The UK government should introduce a “benefit company” status in company law to make it easier to set up profit-making companies driven by mission, a government-backed review has said.

The recommendations come in On a Mission in the UK Economy, the final report of an Office for Civil Society review of “mission-led businesses” – businesses which exist to make a profit, but are also driven by social mission. The Office for Civil Society has said it is keen to expand the growth of this kind of business in the UK.

The review panel is led by Nigel Wilson, chief executive of the Legal & General insurance group. It says that its call for evidence on mission-led businesses has revealed that they are growing in popularity.

It makes ten recommendations, including introducing a model similar to the “benefit corporation” structure which has already been introduced in Italy and 32 US states.

The structure allows businesses to enshrine a social purpose as legally more important than the requirement to maximise shareholder value. But it does not have the asset lock which prevents the boards of charities, community interest companies and community benefit societies from selling up and making a profit.

Benefit corporations are seen as a halfway house between mainstream businesses and social enterprises – although the definition of social enterprise is a complex one and is not well-agreed, even within the social enterprise community.

The review said there was evidence that mission-led businesses are growing in popularity.

“Our numerous interviews and meetings over recent months have convinced us there is a new social contract developing between business and society, in which businesses engage with stakeholders beyond their current narrow remit to create benefits for employees, citizens and society at large,” the review said.

“We have found evidence that businesses that embrace social priorities perform better, reflect people’s ideals and ambitions and so are primed for success. Of course, they also face challenges, particularly in securing funding and identifying appropriate legal structures to serve their purposes.

“The attached report discusses the current state of mission-led business in the UK, sets out our vision for the next decade and makes 10 recommendations that we hope will help businesses and government move forward.”

Recommendations in full

• Government to lead a conversation on responsible business and identify how the public, private and social sectors can work together to address societal issues.
• Starting with business schools, educators to lead the way in analysing the impact on business of having a purpose that serves society, and embedding this into curricula.
• Government to encourage and incentivise the positive social impact of mission-led business by enabling blended finance investment models and social pension funds.
• UK corporates to create social and environmental impact investment funds targeting £1 billion by 2021.
• Mainstream businesses and start-up mission-led businesses to set up talent exchange programmes.
• Advisory firms to commit to better serving mission-led businesses through increased training and extending their pro bono remit.
• Government to promote the flexibility offered under English law for companies to act with a social purpose and align shareholder and stakeholder interests.
• Government to encourage businesses to incorporate around a social purpose and commit to social impact by establishing clear entry points for entrepreneurs.
• Government to explore the introduction of a “benefit company” status in English law.
• Every business to actively communicate its social mission and progress in the form of a “transparency report”.