Businesses of all types and sizes are the drivers of world economies and the foundation of daily life in many societies. Given their influence, it’s no surprise that the way in which they conduct themselves is also hugely significant for society. This begs the question: Do businesses have an obligation to conduct themselves in an ethical manner?
If you are a proponent of conscious capitalism, then the answer is a resounding “yes!” Ethics is at the heart of conscious capitalism. This philosophy positions companies as a force for good and the instigators of positive change. But exactly what role do ethics play in conscious capitalism?
What Is Conscious Capitalism?
In order to understand the role of ethics in conscious capitalism, it’s necessary to first take a closer look at this business philosophy. Conscious capitalism is a collection of principles intended to guide corporate decision-making at all levels — from establishing the company’s official mission, to hiring members of the board, to establishing labor practices for workers. Its principles are as follows:
- A higher purpose: Conscious capitalism states that all businesses should have a higher purpose beyond the generation of profits. For example, a hospitality company’s higher purpose might be to provide compassionate care to travelers so they can feel well taken care of when they are far from home. A funeral home’s higher purpose would be not only to honor the memories of those who have passed on, but also to provide comfort to those left behind.
- Stakeholder orientation: Conscious capitalism requires companies to orient their mission and business practices toward meeting the best interests of all of their stakeholders. A company’s stakeholders can include its employees, shareholders, suppliers, vendors, customers, clients and labor unions. The community near the company is also a stakeholder in the company’s success, as businesses have direct impacts on their surrounding communities.
- Conscious leadership: The person at the helm of an organization must be accountable for their mistakes, take ownership in their work, drive innovation, work toward positive change and inspire others. In conscious capitalism, conscious leadership also applies to every team member — not just the CEO.
- Conscious culture: A company’s culture can be described as either toxic or uplifting. It’s the responsibility of every leader in the organization to nurture a positive company culture that benefits all stakeholders and drives the company forward.
What Role Do Ethics Play in Conscious Capitalism?
Ethical codes comprise a broad topic with many possible interpretations. However, one simple definition is that “ethics” refers to a collection of moral principles that guide the behaviors, conduct and decision-making of individuals and groups. Through ethical codes, humans grapple with some of the most complicated questions in life, such as:
- What is right and wrong?
- How can one live a good life?
- What should a person do when both option A and option B will result in an act of wrongdoing?
- What are humanity’s rights and responsibilities?
In essence, ethics govern how people relate to one another and interact with each other and their environments. The underpinning philosophy of conscious capitalism is that if all humans have ethical obligations to each other, then businesses have ethical obligations to humanity and their environments.
Proponents of conscious capitalism point out that all of an organization’s stakeholders are both interconnected and interdependent; what affects one affects all, and all stakeholders are equally important. What does this mean in practical terms?
Here is an example: Pantheon Enterprises, a chemical manufacturer located in Phoenix knows that the creation of new chemical products can lead to negative effects on the environment and people’s lives.
In order to combat this, Patheon enterprises commits to following conscious and sustainable efforts and goals. They “provide solutions to human needs, wants, and challenges.” However, they do not disregard the effects of the chemical industry so they devote themselves to “protecting people and our planet” by following the standards they have set to hold themselves accountable in an ethical manner.1
Case Studies of Ethical Leadership in Conscious Capitalism
There are a number of companies that have embraced the ethical mindset of conscious capitalism. They are led by individuals who recognize that self-interest and altruism are not mutually exclusive; it is indeed possible to build and grow a profitable company while doing right by others.
One notable example is Bombas, a company founded for the dual purpose of profits and philanthropy. Their mission is to donate a clothing item for every clothing item a customer purchases (primarily socks). All of their donations are sent to community organizations across the country for distribution to individuals affected by homelessness.2
To date, Bombas has donated more than 40 million clothing items to homeless shelters and has partnered with more than 3,500 community organizations across the nation.2 This company is a true force for good. Other notable companies that adhere to the ethical principles of conscious capitalism include:
- Patagonia: This outdoor clothing company is committed to maintaining an environmentally-friendly supply chain, having switched from pesticide-heavy crops to organic cotton.3 Furthermore, the company pays its workers fair wages.4
- Starbucks: This company relies on objective third-party evaluators to ensure that all of its coffee is ethically sourced and that farmers receive fair pay.5
- Whole Foods: The co-founder and CEO of Whole Foods, John Mackey, is also the co-founder of the conscious capitalism movement. As such, it makes sense that the company would adhere to ethical principles that nurture all of its stakeholders and promote healthy living. For example, the company promotes products with minimal environmental impact and hires a diverse workforce.6 It also pays its workers fairly while capping salaries for executives.7
As you can see, there are a number of ways that companies can adhere to the ethical principles of conscious capitalism. Ideally, a company will adopt comprehensive policies and practices designed to nurture ethical decision-making in all of its spheres of influence — from environmental impacts to social well-being.
At the Colangelo College of Business at Grand Canyon University, all of our business and management degree programs emphasize the importance of ethical decision-making and servant leadership. If you envision yourself setting an example for others to follow in the corporate world, consider applying for enrollment today in one of our programs. These include the Bachelor of Science in Business Management degree, Bachelor of Science in Applied Business Analytics program and the Master of Business Administration (MBA) degree. Click on Request Info above to explore the many online and on-campus possibilities at GCU.
1Pantheon Enterprises, The Principles of Conscious Chemistry in August 2021
2Bombas, About Bombas, Giving Back in June 2021
3Patagonia, How We Got Here: Organic Cotton in September 2021
4Patagonia, Living Wage in September 2021
5Starbucks Coffee at Home, Starbucks Ethical Sourcing in September 2021
6Whole Foods Market, Our Core Values & Mission in September 2021
7CNN, CNN Business, 9 Top Executives with $1 Salaries in June 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.