Business must urgently rethink its role in society, according to a new report on the future of the corporation published by the British Academy, the United Kingdom’s national academy for the humanities and social sciences.

Issues of growing inequality, the negative perception of corporate culture, as well as climate change and technological developments mean a change in the business agenda is urgent, says the author of the report, Colin Mayer.

“The corporation has failed to deliver benefit beyond shareholders, to its stakeholders and its wider community,” Mayer told the BBC.

“At the moment, how we conceptualize business is, it’s there to make money. But instead, we should think about it as an incredibly powerful tool for solving our problems in the world.”

The United Kingdom is now one of the worst examples of responsible capitalism, due to the ownership structure of companies, Mayer said.

“The UK has a particularly extreme form of capitalism and ownership,” he said.

“Most ownership in the UK is in the hands of a large number of institutional investors, none of which have a significant controlling shareholding in our largest companies. That is quite unlike virtually any other country in the world, including the United States.”

In its report, Principles for Purposeful Business, the British Academy proposes a new formula for corporate purpose: “To profitably solve problems of people and planet, and not profit from causing problems”.

The report came a week after the Labour Party in its manifesto for the Dec 12 election proposed the biggest shake-up of how business is owned and run in decades. It included the nationalization of water, rail, energy, mail, broadband and the forced transfer of company shares to employees.

Mayer said the manifesto is too old-fashioned in how it proposes to achieve its aims.

“It’s very much focused on one particular means of delivery, that is through the state,” he said.

“Now, the state has an important part to play. But we should think about the state in a more imaginative way, as to how it can promote successful business, how it can reform the nature of business in society. That’s what we’re really looking for.”

Matthew Lesh, from the Adam Smith Institute, a world-leading free market think tank and lobbying group, said the pursuit of profit has produced a rise in living standards.

“The profit motive has raised literally billions of people out of poverty by encouraging innovation and ensuring our finite resources are used exceedingly productively,” he said.

“Mandating alternative purposes for business raises more issues than it solves. It removes the essential accountability between shareholders, whose investments are at risk, and corporate executives.”

However, in August, the US-based Business Roundtable issued a new Statement on the Purpose of a Corporation, signed by 181 chief executives who committed to lead their companies for the benefit of all stakeholders-customers, employees, suppliers, communities and shareholders.

Mars chairman Stephen Badger said companies face many challenges. “We’ve never felt the need to be public but times have changed,” he said. “The talents (employees) really want to know what the company they work for stands for.”

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