current company law, directors are required to prioritise shareholder returns above all else - even when they want to balance those interests with doing right by their employees, customers, or the environment. This outdated model is out of step with what the public want - polling of 2081 UK adults undertaken by Yonder in 2024 shows 76 per cent of people believe the law needs to change to give businesses a legal responsibility to prioritise people and the planet alongside making a profit.
The Better Business Act offers a simple, pragmatic solution. Backed by more than 3,000 companies - including household names like Virgin, Iceland Foods and innocent Drinks - the Act would update the Companies Act to give directors the clarity and confidence to align profit with purpose. It would free business leaders to make decisions in the long-term interests of their stakeholders - and of the country. It also makes economic sense.
Research by Demos shows that purpose-led businesses could contribute an additional £149 billion to UK GDP - a potential 7 per cent boost to the economy. In a period where public finances remain tight, and growth is urgently needed, this is an opportunity we cannot afford to ignore.
The Labour Party has already shown an understanding that the power of business can be a force for good. The newly passed Employment Rights Bill will deliver the biggest expansion of workers’ rights in a generation. Investment is flowing into green and digital industries.
The party has consistently spoken about the need for growth that is both inclusive and sustainable. But government cannot, and should not, do this alone. Business must be part of the solution, and many are already stepping up. On the high streets and at the heart of every community.
Supporting purpose-led business is not about adding red tape or mandating a one-size-fits-all approach. It is about modernising our economic framework to reflect the challenges and expectations of today - and backing the firms that are already ahead of the curve. These companies are not waiting for permission to do the right thing. They are proving that good business is good economics.
With the right support, the UK could become the world’s first truly stakeholder-led economy - one where long-term thinking, social responsibility and environmental stewardship are built into the heart of how business operates. For ministers, that is a future worth backing; and that is good growth worth backing.
Andy MacNae is the Labour MP for Rossendale and Darwen.
