What Is Conscious Capitalism?

The term conscious capitalism refers to a socially responsible economic and political philosophy. Proponents of conscious capitalism believe that businesses should operate ethically while they pursue profits. This means they should consider serving all stakeholders involved including their employees, humanity, and the environment—not just their management teams and shareholders. The idea of conscious capital was created by Whole Foods co-founder John Mackey and marketing professor Raj Sisodia.

Key Takeaways

  • Conscious capitalism is a socially responsible economic and political philosophy created by John Mackey and Raj Sisodia.
  • Proponents believe businesses should operate ethically by serving the interests of all stakeholders involved—not just corporate management and shareholders.
  • The four guiding principles behind conscious capitalism include a higher purpose, stakeholder orientation, conscious leadership, and conscious culture.

Understanding Conscious Capitalism

The concept of conscious capitalism was coined and popularized by John Mackey, Whole Foods co-founder, and co-CEO, and Raj Sisodia, professor of marketing at Bentley University, in their book "Conscious Capitalism: Liberating the Heroic Spirit of Business." The two are also co-founders of Conscious Capitalism, a nonprofit organization that has chapters in more than two dozen U.S. cities and ten other countries.

The conscious capitalism credo acknowledges that while free-market capitalism is the most powerful system for social cooperation and human progress, people can aspire to achieve more. It does not minimize profit-seeking but encourages the assimilation of all common interests into the company's business plan.

Building on the foundation of traditional capitalism—which includes competition, entrepreneurship, freedom to trade, the rule of law, and voluntary exchange—the credo adds elements like trust, compassion, collaboration, and value creation to the formula. Although profits don't take a backseat in conscious capitalism, the philosophy emphasizes doing so in a manner that integrates the interests of all major stakeholders in a company. 

There are four guiding principles behind the concept:

  • Higher Purpose: A business that adheres to the principles of conscious capitalism focuses on a purpose beyond pure profits. In doing so, it inspires and engages its key stakeholders.
  • Stakeholder Orientation: Businesses have multiple stakeholders including customers, employees, suppliers, investors, among others. Some companies focus on return to their shareholders to the exclusion of everything else. A conscious business, on the other hand, concentrates on the whole business ecosystem to create and optimize value for all of its stakeholders.
  • Conscious Leadership: Conscious leaders emphasize a "we" rather than a "me" mentality to drive the business. By doing so, they work to cultivate a culture of conscious capitalism in the enterprise.
  • Conscious Culture: Corporate culture is the sum of the values and principles that constitute the social and moral fabric of a business. A conscious culture is one where the policies of conscious capitalism permeate the enterprise, fostering a spirit of trust and cooperation among all stakeholders.

Benefits of Conscious Capitalism

Conscious capitalism has become an increasingly popular concept in the business world. In fact, a growing number of businesses have adopted its principles including Whole Foods Market, Starbucks, The Container Store, and Trader Joe's. By rejecting this philosophy, corporations may see their positions adversely impact both revenues and profits.

Because of the increasing popularity of socially responsible investing, companies that reject conscious capitalism may see a negative impact on their profits and revenue.

Although conscious capitalism focuses on doing the greater good for its stakeholders and not just for shareholder profit, firms that adopt this philosophy reap significant rewards. Many consumers and investors consider the impact businesses have on the environment and its inhabitants. These stakeholders seek businesses that align moral principles with corporate values. According to Nielsen's report entitled Global Survey on Corporate Social Responsibility, 43% of consumers said they would prefer to spend more on products and services that support worthwhile causes.