Megatrends 2010: The Rise of Conscious Capitalism

By Patricia Aburdene (This article, is reprinted by permission from Patricia Aburdene and may not be reprinted from this site. Please contact the author for reprint authorization.)

Excerpt from Chapter 2 Megatrends 2010: The Rise of Conscious Capitalism

The Path of Conscious Capitalism Whether the Dow soars to greater heights or sinks to new lows, will ordinary investors like us cheerfully recommit to business as usual—scandals, crashes and all—trusting Sarbanes-Oxley and the like to protect us from the next round of bad guys? Besides, do we want to support a greedy brand of capitalism that, as Timberland’s Jeff Swartz charges, turns its back on injustice to carry out the sole stated goal of making money? Especially considering that the research you’ll read in this chapter shows that moral companies often outperform the market?

Before you decide, journey with me to meet several pioneering firms that set the benchmark in social responsibility and some of the activists who devote their lives to transforming business. In the process, you will discover how much sense it makes to embrace both profit and principle.

“Responsibility from the Supermarket to the Stock market” is the motto of Green Money Journal, described later in this chapter.

Corporate Social Responsibility

When Business for Social Responsibility (BSR), the San Francisco-based nonprofit, was founded in the 1990s, it counted just a few members. Today it boasts 400 organizations, including about half of the Fortune 500. BSR defines corporate social responsibility (CSR) as a “comprehensive set of policies, practices and programs” that earn financial success in ways that “honor ethical values, and respect people, communities and the natural environment.”

In other words, CSR firms are conscious of how their actions impact their constituencies. Sure, they worry about stockholders, but they’re also concerned about “stakeholders” like employees, customers, suppliers, communities at home and abroad—and planet Earth.

In addition to joining outfits like BSR, corporations signal their willingness to embrace Conscious Capitalism by endorsing standards like the CERES (Coalition for Environmentally Responsible Companies) Principles and through the Global Reporting Initiative (GRI).

WHAT ARE THE CERES PRINCIPLES?

In 1989, CERES created a 10-point code of corporate environmental conduct. In 1993, Sunoco became the first Fortune 500 firm to subscribe to the principles.

1. Protection of the Biosphere
2. Sustainable Use of Natural Resources
3. Reduction and Disposal of Waste
4. Energy Conservation
5. Risk Reduction
6. Safe Products and Services
7. Environmental Restoration
8. Informing the Public
9. Management Commitment
10. Audits and Reports

Today more than 70 companies—from environmental leaders like Interface, the pioneering carpet and carpet tile manufacturer, and the Body Shop to global giants like Bank of America, Coca-Cola and Nike—endorse the principles.

The GRI issues uniform guidelines for corporations—as well as governments and NGOs—that choose to report on the social, environmental and economic aspects of their operations. More than 600 organizations have adopted the GRI guidelines.

Why do corporate blue chips rally round the banner of corporate social responsibility? Many want to do the right thing, of course, but there is a practical reason as well. A reputation for corporate responsibility enhances the company’s brand, while being deemed “socially irresponsible” damages it. The marketplace implications, not surprisingly, are sizable.

Indeed, the crusade for corporate accountability has already garnered immense public support. When the Conference Board polled 25,000 people in 23 countries, a full two thirds said they want business to “expand beyond the traditional emphasis on profits and contribute to broader social objectives.”

Top CSR companies, of course, already do exactly that:

• 3M’s corporate-wide offensive against carbon emissions is cutting greenhouse gases at 3M facilities in 60 countries.
• General Mills invested $2 million in a joint venture between minority-owned Glory Foods and community organization Stairstep Initiative to create an employee-owned business and 150 jobs in Minneapolis’s inner city.
• Proctor & Gamble (P&G) technology helps people in developing countries to cheaply disinfect water in their homes. The consumer giant also supports nine minority-owned banks and invests in venture capital funds for minority business. “Diversity is a matter of ethics,” says P&G spokesperson Terry Loftus—and a “fundamental business strategy.”
• Motorola’s superior customer service rests on the firm’s commitment to “bionics”—a new field where product inspiration comes from the “simplicity, efficiency and beauty of nature.”

Every year Business Ethics, a quarterly report on corporate social responsibility, lists the top 100 corporate citizens. 3M, General Mills, P&G and Motorola all make the list. Drawing on ratings devised by KLD Research & Analytics, Business Ethics ranks corporate responsiveness to seven stakeholders: shareholders, the community, women and minorities, employees, the environment, non-U.S. stakeholders, and customers.

Here are a few more winning examples:

• A Cummins Engine project near its San Luis Potosi, Mexico, facility teaches blind people basic carpentry skills. In Brazil, when kids climbed under a Cummins fence to snitch the sheet metal, Cummins built a school for 800.
• Natural grocer Wild Oats stocks 80 percent organic produce. Work there for 25 hours or more and get profit sharing. Competitor Whole Foods, whose energy is 25 percent solar, is a regular on Fortune’s 100 Best List.
• Chip giant Intel sets the benchmark on safety. If one of Intel’s 80,000 employees misses a day of work due to injury, the CEO had better get an e-mail on it within 24 hours. On May 18, 2005, Paul Otellini succeeded Craig Barrett as CEO and Barrett became chairman. The following day, the word went out at Intel: “accident reports will now go to Paul,” says Intel CSR director Dave Stangis. Intel studies the mishap’s cause to prevent another.
Result: Intel’s minuscule accident rate: 0.27 per 100 versus an industry average of 6.7 per 100.

Megatrends 2010: The Rise of Conscious Capitalism
By Patricia Aburdene


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