I have chosen in this blog to focus specifically on issues related to cooperative and mutual businesses, but I sometimes wonder whether that’s a mistake. What I mean is that, while those of us associated with the cooperative world ponder issues such as, say, member democracy or access to capital, the rest of the business world cheerfully gets on with its work of making money for investors and shareholders.
I think we need to look beyond the coop sector sometimes, and to start intervening in the way that we allow conventional companies to operate. As societies we permit company law to grant limited liability to businesses run simply to maximise profits, while requiring in exchange for this very generous concession almost no commitment from business to contribute to the wider social good.
Prem Sikka, professor of accountancy at Essex University, has a good piece in today’s Guardian. Talking in particular of the British retailer BHS now in administration, he describes the way that directors there were able to treat BHS as their private fiefdom, with no concern for employees, pension scheme members, supply-chain creditors or other stakeholders.
Here’s his conclusion: “UK company law needs to be modernised. Companies are not the private property of shareholders. Rather they should be seen as public institutions that help to advance common interests, and create and distribute wealth. Directors should be seen as trustees of stakeholders rather than as agents of shareholders advancing sectional interests…. The current model of corporate governance needs to be swept away and replaced by stakeholder representation on the boards of major companies.”
I absolutely agree. Read his piece yourself here.