Documents to download

Ahead of the debate on 8 December 2016 on case for maintaining the balance between rights and responsibilities in the corporate sector, this Library briefing provides background information on corporate responsibility.

The term ‘corporate sector’ is used to describe that part of the UK economy which is made up of private sector companies. The total value of shares for companies on the FTSE 100, domiciled in the UK, in December 2014 was £1,727 billion. The UK private sector provides employment for over 26 million people, the majority of the UK work force. As such, the action of the corporate sector has a significant impact on society as a whole, in terms of economic growth, and employment.

Public Opinion

The role of the corporate sector in society has come under increased scrutiny since the 2008 financial crisis, and events such as the recent BHS pensions crisis and the Libor fixing scandal. While public opinion is positive towards businesses overall, levels of trust in the managers of big businesses is negative. When asked about what their areas of concern were, the public stated that they were concerned about issues including corporate tax avoidance and executive pay. Research by YouGov also found that, while business leaders were aware of some negative public attitudes towards UK businesses, there was disagreement about how business might best respond.

Role of Government

The role of government in encouraging the corporate sector to act in a responsible way has taken a variety of different forms. Both Conservative and Labour governments have sought to involve the corporate sector in a number of types of voluntary or partially voluntary activities. Governments have also sort to define corporate responsibility through legislation. Under the Companies Act 2006, directors of companies have a duty to behave in the interests of their shareholders, and to have regard for other issues such as long-term sustainability, the impact of decisions on employees and their impact on the environment.

Corporate Governance Reform

On 29 November 2016, the Department for Business, Energy and Industrial Strategy published a green paper entitled Corporate Governance Reform. This included proposals intended to: increase shareholder influence over executive pay; increase the influence of employees, customers and suppliers in corporate decision-making; and extend existing governance rules to apply to large privately held companies. The Labour Party, the Scottish National Party and the Liberal Democrats have criticised the proposals, arguing that they do not go far enough in improving the corporate governance system in the UK.

Documents to download

Related posts

  • The UK economy in the 1980s

    This briefing is the fourth of a series on the post-war history of the UK economy. The series proceeds decade-by-decade from the 1950s onwards, providing an overview of the key macroeconomic developments of each decade. This briefing looks at the 1980s. The decline in the profitability of industry, which began in the 1960s, was reversed in this decade; however, the share of national income received by workers fell to a post-war low.

    The UK economy in the 1980s
  • Eating less sugar: Reformulating food and drink products and government policy

    Too much sugar in diets can contribute to health issues. Reformulating products, or changing how much sugar is in what people normally eat and drink, means the public do not have to change their habits to eat more healthily. Recent governments have introduced measures to decrease the public’s consumption of sugar, as well as salt and fat. However, some organisations have encouraged the government to go further by creating more mandatory schemes and levies for industry.

    Eating less sugar: Reformulating food and drink products and government policy
  • Role of the prime minister’s trade envoys

    The prime minister’s trade envoys are a network of parliamentarians appointed to engage with countries where the UK government has identified trade and investment opportunities. There were 35 trade envoys covering 58 markets as of 16 May 2024. The government has said trade envoys support the UK’s economic growth by promoting trade in key markets. However, some parliamentarians have sought clarity on aspects of the trade envoy programme.

    Role of the prime minister’s trade envoys