An amplified voice on encouraging Responsible Business Practices

14th May, 2024

By Jenny Herrera, CEO of the Good Business Charter

I think we all know that on our own we can achieve little. It is as we partner with others that our collective voice can be amplified and the potential for change increases.

We are proud to partner with the Institute of Directors (IoD), who was our 1,000th organisation to accredit, and who recently published their manifesto for business, framed as a policy roadmap for the next UK government.

I wanted to highlight the overlaps with the Good Business Charter’s 10 components and reference other partners in this space as together we seek to drive change. As more organisations accredit with the GBC, we show that our standards are achievable and that therefore there is no reason not to make such practices the established norm in our nation. The Good Business Charter (GBC) and its accredited organisations put people first.

Pay Fair Tax

The IoD’s manifesto sets out key improvements they see as necessary to the business tax system as follows:

Reduce the complexity and improve the functioning of the business tax system

The UK has the longest tax code in the world, currently in excess of 21,000 pages. The code has more than trebled in size since 1997. This Byzantine structure is packed with offsets, loopholes and distortions which increase the scope for tax avoidance and reduce the predictability of outcomes for companies.

To ‘Pay Fair Tax’ is what the GBC expect of its accredited businesses. We also work closely (full disclosure: I am a Director of) TaxWatch which is a think tank seeking to expose tax avoidance and shine a light in particular on businesses that are using the loopholes and distortions the IoD refer to in order to avoid UK tax.

If all businesses operating in the UK were paying their fair share of tax (and individuals for that matter) we would be able to provide a better public service. It is a point of deep frustration that a company’s executives would take for granted the fact their workforce has been educated for free in this nation as well as the infrastructure they require to send and receive goods, without being willing – and indeed proud – to pay their fair share of tax.

We are not alone in feeling this frustration – for the last 11 years running, the Institute of Business Ethics annual survey on the British public’s attitudes toward business ethics  indicated that tax avoidance was the most important ethical issue for them.

We encourage all businesses to consider deepening their commitment to transparency on tax through accreditation with the Fair Tax Foundation. 

Prompt payment to suppliers

This is a topic close to our heart and one we regularly shout about alongside the leading champions on the topic – FSB and the Small Business Commissioner. We are delighted to see the IoD highlight it too as follows:

Increase reputational pressure on slow invoice payers

Companies that are paid swiftly can raise their productivity by spending more time on projects of economic value and less time chasing invoices. Yet less than one in ten of our members are aware that they can check on the payment practices of large employers. Far fewer feel able to take enforcement action themselves against slow-paying customers.

A new government should:

  • Publish twice-yearly rankings, by organisation, of the average time taken to pay invoices. Ranking lists should be actively released to the media.
  • Develop an aggregate headline indicator of the average invoice payment time across all qualifying businesses.
  • Require public sector entities employing over 250 people to report their payment practices through the same system as private entities.

We know some organisations have needed to change their systems to ensure prompt payment before they can accredit with the Good Business Charter. This highlights the fact an incentive is often needed to invest the money in improved systems to ensure prompt payment.

Where there is a will, there is a way – and TSB has been an example of leading the way on this, since becoming accredited with the GBC in 2020, prioritising their small suppliers and paying them on average in just seven days. We need to keep pushing to make it unacceptable for large companies to pay invoices late.  In our current digital era, there should be no excuse for not turning round an invoice quickly and getting it paid. Small businesses depend on it!

Employee wellbeing

The GBC requires businesses to commit to the physical and mental wellbeing of their workers. Incentives to do this can only be a good thing as proposed in the manifesto:

Support businesses to increase their overall investment in occupational health

Since the end of the pandemic, levels of economic inactivity due to long-term sickness have increased significantly. This has contributed to labour shortages; it is also a waste of valuable human capital. Employers’ provision of occupational health benefits should be incentivised by bringing additional occupational health costs into scope of additional tax relief under the Benefit in Kind exemption.

EDI

The GBC also requires businesses to commit to embedding robust EDI measures into their organisations. Under the skills and employment section the IoD proposes some ways government can help:

Encourage a more inclusive business environment

In order to maximise access to talent and boost productivity, responsible businesses are actively engaged in developing a welcoming environment for colleagues from all backgrounds.

Their proposals include introducing ethnicity and disability pay gap reporting for organisations with over 250 staff – a key area of focus for the GBC’s EDI component when we first launched (we have recently widened our questions to cover all protected characteristics but remain highly committed to ensuring the GBC champions those from ethnic minorities and those with a disability).

We are connected with Change the Race Ratio and have benefitted from input from the Chartered Institute of Personnel and Development to ensure what we ask in the GBC application and renewal process holds businesses to account in a meaningful way with that focus, highlighted here in the IoD’s manifesto, of encouraging a more inclusive environment.

Environmental responsibility

It would be strange not to have something in the IoD’s manifesto on sustainability. The GBC asks accredited organisations to agree to meet clear commitments on this. The IoD’s focus is on how government must take a lead here:

Sustainability

In order to become more sustainable, the interests of the business community are best served by a managed transition marked by effective government leadership on, and commitment to, net zero. 

IoD proposals include a ‘Help to Green’ campaign for SME’s and tax incentives.

The IoD has undertaken research which shows that only a quarter of SMEs have targets to meet Net Zero by 2050 and are calculating any carbon outputs. This makes GBC accredited organisations ahead of the curve with their commitments within our Environment component.

The Institute of Directors has produced a new guide which provides practical advice and guidance, along with examples drawn from eight case studies of how businesses can get ahead of the curve and meet their net zero targets. Further resources and training are available here.

The Good Business Charter and IoD amplifying messages at every level – local, regional and national

We will continue to partner with the IoD to amplify these key messages.

I also recently had the privilege of addressing the Regional and Branch Chairs of the IoD as well as their Special Interest Group leads, as we continue to explore effective ways to partner with the IoD to create a fairer, sustainable UK where people matter. We hope that together we can build momentum on the ground in all regions of the UK, and encourage more businesses to commit to paying fair tax, prompt payment of suppliers, environmental responsibility and more through following the IoD’s lead and accrediting with the GBC.