All for-profit companies are established for the purpose of generating profits for the owner, management team, investors and employees, whereas nonprofit organizations have a mission to do good. But can there be a middle ground or a hybrid model? Why can’t for-profit companies also be committed to doing good?
The truth is they can, and they can do it without compromising their need to turn a profit. This growing movement is called “conscious capitalism,” and it’s revolutionizing the way entrepreneurs structure businesses, how consumers select brands and even how investors pick stocks. With an eye toward benefiting all internal and external stakeholders, conscious capitalism companies are attracting some devoted fans.
Conscious Capitalism Companies: An Overview
Before taking a closer look at some case studies in conscious capitalism companies, it’s helpful to have a basic understanding of what this approach is. Quite simply, conscious capitalism states that a business can and should infuse ethical policies and practices into all aspects of their company while still pursuing profits. The term “conscious capitalism” was first coined by Whole Foods co-founder and CEO John Mackey and marketing professor Raj Sisodia.1
There are four primary principles of conscious capitalism:2
- A higher purpose: Businesses need to figure out their higher purpose and shape their policies and practices toward that higher purpose. For example, an organic mattress company’s higher purpose might be to help people enjoy a healthy night’s sleep on sustainable products that have a low environmental impact.
- Stakeholder orientation: Companies interested in conscious capitalism must optimize value for all stakeholders. This includes internal stakeholders such as employees and shareholders, as well as external stakeholders including the community in which a company is headquartered.
- Conscious leadership: Similar to ethical servant leadership, conscious capitalism leaders must serve as positive, ethical examples who motivate and inspire their team.
- Conscious culture: Company leaders and employees must create a workplace culture that nurtures cooperation and fosters trustworthiness. The workplace culture should inspire all stakeholders to commit to being a force for good.
By leading by example and embracing ethical practices, conscious capitalism companies attract a devoted fan base of consumers who remain loyal to the brand and investors who want to keep these companies in their portfolios.
Here are a few case studies in conscious capitalism:
In 2006, when Blake Mycoskie took a vacation in Argentina, he met a few women who collected shoes to donate to schoolchildren in need. Blake, a serial entrepreneur, decided that he wanted to help. He started TOMS that same year and established its innovative One for One® model, which donates a pair of shoes to a person in need for every pair sold.3
Today, TOMS also donates a third of its profits to what the company calls “grassroots good” — facilitating positive change at the local level. In all, TOMS has impacted more than 100 million lives to date.4
But that’s not the only way in which TOMS is committed to being a company dedicated to conscious capitalism. They also embrace environmentally sustainable practices, such as using sustainable cotton, greener packaging and greener manufacturing processes. In addition, they measure their carbon footprint and strive to further reduce it each year.
TOMS has attracted a devoted following, and fans of their shoes can feel good about their purchases. The company is fully accountable to all of its stakeholders, releasing annual reports about their practices. In short, the company is an inspiring case study that other fashion entrepreneurs can strive to emulate.
Starbucks — the ubiquitous coffee chain with thousands of locations in dozens of countries — has long been committed to being a force for good. In addition to ensuring that their coffee beans and other products are sustainably sourced, the company also actively gives back to farmers by investing in their growth and donating millions of disease-resistant plants.5 In addition, the company strives to minimize its carbon footprint and overall environmental impact.
Moreover, Starbucks is oriented toward all of its stakeholders, with a focus on creating gainful opportunities for its workers. The company provides 100% college tuition coverage for a first-time bachelor's degree for all benefits-eligible employees — something virtually unheard of in the food industry.6 Plus, Starbucks has a program that hires U.S. veterans.7
Unlike most national chains, Trader Joe’s positions itself as a neighborhood grocery store that embodies a small-town community vibe. Known for its unique products, Trader Joe’s has committed to selling only products that were harvested, produced or manufactured sustainably. The company has also taken steps to significantly reduce food waste and composts and recycles millions of pounds of materials.8
Environmental sustainability isn’t Trader Joe’s only mission. As a leading example among conscious capitalism companies, Trader Joe’s donates millions of meals to communities in need through its Neighborhood Shares Program. In fact, in 2020 alone, the Neighborhood Shares Program donated approximately 69 million meals.9
Furthermore, Trader Joe’s actively nurtures an inclusive, welcoming environment for all of its employees. The company is committed to diversity and offers a generous scholarship fund to its workers, with additional scholarship opportunities available for minority employees.10
Individuals who are deeply committed to ethical business practices and servant leadership will find an inviting home at Grand Canyon University’s Colangelo College of Business. We offer many business and management degree programs designed to graduate ethical, conscious individuals who are determined to make the world a better place through careful organizational structuring and ethical business practices.
Undergraduate students can choose from bachelor’s degrees such as the Bachelor of Science in Applied Entrepreneurship, while graduate students can choose from a range of MBA programs like the Master of Business Administration with an Emphasis in Leadership degree.
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1Northeastern University, What is Conscious Capitalism, and How Does it Differ from Corporate Social Responsibility? in November 2021
2Conscious Capitalism, Conscious Capitalism in August 2021
3Esalen, CTR Journal, Why I Started Toms in July 2021
4TOMS Shoes, Impact in July 2021
5Starbucks Stories and News, Starbucks to Provide 100 Million Healthy Coffee Trees by 2025 in August 2021
6Starbucks, Working at Starbucks, Education in August 2021
7Starbucks Stories and News, Starbucks Military Commitment by the Numbers in August 2021
8Trader Joe’s, Sustainability in March 2021
9Trader Joe’s, Neighborhood Shares, Neighborhood Shares—Every Day, Every Store in July 2021
10Trader Joe’s, Diversity & Inclusion in March 2021
The views and opinions expressed in this article are those of the author’s and do not necessarily reflect the official policy or position of Grand Canyon University. Any sources cited were accurate as of the publish date.