Avery & Brown is pleased to have acted for the Better Business Act by responding to the Department for Business, Energy & Industrial Strategy (BEIS) open consultation on 'Restoring trust in audit and corporate governance: proposal on reforms'.

BEIS is seeking views on proposals to strengthen the UK’s framework for major companies and the way they are audited. This is the first time in many years that the Companies Act is being re-examined, so it's a timely opportunity for us to advocate for the change we want to see. As supporters of the Better Business Act Coalition, we were delighted to submit our response to the consultation, which we have pasted below.

Re: Restoring trust in audit and corporate governance - Consultation on the Government’s proposals

This submission is made by Avery & Brown Ltd.

Avery & Brown is a digital marketing and creative agency which puts people and planet on par with profit. We are on a mission to become a regenerative business; one which gives back far more to society and the planet than what it takes from them.

This consultation is of considerable interest to Avery & Brown and we are therefore pleased to present our views in respect of your proposals. As a member of the Better Business Act Coalition, we concur with the main points contained in the Coalition's submission to this consultation which are copied below for ease.

Summary of our view

As the Government embarks on this major programme of corporate governance reform, there is an opportunity to clarify what responsible behaviour looks like by revisiting Section 172 of the Companies Act 2006. Avery & Brown supports the Better Business Act because we adamantly believe in the role that better business can – and must – play in tackling the climate, ecological and social crises and creating a cleaner, greener, fairer future for all.

We concur with the Government's view that responsible behaviour by directors is the fundamental starting point for high quality and reliable corporate governance and reporting. As BEIS embarks on this major programme of reform, there is an opportunity to clarify what responsible behaviour looks like by revisiting Section 172 of the Companies Act 2006. As the Consultation document highlights previous attempts at incremental reform have not had the desired effect and there is a need for significant, targeted measures.

Section 172 of the Companies Act occupies a unique position in our company law framework setting out a number of general duties that directors owe to a company. Widely recognised as ambiguously worded and something of a historic compromise, now is the time to provide greater clarity to directors.

Section 172 of the UK’s Companies Act 2006, imposes on a director the duty to ‘act in a 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 so doing, to have regard to a range of stakeholders. However, in the absence of clear guidance, the interests of shareholders can in practice be pursued without regard to those of other stakeholders.

We believe that it can no longer be a choice to align the long-term interests of people, planet and profit. We believe that Section 172 should be amended so that the interests of shareholders are now advanced alongside those of wider society and the environment. By amending s172 to provide greater clarity to directors, the nature of conversations in the boardroom can be changed to allow for a more holistic approach to the challenges faced by the company’s directors.

We understand that others including the Trade Union Congress (TUC) representing workers, the Institute of Directors (IoD) representing business leaders and ShareAction representing investors will also be highlighting the need to amend s172 in their respective consultation responses.

If your business would like to support the Better Business Act, please visit their website here.

To learn more about the BEIS open consultation described in this post, visit this web page.