Conscious capitalism is a concept that has gained significant popularity in recent years. It is a belief that businesses should focus on having a positive impact across society. According to this belief, businesses should work at minimizing negative social and environmental impact, building a great culture for their employees, establishing mutually beneficial relationships with employees, and maintaining good connections with other companies, while also delivering long-term profits to their investors. John Mackey, one of the progenitors of conscious capitalism, underlined the core belief of conscious capitalism by saying, “Business has to give people enriching, rewarding lives...or it's simply not worth doing."
Traditionally, business has often been viewed solely as a way to make a profit. Of course, financial returns are an important part of any company. However, conscious capitalism expands on this. It holds that businesses should adopt a “multi-stakeholder operating system” (MSOS), wherein a company has a responsibility to all their stakeholders, including employees, customers, members of the local community, suppliers, investors, and even the environment and society at large. Kyle Chudom, a financial advisor at Morgan Stanley, believes companies following conscious capitalism should be focused on “building a system where all stakeholders benefit, building a system that’s going to help the company and its culture over the long term.”
A key pillar of conscious capitalism is profit with purpose. While profit is still important to any business, companies should have a clear mission and vision that goes beyond simply making money. Businesses that are driven by purpose are more likely to be successful in the long run, as they can create strong connections with their customers and employees. According to Mark Weimberher, CEO of EY, “long-term thinking is critical in a world of inclusive growth. Indeed, one of business’s most important contributions to society is driving sustainable, long-term growth while investing in solutions for the challenges of tomorrow.”
At the end of the day, profit will still be king for many investors. However, profit-focused investors would be happy to learn that conscious, purpose-minded companies perform just as well, if not better, than the stock market at large. “Research found that companies that operate with a clear and driving sense of purpose, beyond the goal of just making money, outperformed the S&P 500 by a factor of 14 between 1998 and 2013” (Raj Sisodia, 2013). In a separate study of conscious companies, “The 18 publicly traded companies out of the 28 outperformed the S&P 500 index by a factor of 10.5 over the years 1996-2011” (Tony Schwartz, 2013).
Conscious capitalism is a powerful philosophy that emphasizes the importance of purpose, stakeholder orientation, and creating value for all. It is a way of doing business that goes beyond just making a profit and instead focuses on creating a better world for everyone. As John Mackey said, “Businesses have a responsibility to give people enriching, rewarding lives. By embracing conscious capitalism, businesses can do just that.”