"Conscious Capitalism has the capacity to contribute to the greater good."
Conscious Capitalism: it's a thing. And it’s gaining traction in the business world.
Not only has the Conscious Capitalism movement won the support of leading brands like Unilever and Airbnb, it is provoking discussion on the real purpose of business.
So what exactly is Conscious Capitalism?
According to Deakin University lecturer Dr Amanda Allisey, Conscious Capitalism is about understanding and embracing the civilian responsibilities of corporate entities.
‘Conscious Capitalism has the capacity to contribute to the “greater good”, as the outcomes that are to be achieved and the means to get there are both clearly articulated as value statements,’ she explains.
For a business to qualify as ‘conscious’ it must meet the four basic tenets of the Conscious Capitalism philosophy:
‘In terms of employee motivation and wellbeing, aligning an organisation’s aims and goals explicitly with values is a positive approach,’ says Allisey. ‘Employees tend to form stronger alliances with organisations for whom they feel strong value congruence.’
This model has been steadily gaining traction since 1976, when Anita Roddick’s The Body Shop challenged the orthodoxy that business success and business profit were one and the same.
Since then, a number of high profile brands have become ambassadors for Conscious Capitalism, including Red Balloon, skincare company AESOP and software start-up Atlassian.
Allisey believes the popularity of Conscious Capitalism has been fuelled by a growing consumer distrust in big corporations. With the Enron scandal and the global financial crisis damaging public confidence in institutions, Conscious Capitalism is an attractive alternative.
But what’s interesting is that, unlike most anti-globalisation movements, Conscious Capitalism is pro-corporations. It effectively argues that business can have its cake and eat it too – ethically, that is.
And that’s what many of these ‘conscious’ companies have been doing.
US company Whole Foods, for instance, bans plastic bags and ensures leaders are paid no more than 19 times the lowest paid employee – compared to an average 400 times for most publicly listed US companies. The business also manages a workforce of around 88,000 people and turns over nearly US$13 billion in profit each year.
Closer to home, Australian travel company Intrepid Traveller repaid staff for wage reductions during the Global Financial Crisis and records an annual compound growth of 25 per cent, delivering an average revenue of more than $130 million each year.
According to Conscious Capitalism advocate Raj Sisodia, conscious businesses are actually outperforming traditional businesses. In his book, Sisodia argues that these so-called firms of endearment, including Amazon, Adobe and Disney, returned 14 times more profit than S&P 500 stock market companies between 1998 and 2013.
So, what does this mean for the future of business?
Dr Allisey believes Conscious Capitalism could signal the beginnings of business with a difference.
‘The new wave of Conscious Capitalism suggests that there is a considerable drive to make business meaningful.
‘Therefore, Conscious Capitalism could have the potential to improve wellbeing in both the external and internal environments.’