Duties call

Perhaps because the world seems a more hostile place at the moment, but even so the campaign for reform of directors’ duties—so they recognise their “impact on people and planet”—seems to be ramping up.

B Lab UK announced this week that it now has 3,000 businesses signed up to supporting reform in its Better Business Act campaign.

Directors’ duties are contained in section 172 of the Companies Act, but there has been pressure for change for some time in favour of refocusing the clause on broader stakeholder interests.

The Better Business Act launched four years ago to campaign for reforms. The group’s new milestone comes as the government weighs a new audit reform bill and whether to integrate new sustainability reporting standards into corporate disclosures.

Companies backing changes to section 172 include Iceland, Virgin Group, Gü, Danone and the Institute of Directors, together with the RSPB.

Chris Turner, chief executive of B Lab and director of the Better Business Act campaign, says: “The growth of the coalition from 300 to 3,000 businesses in just three years is testament to the increasing shift in mindset from business leaders that ‘business as usual’ isn’t working and we need to challenge the status quo.

“The Better Business Act is our chance to harness the full potential of business at a time when society, more than ever, needs business at its best.” The big issue is whether policymakers will be able to lift their eyes away from the multiple crises currently under way to take notice.

Burning bridges

And in the week that Donald Trump went full postal on global tariffs, signalling increasing isolation from the rest of the world, there was a warning about the US’s rejection last month of the UN’s Sustainable Development Goals (SDGs).

The Conference Board, a US think tank, says: “The US withdrawal from the SDGs may accelerate the fragmentation and politicisation of the global sustainability landscape…”

In other words, the US is moving in a different direction to Europe. The US position “highlights growing divergence in global sustainability regulations. While Europe continues to expand mandatory ESG disclosure requirements…the new US administration has deprioritised federal climate disclosures rules, favouring deregulation and corporate autonomy instead.”

As with trade, so with sustainability. Oof!

EY = Equality? Yes!

EY, the audit and all-things-business-advisory outfit, has marked a milestone: the first time the firm has been run by an all-female team.

The news comes as Alison Duncan was named UK chair of the firm, joining managing partner Anna Anthony.

Duncan says: “It is truly an honour and a privilege to have been selected for this role and I am looking forward to working with Anna Anthony, the board and our wider partner group as we continue to grow the business, serve our clients and create exceptional careers for EY people.”

Just thinking back over the decades covering audit firms (it’s been a thrilling life), we can’t remember a time when a firm was run by an all-female team. So, this might be quite the moment for EY but also the profession.

Private equity, public interest

Staying with audit firms for a moment, the Financial Reporting Council (FRC) has sent a reminder to firms that their priority is the “public interest” when considering “capital restructuring”—or, to put it another way, selling a stake to private equity.

Only a minority of firms have allowed outsiders to invest, but it remains a continuing topic of discussion inside the arcane world of audit (how else are they going to find the readies to invest in new tech like AI?).

An update to an open letter from the FRC reminds firms of the rules for auditors: firms doing statutory audits must be “controlled by qualified professionals” and be independent.

The FRC is not opposed to outside investment. “However, there are important risks that will need to be carefully managed. As with any other major change within an audit firm that has the potential to affect its leadership and culture, a change in ownership structure via capital restructuring must be able to maintain and enhance over time the important public interest dimension of audit.

“It must also protect independence as required by law and allow for any threats to that independence as a result of conflicts to be effectively safeguarded.”

Audit firms, you have been warned.