S172 provides a framework that does exactly this. It requires directors to consider the full range of stakeholders, to report on their needs and to provide information on how they make decisions that are in the interests of diverse groups. Yet in my experience many leaders are not familiar with it.

Under s172, companies are required to talk to:

–        The nature of their stakeholders: who they are; why they are important; the value the company creates in the eyes of different stakeholders; how the company develops and maintains relationships; the risks and tensions that are implicit in balancing various stakeholder needs and expectations; the role of the board in engaging with stakeholders; and any feedback they have received, including how this impacted on key decisions.

–        The way in which the company makes critical decisions: how decisions underpin progress in meeting the company’s purpose; the links between decisions and the company’s strategy; how decisions are made in the context of risks and opportunities; the impact on different stakeholders; how the board and executive reached critical decisions; the challenges associated with decisions; and the actual outcomes, including how they are reflected in current performance and metrics and the long -term implications on the company.

–        Reporting must not only focus on stakeholders, but also consider the other aspects of s172 such as decisions processes and mechanics;

–        It’s really useful to cross-reference between the discussion of stakeholders and the decision making processes and outcomes to bridge the information provided;

–        Statements should create a connected narrative linking stakeholder needs to the business model, strategy and how business is really done, including a consideration of governance and culture; and

–        When well written the statements can be a standalone source of information with value beyond the board room and investor base, providing an insight into how the organisation is really managed.

My discussions indicate that s172 is not well known or understood amongst individuals on boards and those advising them. The opportunity it creates to drive better dialogue around stakeholders and their needs is often not grasped. And yet it could really go to the heart of driving a more balanced and transparent mindset, underpinning the continued focus on ESG particularly. Investors, employees, customers, and the wider community want to work with and within companies that are purposeful and authentic in that ambition. We have a framework to underpin this and it’s our responsibilities as directors to embrace it.