Regulators and investors – a changing landscape
The regulatory climate in the UK is increasingly favourable to the development of purpose-led business. Prior to 2018, regulators tended to emphasise the duty of company directors to protect and enhance shareholder value, and there was no requirement to establish a purpose. The Corporate Governance Code for listed companies, issued in 2018 and updated in 2024, changed this, and it was followed up by the stewardship code for investors which for the first time emphasised the importance of purpose for investors as well.
The UK Corporate Governance Code 2024:
The Code requires Boards to “establish the company’s purpose, values and strategy and satisfy itself that these and its culture are aligned.”
Principle A of the Code states that “A successful company is led by an effective and entrepreneurial board, whose role is to promote the long term sustainable success of the company, generating value for shareholders and contributing to wider society.”
This shift was not restricted to large listed companies. For private companies, the Wates principles for large private companies were drawn up in December 2018, and had similar requirements to the corporate governance code, placing the establishment of corporate purpose as the first and fundamental duty of the Board.
An increasing number of start-ups are seeking to set themselves up as purpose led from the start and to embed their purpose into their articles for example Purposely (getpurpose.ly) and growing numbers of companies are seeking to become BCorps to demonstrate their commitment to having a positive impact.
In 2018 there was a clear signal that investors wanted companies to be clear about their purpose with the publication of his annual letter to CEOs, by BlackRock CEO Larry Fink. He said:
To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society. Companies must benefit all of their stakeholders, including shareholders, employees, customers, and the communities in which they operate. Without a sense of purpose, no company, either public or private, can achieve its full potential.
This and the position Larry Fink took in subsequent letters, in particular on climate change, demonstrated that the conversation had shifted. Investors began to show a growing interest in a ESG and a range of ESG factors were increasingly being brought into investment decision taking.
By 2025, however, there had been a shift and increasing reference to an ESG ‘backlash’ particularly in the US. There is some debate as to how much of this is a shift in language and how much backtracking has actually happened – see What The ESG Backlash Reveals—and What Comes Next. This September 2025 piece in HBR Are Companies Actually Scaling Back Their Climate Commitments? (paywall) argues that under closer examination a more nuanced picture emerges – that although a fraction of companies have pulled back, many more are staying the course, or even doubling down, they are just doing it quietly.
This piece by FTI argues that while some believe that ESG is losing momentum, the reality is that the business case for ESG remains strong: https://www.fticonsulting.com/insights/articles/esg-mid-year-update-who-still-cares-why-you-should.
This research by Bain in September 2025 finds that CEOs, consumers and B2B buyers remain committed to sustainability because of the value it delivers: Sustainability is not dead – CEOs, consumers and B2B buyers continue to act sustainably, and tie it to business value.