As noted in an earlier post, in Australia, company directors have a duty to act in the best interests of the company (among other duties, including a requirement to act in good faith and for a proper purpose). Whilst prioritising shareholders is not an express requirement, nor is it written into the Corporations Act 2001 itself, the idea of shareholder primacy is widespread in the culture and practice of business.
We have seen a shift in the expectations of business in Australia. We’ve heard directors say they are trying to consider the impact of the company’s decisions on stakeholders, but that many boards don’t yet know how to build in processes to do that effectively.
At B Lab ANZ our work is focus on improving the culture and practice of business in Australia and Aotearoa New Zealand. From September 2020, all Australian B Corps will be required to amend their company constitutions to include a commitment to pursue profit and purpose, and require company directors to consider all stakeholders in decision-making. This change will showcase B Corp leadership in corporate governance with these companies ensuring they are accountable to creating profit and positive impact.
Over the last 18 months, we have had the good fortune of meeting purpose-driven businesses (currently outside of the B Corp community) that have amended their constitutions to include a social and/or environmental purpose alongside profit. These businesses are embracing accountability by embedding their commitments into their governing documents, and are backing them up with thoughtful and innovative governance practices.
We wish to use this moment to share examples of how companies - both B Corps and non-B Corps - are practising stakeholder governance by sharing guides, resources and templates to make it possible for more businesses to do this well.
As B Corps now move to include purpose and stakeholder governance in their company constitutions, we are inviting organisations with an interest in this area to collaborate. We would like to work together to build a platform to:
Collate the evidence base for the relationship between a company committing to purpose and stakeholders, and the positive social and environmental impact they generate
Collect and share best-practice tools, guidance, and case studies showcasing the pathway to informed and effective stakeholder governance.
To bring this to life we are seeking funding and research partners to collaborate on this initiative. We welcome your support; please contact me if you’re interested in learning more.. Otherwise stay tuned for more information as we develop this plan in 2021 and beyond.
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