Enlightened Corporate Practices More Commonplace in the UK?


The objective of public companies has been debated for many years in many countries, including the United Kingdom and Australia. In the past the shareholders’ interest is at the forefront in the minds of the directors. The company’s objective used to be to maximise the interest of the shareholders above any other interested parties who might have claims against the company. This approach provides the best way of securing overal prosperity and welfare for the organisation. This principle applies for most companies located in the Anglo-Saxon jurisdiction, such as UK, Australia, New Zealand, Canada and United States.

Increased scrutiny from the public and stakeholders have put pressure on the companies to consider their objective and become more socially and environmentally responsible. This leads to the development of enlightened shareholder value approach, which states that directors are obliged to take proper account to sustain effective relationships with employees, customers, suppliers and others to consider the impact of its operation on the community and the environment. The objective of public companies were redefined to include social service role, aside from making profits for the shareholders, they also have responsibilities to the employees, customers, the general public and the environment.

On October 2009, The Companies Act 2006 became a law in the UK. The law codified for the first time the duties of company directors to consider the community and the environment, the interest of employees and to be fair to the shareholders in promoting the success of the company. The TCA put some pressures on the directors by requiring them to have regard to the community and the environmental issues when performing their duty to promote company success. Risk assessment not only covers financial risks but also those related to safety, health and environmental, reputation and business integrity issues.

Enlightened corporate practices became more  commonplace in the UK, setting a good example to the world. The government sponsors a corporate social performance website which states its ambitious vision for UK businesses to consider the economic, social and environmental impacts of their activities, wherever they operate in the world. Most companies are now keen to talk about corporate social responsibility in their annual reports, and many believe that complying with CSR guidelines is a commercial necessity as it makes a good financial sense.

The Charity Business in the Community has more than 850 of the UK’s top companies all committed to improving their positive impact on the society and the environment. It publishes a Corporate Responsibility Index, which measures company performance in terms of how well the companies apply CSR values to their business. CSR goes beyond looking to making more money but include a wider commitment to building a better society. This can be seen reflected in the actual business practices or through other activities like charitable donations or volunteering projects.

The best practices for business today is to become environmentally and socially sustainable. Most companies these days include a statement on corporate social responsibility on their company strategy. A good example is the ACM Group, this statement can be found on their website: “The ACM Group Management is dedicated to making sure they are capable of conducting their work in an ethical manner and will always be happy to receive any comments you may have about your experience.”

The key drivers of corporate social responsibility in the world include consumer demand, staff retention, cost management, building brand and because it’s the right thing to do. The majority of businesses in the UK are involved with local charities, either through donating money, products, services or their time. Aside from these, businesses are also working for ways to reduce their environmental impact by calculating the carbon footprint of their business operations.

The benefits of adopting corporate social responsibility are becoming more tangible in the UK. Companies that have environmentally and socially sustainable business practices get tax relief on charitable activity. Lower energy bills due to efficiency measures were introduce benefiting green companies. Adopting to CSR offers many cost benefits, but the most interesting to see is that British businesses are more reactive in their approach and most of them are largely responding to stakeholders’ needs. Complying to CSR makes businesses thought leaders and gave them an edge to unlocking their potential for growth in the crowded marketplace.