Conscious capitalism transforming the way we do business

Oxford dictionary defines capitalism as "an economic and political system in which a country's trade and industry are controlled by private owners for profit."

Over the past two hundred years capitalism took root as a widely accepted socioeconomic system. History suggests, whenever human beings enjoy the freedom of pursuing their own initiatives, the world prospers and people live a happy and longer life.

Capitalism has certainly contributed significantly to the economic development of the globe. However, it has its downside as well. Over the years, the prime objective of businesses has been earning profits by any means without paying attention to the interests of all stakeholders, including employees, customers, suppliers, communities, and the environment.

Consequently, a group of people have become hefty rich while millions of people are deprived of their basic needs. Inequality has kept on rising.

Studies show that only 42 people hold the same wealth as 3.7 billion of the world's poorest. Some 192 million people are unemployed or underemployed, one out of ten people are malnourished, one in nine people lack access to clean water, and an estimated 1.6 billion people are homeless worldwide.

To address above challenges and to protect the environment, a concept called "conscious capitalism", which seeks to align profit-making activities with a greater sense of purpose and social responsibility, is being evolved. Aligning and combining the power of capitalism with the global human consciousness movement is a paradigm shift.

This novel idea was popularised by John Mackey, co-founder of Whole Foods Market, and Raj Sisodia, a business professor.

Conscious capitalism has evolved around four pillars: higher purpose, stakeholder integration, conscious leadership, and conscious culture and management.

Higher purpose refers to going beyond profit that benefits society; stakeholder integration emphasises aligning the interests of all stakeholders; conscious leadership is all about leading by mentoring, motivating, developing, and inspiring people; and conscious culture focuses on trust, authenticity, caring, transparency, learning and empowerment.

Various studies exhibit the enormous benefits of conscious capitalism.

A Harvard Business Review article showed companies that practise this concept perform 10 times better than their peers. An Oxford University study revealed that companies with a strong sense of purpose outperformed the market by 4.8 percent per year over a 15-year period.

Research carried out by the University of Hamburg shows companies with a strong sense of purpose had higher levels of employee engagement, lower levels of employee turnover, and higher financial performance.

There has been a notable mindset shift of the consumers, especially the millennials, who are making different choices. A study shows that seven out of 10 consumers demand companies to be committed to the wellbeing of the society and environment.

A survey conducted by Nielsen found that 55 percent of consumers are prepared to pay more for products and services provided by companies committed to positive social and environmental impact.

Reputed companies like Google, Southwest Airlines, Patagonia and The Container Store successfully embraced conscious capitalism and integrated its principles into their business strategies. They create win-win bids for customers, employees, suppliers, communities, and the environment, resulting in exceptional customer experiences, less turnover, lower overhead costs, higher profits, and sustained growth.

It's high time that businesses transformed themselves by embracing conscious capitalism, which will ensure their successes, address societal challenges and contributing to a more sustainable and inclusive world.

The author is chairman and managing director of BASF Bangladesh Limited. Views are personal