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Written question asked by Martin Wrigley (Liberal Democrat) on Thursday, 12 June 2025, in the House of Commons. It was due for an answer on Monday, 16 June 2025. It was answered by Justin Madders (Labour) on Friday, 20 June 2025 on behalf of the Department for Business and Trade.

Companies: Directors

Question

To ask the Secretary of State for Business and Trade, if his Department will amend section 172 of the Companies Act 2006 to require company directors to balance the duty to promote the success of the company with duties to (a) employees and (b) the environment.

Answer

Section 172 of the Companies Act 2006 requires company directors to have regard in their decision-making to the interests of their employees and to the impact of the company's operations on the community and the environment. All large companies must report annually on how their directors have fulfilled this duty. Section 172 enshrines in statute the "enlightened shareholder value" principle, which recognises that the long-term success of a company depends in part on the ongoing consideration of wider stakeholder interests. This contrasts with the "shareholder maximisation" principle underpinning directors' duties in some other jurisdictions, in which directors owe their duty only to shareholders.

The Government welcomes suggestions on how to ensure companies consider wider stakeholder interests alongside the needs of stakeholders. I look forward to considering the clauses of the Company Directors (Duties) Bill when available.

I would be pleased to meet with the Honourable Member for Newton Abbot to discuss his Private Member's Bill.

Secondary information

Type
Written question
Reference
59439
Session
2024-26
Grouped for answer
Yes
Subjects
Companies Directors Publicity
Legislation
Companies Act 2006
Link
View this Written question on www.parliament.uk