Today will see the House of Commons debate a private member’s bill proposing to change directors’ duties so they explicitly include the environment and workers.

The Company Directors (Duties) Bill, brought by Lib Dem MP Martin Wrigley, proposes an amendment to section 172 of the Companies Act so that directors would “balance their duty to promote the success of the company with duties in respect of the environment and the company’s employees”.

A campaign called the Better Business Act has been working for some time to convince law makers that directors’ duties need reform to reflect concerns for climate, environment and society.

Wrigley says: “This bill would drastically shake up how companies operate, ensuring all company directors are required to consider the planet, their employees and the communities they server, alongside profit.”

Wrigley adds there is a role for Parliament to push companies towards prioritising “long term sustainability alongside financial success”.

Chris Turner, Better Business Act campaign director, says the bill already has cross-party support from dozens of MPs and the backing of 3,000 companies.

‘Redefine the role of business’

He says: “The publication of the Company Directors (Duties) Bill demonstrates the growing support from within Parliament and from businesses across the UK to redefine the role of business in society.”

Under the private member’s bill, section 172 would be amended to read: “A director of a company must act in the way he considers, in good faith, would be most likely to promote the success of the company for the benefit of—(a) its members as a whole, (b) the environment, and (c) the company’s employees.”

The amendment also proposes directors “have regard” to “the impact of the company’s operations on the community and the environment,” and “the interests of the company’s employees”.

Few private members’ bills (PMBs) go forward to become law. According to the Institute for Government, of 2,500 PMBs between 2010 and 2024, only 110 became law. In recent times, the most high-profile PMB has been the assisted dying bill.

Reform of Section 172 is not without support, including the Institute of Directors (IoD). The IoD is currently undertaking research looking at the role of non-executive directors because “recent corporate scandals and collapses have raised concerns about their effectiveness”.

A “manifesto for business”, launched by the IoD, calls for reform of section 172 to ensure directors’ duties focus on “the company as a whole” and remove any suggestion that they should “prioritise the interests of shareholders”.

Reform also has the support of ‘queen of shops’ Mary Portas. In a recent speech in Whitehall, Portas said section 172 was a priority.

“The world is on a knife edge socially, culturally, environmentally. People are not just asking more from business, they are demanding it.

“But we are still shackled to outdated rules built for a world that no longer exists. This is not just an economic crisis, it is a systemic one. A system obsessed with short-term profit is killing long-term value.”