By Lewis Perkins
July 30, 2009
In today’s business community, new conversations are emerging, reminiscent of dialogue you would expect from ministers, rabbis and other people of faith. Words such as authenticity, transparency and truth are infusing corporate speak and mission statements. Corporate culture is evolving - for the better.
As corporations analyze their abilities to remain profitable for the future, they are having conversations within that previously belonged to a smaller sector seemingly dominated by health and wellness companies. It is not surprising to learn that conversations about social consciousness are taking place within companies who have it in their DNA, such as Patagonia, but would we expect to hear the same within Fortune 500s? Perhaps we should.
The Call for Conscious Capitalism
Since the Enron executives were exposed in 2001 for accounting fraud to the more recent Wall Street scandals, citizens around the world view U.S. corporate leadership with a significant level of distrust. All you have to do is visit the Gallup Web site for statistical proof that disapproval of our nation is at an all time high.
It is clear that we have a country in great need of a strong dose of good old fashioned ethics. The thing is, top business schools have been teaching ethics for over a decade and Corporate Social Responsibility (CSR) has been in the lexicon of companies for even longer. If we have all been talking about it, and in many cases doing it, what’s the problem? Could it be that CSR is simply an afterthought of major corporations or used as a way to mitigate risk with key stakeholders who could prevent us from doing business in the most profitable way? Clearly, the old way of doing business has not been serving the greater good. And maybe the old way of CSR was not serving us well either.
Here enters a new movement called Conscious Capitalism. This emerging model promotes that businesses can and will exist in the world not only to create products and services that benefit humanity, but that they can also be a part of the solution for current social and environmental issues. In the old business model, corporations existed to increase profits and shareholder wealth. In the new model, corporations are designed to provide wealth and a better way of living to all stakeholders. It’s no longer “Company PLUS cause,” it is “Company IS cause.”
Champions of Conscious Capitalism
These ideas are not new. Even corporate legends are stepping up to support the new stakeholder centric business model. Earlier this year, former GE Chairman and CEO, Jack Welch, publically stated that running a corporation merely for the purpose to increase shareholder wealth was a “dumb idea.”
One of the many companies leading this conversation is Whole Foods Market. In the case of Whole Foods Market, consider all the organic food producers and makers of organic textiles, cosmetics and home products (7th Generation included) that have had a venue for shelf space. This conscious capitalism has spurred other similar chains to add organic food aisles to their stores. It has also driven companies, such as Walmart, to call out their vendors and create mandates on consumer packaging. These companies understand that solving environmental and societal issues means that they will be around longer to benefit from their corporate offerings - be that a product or a service.
I was recently introduced to Jay Coen Gilbert – the co-founder of B-Corp http://www.bcorporation.net/, an organization built on the idea of creating a new category for companies in addition to the traditional types of incorporations (such as S-Corps, C-Corps and LLC’s). As it states on its Web site, “B-Corporations use the power of business to solve social and environmental problems.” B-Corporations are unlike traditional responsible businesses because they:
1. Meet comprehensive and transparent social and environmental performance standards.
2. Institutionalize stakeholder interests.
3. Build collective voice through the power of a unifying brand.
Another prime example is Mohawk Industries and its vast recycling initiatives. The largest floor covering manufacturer in the world, Mohawk has committed to recycling more waste than it produces. Each year, it diverts more than 3 billion pounds from landfills, and recycles its own products, its competitors’ carpets and purchases other waste including home demolition waste to used soda bottles. In fact, it saves 3 billion pounds of soda and water bottles from landfills annually, and uses these PET bottles to produce millions of pounds of recycled carpet, which is then used to manufacture its floor covering products. The company recognizes the significant environmental footprint of the products it produces, but its efforts are dedicated to minimizing that impact as much as possible while also helping the communities in which it works and lives.
The Future of Corporate Capitalism
So where do we go from here? Can we really expect to witness such a significant transition of the corporate mindset at the heart of our major corporations? Can and will this shift to a shareholder centric business model take place? I believe it already has. Just watch: corporate transformation is rapidly occurring to meet the demands of a shifting society.
Lewis Perkins is a champion for sustainability - personally and professionally. A sustainable strategies consultant to corporations and businesses, including The Mohawk Group, Perkins draws on this passion to help advance companies’ missions of environmental and social responsibility. He has recently spoken on the issues as part of Forbes’ Business Visionaries Series, the Sustainable Brands conference and the Lifestyles of Health and the Sustainability (LOHAS) forum. Follow his insight on environmentalism and corporate citizenship on his blog, Semantics of Sustainability http://www.fastcompany.com/blog/lewis-perkins/semantics-sustainability-0, on FastCompany.com. Perkins can be contacted at [email protected].