UK institutions need to shift their thinking to enable purpose-driven businesses to rebuild the post-Covid economy, shadow business secretary Ed Miliband has said.

Writing in the Financial Times, the former Labour leader said he had spoken to numerous business leaders who now say that the rising focus on purpose will be key to profitability and long-term success.

“The institutions we have in the UK do not, by and large, encourage such strategies,” he warned.

“Many [purpose-driven businesses] are deeply concerned about the climate crisis and the damage to our society of extreme inequality. And they are in a position to make a huge contribution.”

The shadow business secretary called for four areas to be addressed in order to foster a purpose-led recovery. Firstly, he calls for greater prominence for patient shareholders in public companies and greater state investment. Secondly, company law needs to be reformed so that it enables and encourages purposeful action and benefits stakeholders over shareholders, all while accelerating alternative methods of business ownership.

Third, Mr Miliband calls for a regulatory system that works for purpose-driven businesses, their consumers and investors, with transparency and benchmarking standards. Finally, he calls for greater investment in infrastructure and skills to raise productivity in these industries.

Writing the letter, the business secretary said: “It is striking how many businesses are calling for a different way forward for our country. This speaks to how, as we have been through the worst of times, we have seen the best of people, including in the world of work.”

He added: “Businesses, workers, unions have co-operated to do the right thing. This spirit is not just needed for the current crisis but for the enormous challenges that lie ahead.”