Recent years have seen a real growth across the globe of interest and research into the concept of business purpose. As recently as the start of this month, the World Economic Forum published an article entitled, "A sense of purpose is essential for businesses today. Here's why."

Eager to engage in the global discussion about purposeful business, the Scottish Government partnered with the Scottish Council for Development and Industry (SCDI) to set up the Business Purpose Commission for Scotland (the Commission). The Commission was business-led and consulted and engaged widely over the course of Autumn 2021 to Summer 2022, looking particularly at how Scotland might support and encourage purposeful businesses which promote economic prosperity, social wellbeing and environmental sustainability.

In June 2022 the Commission published its report, “Now is the time for purpose: putting purpose at the heart of Scottish business”. That report contained recommendations for business, government, investors, consumers and educational institutions and the Government's response to the Commission's report was published on 10 January 2023. Here we set out both the background to the Commission's report and some key points that Scottish businesses may wish to note from the Scottish Government's recent response document:

  • The definition of business purpose that the Commission used is provided by the British Academy, i.e. the purpose of a business is, “to find profitable solutions to the problems of people and planet, and not profit from creating problems for either.”

  • The Commission's Report makes 12 recommendations and recommendations 10 and 11 are directed at the Scottish Government. Those are:
    • that the Scottish Government should mainstream and scale-up public and private sector business support for business purpose; and
    • that the Scottish Government should make business purpose a golden thread in the National Strategy for Economic Transformation Delivery Plan.
  • In response to recommendation 10, the Government acknowledges that it may have a role in facilitating business support for business purpose and that commitment to this, as well as future funding, will depend on the outcomes of the National Strategy for Economic Transformation (NSET) project 17, which is aimed at transforming how support to workers and businesses is provided by the Scottish public sector.

  • The Government is also keen to improve the quality of data that it gathers to create its business support policies and products and will therefore work together with both the Business Support Partnership and the wider business community to ensure data-led improvements.

  • The Government will promote the Commission’s Report and the business benefits of business purpose by engaging with the organisations currently delivering business support, (for example, via the Business Support Partnership), and recommending that those delivery partners bring the business purpose framework, toolkit and case studies into existing business support and advisory services.

  • The Government is planning a review of the Scottish Business Pledge (now closed) and agrees with the Commission that this is an opportunity to consider the role of business purpose in the Pledge.

  • Looking at recommendation 11, the Government agrees that the British Academy's definition of business purpose (set out above), adopted by the Commissions, is a helpful framework for discussing this concept, and that it would be valuable for that to be to have a common vocabulary on business purpose. However, company law is reserved to the UK Government, therefore introducing a legislative definition of business purpose in Scotland cannot be taken forward by the Scottish Government.

  • The Government does commit to working to raise the profile of business purpose across government, to enable Scottish Ministers and policy officials to apply the findings in the Commission's report to their portfolio objectives, and to embed this definition of business purpose across the Scottish Government where this is relevant.

The Government's response concludes as follows:

" We support a swift uptake of the business purpose agenda within existing policies, strategies, business support delivery structures and initiatives where possible. We commit to continued engagement with the business purpose agenda and look ahead to the beneficial, long-term gains for the economy, society, and planet, in the growth of purposeful companies in Scotland to 2030 and beyond."

Against that background, if your business has not yet begun the process of considering its purpose, now may be the opportune moment.  Our Government and Business team would be delighted to assist you; please get in touch if we can help.

Contributor

Niall McLean

Partner & Solicitor Advocate