Business Purpose Commission report: Scottish Government response

Background

Issues around business purpose, governance and company ownership have rarely featured in the public debate about Scotland's economic performance. An approach to corporate governance which prioritises the short-term interests of shareholders above those of stakeholders (employer, employee, supplier, customer, community, planet), is often cited as a factor in explaining the UK's poor relative performance on business investment, skills formation, productivity, R&D and inequality.

In recent years, business purpose discourse has moved firmly into the mainstream. The mounting evidence and growing support for the purposeful business agenda is reflected in a range of international publications and projects:

• The British Academy's project on the Future of the Corporation
• The Big Innovation Centre's Purposeful Companies Taskforce
• The Enacting Purpose Initiative
• The US Business Roundtable's new Statement on the Purpose of a Corporation.
• A range of publications and commentary from international institutions, prominent academics and private sector consultancies/ organisations (e.g. Purpose: Shifting from Why to How, McKinsey 2020; Why business must harness the power of purpose | EY - Global 2020).

In the wake of the 2008 global financial crisis, the weak and unequal recovery which followed, the challenges of Brexit and the Covid pandemic, and the clear and present climate and nature crises, the case for understanding the business purpose agenda and its relevance to Scotland's businesses, wider society and economy, was compelling.

The onset of economic recession in Autumn 2022 underlines once again the enormous potential in positioning business as a force for good in society, contributing to a thriving economy; healthy, prosperous, and more equal communities; and protecting and safeguarding our planet for future generations.