Written by Lance Kawaguchi
CEO, The Cure for Brain Cancer Foundation
The top objective for any business usually revolves around profitability. Profitability is essential for the long-term success of a business, as it allows a company to sustain itself, grow, compete, and provide a return on investment to stakeholders. Milton Friedman, over 50 years ago, helped posit the idea that the sole responsibility of business is business (i.e., maximising profits). However, the turn of the century has resulted in a new era of thinking and consumer behaviour, leading many businesses to reassess how they operate.
The concept that a business can turn a profit and simultaneously be a force for good has gained momentum in recent times. This notion continues to be a driving force leading businesses to not necessarily replace traditional principles but intertwine them with evolving social values and standards. As such, philosophies such as “conscious capitalism,” “corporate social responsibility,” and “B Corp” have now entered the fray as meaningful ways to drive businesses as being positive forces of societal change.
Conscious capitalism is a business philosophy that iterates a paradigm where a company can perform their corporate duties while simultaneously aligning with a higher purpose. The Conscious Capitalism movement was founded by John Mackey, the CEO of Whole Foods Market, and Raj Sisodia, a business professor and author, in 2007. Since then, it has gained traction as a viable and effective approach to conducting business.
Conscious capitalism can be summarized with four tenets:
- Higher purpose: existing beyond the realms of simply turning a profit to engage and inspire stakeholders
- Stakeholder orientation: focusing on the entire business ecosystem to create and optimize value for all stakeholders rather than emphasizing shareholders to the exclusion of everything else
- Conscious leadership: fostering individuals who lead with a sense of purpose, compassion, and ethical responsibility
- Conscious culture: corporate culture encompasses the values that define the social and moral fabric of a company; conscious businesses therefore foster a culture of trust, accountability, and transparency to create a thriving workplace environment
Corporate Social Responsibility (CSR)
Consumer behaviour has changed considerably over the past few decades. As such, businesses have an unwavering need to understand their role as forces of change within society. Corporate Social Responsibility (CSR) can be defined as corporations being accountable for not only economic practices but also their social, ethical, and environmental implications.
The social aspect of CSR comprises several pillars. The first pillar is concerned with legislation regarding human rights, working conditions, and a non-discriminatory workplace environment. The second pillar emphasizes companies’ employees and delves into practices that contribute to their development and well-being, including health, safety and sense of inclusivity. The final pillar expands to a community perspective and brings external stakeholders into the picture (e.g., customers).
Being ethically responsible means to conduct business practices fairly and ethically. For instance, practices that are upheld in accordance with human rights principles (e.g., fair trade practices and equal pay) and ensuring there is fair treatment of employees and customers regardless of age, race, culture, or sexual orientation.
Environmental responsibility covers the ecological implications of a company’s business practices. In essence, this refers to a company’s methods to mitigate impacts on the environment. This is often achieved by reducing pollution, recycling materials and minimizing or, at least, offsetting harmful environmental practices for a net positive result (e.g., planting trees to offset deforestation)
A B Corp (also known as a Certified B Corporation) is an organisation that is deemed to be socially and environmentally responsible. To be classified as a B Corp means to have been officially certified by B Lab. B Lab is a global not-for-profit that aims to hold businesses to a higher standard of accountability.
“If we want to have a shared, endurable prosperity, all business has to be competing not only to be the best in the world, but best for the world,” said B Lab’s co-founder, Andrew Kassoy.
Today, over 6,000 companies have been classified as a certified B Corporation, obtained by scoring highly on a set of impact standards created by a B Lab advisory council of independent experts in business and academia. Evaluated according to their efforts on key impact areas — workers, suppliers, community, the environment, and governance — Certified B Corps are in 89 countries across 161 industries.
Embracing conscious capitalism and corporate social responsibility, and approaching B Corp status, can enable companies to operate in a manner that benefits society and creates long-term value for stakeholders. These new philosophies provide a framework for businesses to understand their impact on people and the planet, ultimately helping them to become a force of good in the world while still adhering to corporate practices in making a profit.