The race for Downing Street: What does it mean for Responsible Business?

By Kevin O'Donnell

As ballots begin to land on the doorsteps of Conservative Party members, the race to be the next Prime Minister continues to be as acrimonious as it appears to be one-sided. Liz Truss maintains a commanding poll-lead over her rival Rishi Sunak and, on current trends, she is set to become the UK’s third female PM. That said, with the exception of 2019, history points to the fact that Tory front-runners do not often fare well when it comes to leadership contests. Team Sunak will be grasping to this and hoping that a major mis-step from Truss’ camp opens the door for a revival in the former Chancellor’s fortunes. Either way, we will know the result in just over one month in what is set to be a watershed moment for both the Conservative Party and the country as a whole.

Thus far, observers could be forgiven for thinking the contest is nothing more than an ideological slug-fest, with both candidates seeking to out right-wing each other and emulate the titan of Conservative politics, Margaret Thatcher. Of course, in this context, it would be churlish not to acknowledge that Labour leadership contests see candidates do the same in reverse. After all, in 2020 Sir Keir Starmer gave an explicit commitment to Labour’s (then) policy of nationalisation. Now that he needs to appeal to the country, and not 400,000 Labour members, the policy has been quietly ditched. Make of that what you will.

But what of policy? And more specifically, what does the race for Downing Street mean for the business community and the broad responsible business agenda? Thus far, much has been made of the fact that Sunak and Truss, as Conservatives, are not inclined to gravitate towards, or articulate a vision of, responsible capitalism whereby businesses exist to enact social good as much as they do to generate profits for shareholders. This is simplistic and fails to acknowledge that it was a Conservative government under the leadership of Theresa May which enacted a whole host of new corporate reporting requirements, from mandatory gender pay gap reporting to strict new diversity targets to expectations that organisations would enact gold-standard mental health plans. On top of this, it was a Conservative government which mandated modern slavery reporting, enacted the Environment Act (2021) and revisited the UK’s Corporate Governance Code.

So, to 2022. Can we expect the incoming government to continue to exert such pressure on business? The answer is more is more nuanced but, broadly, yes we can. While the candidates have not set out respective policy platforms in granular detail, both have a track record of arguing that business has as much of a role to play in achieving specific outcomes as government does. Indeed, both Truss and Sunak have committed to honouring the UK’s statutory climate targets, despite Net Zero ranking bottom of grassroot members’ priorities. At a party hustings event on 17th July, Truss told members that she would attend COP27 and the 15th biodiversity COP as PM in a bid to showcase Britain as a leader on the world stage. In this regard, the impetus for the business community to continue to outline tangible routes to a green economy remains as strong as ever.

Sunak, who has indicated that he will serve in Truss’ Cabinet should he fail to win, also has a record of acting on climate as Chancellor, even if he may appear lukewarm on the issue during the leadership contest itself. It was he who, while in Number 11, completed the Treasury’s Net Zero Review, launched a National Infrastructure Bank with climate as a core remit and worked with the PM to set out the government’s Ten Point Plan for a Green Industrial Revolution.

That said, the cost-of-living crisis is what is focusing minds amongst both the leadership candidates and ministers. With Ofgem set to announce another eye-watering hike in energy prices in October, the immediate priority for government will be to mitigate the impact of inflation and to help households with their bills. To this end, Truss has pledged to introduce a temporary moratorium on the green energy levy, something which Sunak has also endorsed.

In light of the war in Ukraine, and the broad consensus that the European continent, and to a lesser extent the UK, must quickly address reliance on Russian oil and gas, both candidates have pledged to prioritise energy security and sovereignty should they enter Downing Street. This is likely to see more traditional forms of energy – such as nuclear - complement renewables in shoring up the UK’s energy mix moving forward.

We can expect to see both candidates set out their stall in more detail throughout the month of August. Regardless of the policy positions of the Prime Minister and his/her cabinet, there remains an overwhelming consensus amongst business leaders, shareholders and investors that the private sector can, and should, continue to enact systemic change in light of the challenges faced by both society and the planet. Given the scale of these challenges, it is more important than ever that businesses step up, manage their responsibilities, and ensure that driving change is at the heart of their plans for long-term commercial success.