More than 1,000 business leaders call for tighter governance rules after P&O scandal

Company directors should be compelled to align objectives with societal and environmental concerns, MPs are told

Hollie Adams/Getty Images

More than 1,000 business leaders have called for company governance rules to be tightened in the wake of the P&O Ferries scandal.

The coalition of organisations, which includes the bosses of innocent drinks, Iceland and the Institute of Directors, is lobbying parliament to amend the Companies Act to force company directors to align their business objectives with societal and environmental concerns.

Mary Portas, the well-known retail consultant and co-chair of the Better Business Act Campaign, said the actions of P&O – which last month made 800 staff redundant without notice – highlighted how company law needs to be reformed.


P&O boss admits firings were unlawful under UK legislation

FTSE 100 firms failing to report meaningful diversity data, CIPD study finds

Kevin Green: “HR can’t just sit at the side and create nice messages”


“As things stand, the Companies Act still allows some companies to pursue profits at the expense of workers, communities and nature,” she said.

“We saw this most clearly recently with the horrendous behaviour of P&O Ferries executives. We need to update our laws so that a decision like that can never be made in a British boardroom ever again.”

Around 500 business leaders supporting the campaign attended an event in parliament yesterday (20 April) to persuade MPs to make changes to section 172 of the Companies Act, which sets out the responsibility of company directors to “promote the success of the company”.


Get more HR and employment law news like this delivered straight to your inbox every day – sign up to People Management’s PM Daily newsletter


Douglas Lamont, CEO of innocent drinks and another co-chair of the campaign, explained that the current wording of the Act allowed company directors to “profit maximise for shareholders whatever the cost to others”.

“We think it is time that the legal hiding place is removed and the legislation is updated to make it crystal clear to all UK company directors that they are accountable to find an appropriate balance between their responsibilities to people, profit and planet,” he said.

The coalition, which was launched a year ago, is also campaigning for companies to publicise their activities as part of their strategic business reports.

Chris Turner, executive director of B Lab and a director of the campaign, said it was in “everyone’s interests” to align boardroom objectives with the long-term interests of workers, communities, and the environment.

Separate research, conducted by B Lab last year, found that the majority of the public were also in favour of forcing companies to adopt social and environmental goals.

The poll of 2,175 people found 72 per cent said businesses should have a legal responsibility to the planet and people alongside their responsibility to maximise profits. Similarly, more than half (54 per cent) of those polled said employers had a responsibility to their employees.