Conscious Capitalism

Conscious capitalism is something of a buzzword that’s been thrown around loosely in the business world in recent decades. It’s easy to dismiss the notion as a trend or even a paradox. But that would ignore the fact that conscious capitalism has real potential to create positive impact in the world. It’s also a concept many employers are genuinely interested in engaging with.

Capitalism—the economic mode under which virtually all businesses across the world operate—is one of the most influential forces on Earth. For decades, the prevailing view has been that the sole incentive of capitalist companies is to maximize profits. Many people are critical of this model. They argue that something like conscious capitalism is necessary for the wellbeing of all stakeholders.

In this article, we’ll look at what conscious capitalism is, and what some of its features are. We’ll also examine the benefits and disadvantages of conscious capitalism.

Conscious Capitalism Definition

First let’s start with the conscious capitalism definition. We can define conscious capitalism as a business philosophy that encourages businesses to consider the ethics, sustainability, and purpose of their actions beyond simply maximizing shareholder benefit. Conscious capitalism takes into account the wellbeing of all stakeholders, not merely shareholders.

One of the most important features of conscious capitalism in the modern world is environmental concerns. Additionally, identity issues regarding race and gender are considered important for companies interested in conscious capitalism. Many companies are now incorporating these ethics and more into their missions.

Conscious Capitalism 4 Pillars

Advocates of conscious capitalism often refer to the “4 pillars” of conscious capitalism, which really just means the most important characteristics of conscious capitalism. The conscious capitalism 4 pillars are:

Higher Purpose

Conscious capitalist companies embrace meaning and purpose beyond simply maximizing profits. From the outset, conscious capitalist companies generally define the forms of positive impacts they’d like to create in the world.

Stakeholder Orientation

The prevailing model of capitalism takes for granted that the only people whose interests—or stakes—companies should consider are their owners/shareholders. Conscious capitalism argues that companies should consider all forms of stakeholders in the decisions they make, since many people beyond shareholders are impacted by business operations. Other forms of stakeholders include employees, suppliers, distributors, communities, customers, and the environment.

Conscious Leadership

More conscious and conscientious behavior within capitalism must start at the top. A conscious capitalist company requires conscious leaders in order to define and execute an effective conscious mission. Leaders must regard all stakeholders with empathy and ethics, and they must be able to act with integrity. Within an organization, conscious leaders need to earn the trust of their employees, which is typically achieved through transparency and collaboration.

Conscious Culture

The best conscious capitalist companies develop a conscious culture around their conscious leaders. This begins with leadership fostering positivity and inclusivity, while also encouraging employee growth, innovation, and sustainability. Cultivating diversity, equity, and inclusion not only puts conscious values into practice within the company itself—it also empowers a conscious capitalist mission by bringing in multiple perspectives that will better advocate for all stakeholders.

Benefits

Now that you better understand what conscious capitalism is and how it operates, let’s take a look at some of the benefits of conscious capitalism.

Some of the primary conscious capitalism benefits include:

• Improved brand reputation
• Increased customer loyalty
• Increased employee engagement, satisfaction, productivity, loyalty, and retention
• More innovation
• Greater resilience to fluctuations in the broader economy
• Improved relationships with suppliers and communities
• Improved environmental outcomes
• Operational sustainability

This is far from an exhaustive list of the benefits of conscious capitalism, and each of these bullet points contains a wide variety of benefits.

Disadvantages of Conscious Capitalism

The benefits of conscious capitalism are many. But to give the subject fair treatment, it’s important to consider multiple viewpoints. Let’s take a look at some of the potential disadvantages of conscious capitalism.

• Short-term financial sacrifices
• Resistance from shareholders
• Challenges relating to the execution of values, especially in industries where unconscious values, norms, and practices are predominant.
• Added complexity in defining goals and measuring performance.

It’s important to note that these disadvantages are not guaranteed to occur. The actual outcomes will vary from company to company, according to many conditions, including mission/values, management, execution, broader economic and political conditions, and more.

Conscious Capitalism Companies

While many of the tenets of conscious capitalism might seem appealing in an ideal world, the ways capitalism is practiced and talked about might make it hard to imagine real-world conscious capitalism examples. However, there are many highly successful companies that are already putting conscious capitalism into practice. Let’s look at some of the most prominent conscious capitalism companies.

Patagonia: Patagonia has instituted many highly conscious values throughout their operations. The company prioritizes environmental sustainability in manufacturing. Patagonia also advocates for fair labor practices in an industry where competitors notoriously exploit unfair labor practices. Additionally, Patagonia embraces the notion of corporate social responsibility.

Ben & Jerry’s: In addition to being one of the most beloved food brands in the world, Ben & Jerry’s is also unique for the social and environmental justice causes it supports. In addition to climate justice, the company advocates strongly for racial equity and LGBTQ+ related causes.

Many people would also consider Costco, Trader Joes, and Starbucks to be good examples of conscious capitalism companies.

Conclusion

While it may be hard to identify much consciousness at work in the world of capitalism, many companies are making significant strides at putting conscious capitalism into practice. If more companies took up the cause of conscious capitalism, it could make a powerful difference in the world.

 

Additional Resources:

• Top Corporate Training Topics
• Conscious Communication: What is it & Examples
• Consulting Resume: Complete Guide