Purpose-driven business could be the answer to our economic woes, says Pip Murray, founder of Pip & Nut

Our economic system is failing to create a positive impact for people and the planet. The very idea that growth or profit for shareholders are the only measures of success for a business is short-termist. It falls wide of the mark when it comes to the mindset we need to help transform our economy in the long term.

A new report from Demos and B Lab UK, The Purpose Dividend, shows placing greater importance on purpose in business could be the answer to our economic woes. It’s a triple win for people, the planet and profit.

Pip & Nut is one of 1,700 B Corps in the UK proving the case for putting purpose at the heart of a business. When all stakeholders –  not just shareholders – are considered in decisions, we can deliver positive outcomes for all. But what does putting purpose at your core really look like?

One of the key requirements of becoming a B Corp is its ‘mission lock’, which involves updating your articles of association to include mission-aligned legal language. This provides a legal basis to ensure directors are empowered to consider the interest of all stakeholders when making decisions, while protecting the company’s mission through capital raises and leadership changes.

It’s a powerful statement and ultimately drives a company to do business in an inclusive, equitable, and regenerative way. ‘Doing good’ is no longer a nice to have, but a critical requirement for businesses.

Imagine if all businesses aligned their interests with wider society and the environment? What would this mean for the UK economy? The Purpose Dividend has revealed purpose-led business could generate a £149bn boost to the UK economy every year. That’s a 7% increase to UK GDP and equates to a £2,288 annual salary rise for the UK’s lowest paid workers. Evidence such as this demonstrates a purpose-driven approach to corporate governance is essential if we are to have a healthy economy and planet.

This is why the Better Business Act could have such a profound impact on the shape of business here in the UK. It is a suggested amendment to Section 172 of the Companies Act to ensure all businesses are legally responsible for benefiting workers, customers, communities and the environment while delivering profit.

This small shift would drive a mindset change from the very top of every UK organisation and filter through every aspect of it. A coalition of over 2,400 businesses, across many industries and sectors, have already rallied together to demand this change from the government.

It’s time to get our economy moving in the right direction and help UK businesses lead the world.