Labour’s shadow business secretary Ed Miliband has backed a “fundamental rewriting” of British company law to make it clear that every company should produce benefits for society and the environment, saying it could be “the linchpin to a different future”.

The party’s former leader believes legal clarity is needed to bolster work already done by many companies to put staff, customers, society and climate at the heart of their business model, not just the interests of shareholders.

Writing in his new book Go Big: How To Fix Our World, published this month, Miliband draws inspiration from the US “B Corp” model “whose enshrined purpose is [for a company] to be accountable not simply to its shareholders — a corporation’s normal fiduciary duty — but also to its employees, the community and the planet”.

While acknowledging that changes to Britain’s corporate governance code in 2018 had required larger companies to explain their fundamental purpose and values, the code was “voluntary and subordinate to 2006 legislation”.

Miliband’s target is the 2006 UK Companies Act, introduced by Tony Blair’s Labour government, and in particular section 172, which he said enshrined in law a company’s primary duty to “promote the success of the company for the benefit of its members [shareholders] as a whole”.

While the act also states a company director should “have regard” to the interests of employees, suppliers, customers and the environment, he said the primacy of the shareholder was still paramount.

“In reality, whenever there is a conflict between the interests of shareholders and other stakeholders, it is the shareholder who is likely to win out — as the current law requires that,” he said.

He quotes Andy Haldane, the departing chief economist at the Bank of England, who said that “for the first time in history, shareholder primacy had been hard-wired into companies”.

Miliband suggests in the book that Labour will make reform of companies law an objective of a future Labour government: “One new clause in the Companies Act would not be enough on its own to solve the problems of UK capitalism, but it could be the linchpin of a different future.”

Labour’s official policy on this will be set out nearer the next election, which is likely to be in 2024.

Business leaders have also called for reform of section 172 in the 2006 legislation.

The Better Business Act Campaign, supported by companies including John Lewis, Innocent, Danone and Iceland, wants to amend the act so that companies are legally obliged to operate in a manner that benefits all stakeholders, including workers, customers, communities and the environment.

Roger Barker, director of policy and corporate governance at the Institute of Directors lobby group, which supports that campaign, said this was consistent with what the government was hoping to achieve by encouraging companies to adopt net zero emissions and other environmental, social and corporate governance targets.

He said that the campaign had held recent conversations with ministers over amendments to the act. “Section 172 is really the DNA of a company,” he said. “Amending the act sends a message, even if the move is largely symbolic.”

The government is also looking to strengthen rules over how companies and directors act through audit reforms set out in a white paper earlier this year. After a series of corporate scandals, ministers want to help restore trust in how the UK’s largest companies are run, and empower investors, creditors, workers, and other stakeholders.