30 @ July @ 2009 @ Lewis Perkins

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In today’s business community, many new conversations are emerging, sounding much more like the type of dialogue you would expect from ministers, rabbis and other people of faith than your typical corporate leader. Words such as authenticity, transparency and truth are infusing corporate speak, but perhaps more significantly their mission statements. Corporate culture is evolving – for the better.

As corporations analyze and strategize their ability to remain profitable for the future, they are having the types of conversations within their organizations that previously belonged to a smaller sector seemingly dominated by health and wellness companies such as the organic food or outdoors equipment or clothing industries. It would not surprise us to learn that conversations about consciousness are taking place within companies who have social consciousness in their DNA, such as Patagonia, Ben & Jerry’s or Tom’s of Maine, but would we expect to hear from within the Fortune 500’s? Perhaps we should.

The Call for Conscious Capitalism

Since the executives of Enron were exposed in 2001 for accounting fraud to the more recent Wall Street scandals, such as Madoff Investment Securities, citizens around the world view corporate leadership in the U.S. 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.

Couple this with the shenanigans of the “Big 3” automobile executives and Wall Street’s infamous golden parachutes, and we have a country clearly in great need of a strong dose of good old fashioned ethics. The thing is, the top business schools have been teaching ethics for well over a decade now and Corporate Social Responsibility 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 corporate responsibility 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 corporate social responsibility was not serving us well either.

Here enters a new movement called Conscious Capitalism. In short, this new model promotes that businesses can and will exist in the world not only to create products and services that benefit humanity, but in the process of doing so, they can be a part of the solution for the current social and environmental issues that exist in our world today. In the old business model, corporations existed to increase profits and thereby increase shareholder wealth. In the new model, corporations exist to provide wealth and a better way of living to all stakeholders – customers, employees, vendors, all partners and shareholders alike. It’s no longer “Company PLUS cause,” it is “Company IS cause.”

Champions of Conscious Capitalism

These ideas are not new and there are many leaders writing and speaking about conscious capitalism. Even some of our old corporate legends are stepping up to support the new stakeholder centric business model. Earlier this year, former GE Chairman and CEO, Jack Welch, publicly stated that running a corporation merely for the purpose to increase shareholder wealth was a “dumb idea.” He said, “The idea that shareholder value is a strategy is insane. It is the product of your combined efforts – from the management to the employees.” Welch also says that “our main constituencies are your employees, your customers and your products.”

Other companies who are leading this conversation are Whole Foods Markets. Co-Founder John Mackey writes the forward in author Michael Strong’s book Be the Solution: How Entrepreneurs and Conscious Capitalists Can Solve All the Worlds Problems. And Mackey himself has an audio CD called “Passion and Purpose: The Power of Conscious Capitalism.” Both of these works outlines conscious capitalism and led to the creation of an organization called HYPERLINK “http://www.flowidealism.com” Flow Idealism. Mackey and his group believe that you can create a business model which helps to grow your industry in a socially responsibility manner.

In the case of Whole Foods Markets, consider all of 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 kind of conscious capitalism has led most grocery stores chains in this country to add an organic food aisle to their stores. It has also driven companies such as WalMart to call out their vendors and create mandates on consumer packaging that could prevent a company from even working with the world’s largest retailer if they did not meet the reduced consumer packaging material guidelines placed forth. Other examples include Clorox, which launched its Greenworks natural cleaning products line in late 2007 and purchased Burt’s Bee in 2008; Häagen-Dazs has led a large campaign to save the honey bees, whose product is not only a critical component of several of Häagen-Dazs’ ice creams, but also a major contributor to the health of our agricultural industry. These companies understand that solving issues of the environment and society means that we will all be around longer to benefit from their corporate offerings – be that a product or a service.

I was recently introduced to the co-founder of an organization called B-Corp (http://www.bcorporation.net), Jay Coen Gilbert. From Gilbert I learned that B-Corp is built on the idea to create a new category for companies. In addition to the traditional types of incorporations (such as S-Corps, C-Corps and LLC’s), a company can chose to organize as a B-Corp, which operated to create benefit for the environmental and society as a result of its creation or existence. As it states on its website, the “B Corporations are a new type of corporation which uses the power of business to solve social and environmental problems.” B Corporations are unlike traditional responsible businesses because they:

Meet comprehensive and transparent social and environmental performance standards.

Institutionalize stakeholder interests.

Build collective voice through the power of a unifying brand.

Another prime example is Mohawk Industries and its vast recycling initiatives. The largest floorcovering manufacturer in the world, Mohawk has committed to recycling more waste than it products. Each year, it diverts more than 3 billion lbs. 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 lbs. 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 floorcovering 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.