In his 2014 book, Utopia for Realists, Dutch historian Rutger Bregman discusses how capitalism isn’t enough to sustain the dream of progress and stated that “the 21st century will challenge us to find other ways of boosting our quality of life”.
In the wake of Covid-19, his prediction seems to have been more amplified. The last year and a half has pushed people to the breaking point. A number of professionals are quitting their jobs to focus on their mental, physical and emotional wellbeing, as well as to better themselves.
Businesses should not discount this shift as a one-off thing. Rather, they should take it as an urgent call-to-action to redefine their priorities. The World Economic Forum, in its 2019 manifesto The Universal Purpose of a Company in the Fourth Industrial Revolution, asserts that “A company is more than an economic unit generating wealth”. Yes, while aspects such as profitability, productivity and revenues remain as important as ever—they cannot come at the cost of sustainability, empathy and people. A company’s performance must also be measured “on how it achieves its environmental, social and good governance objectives”.
This is where conscious capitalism, which espouses a move away from conventional capitalist models by adopting an ESG-focused approach, steps into the picture. Here is how it can benefit brands while creating large-scale, inclusive value:
Sustainability and responsibility towards the environment
At the heart of conscious capitalism lies sustainability. A modern company “acts as a steward of the environmental and material universe for future generations.” Reducing carbon footprint and adopting eco-friendly practices is a critical element of this process. Take the case of Microsoft, which has created a $1 billion fund as part of its commitment to achieving “carbon negative” status by 2030.
Adopting sustainable practices also helps businesses attract loyal consumers. According to a report, 64 percent of consumers felt happy about their purchases when buying sustainable products, while 53 percent of consumers indicated a switch to lesser-known brands simply because they were sustainable. Young people— millennials and Gen-Z-ers—are especially invested in demanding accountability from brands when it comes to mitigating their environmental impact. According to the 2019 Global Millennial Survey by Deloitte, over 25 percent of younger generations want brands to mitigate the effect of human activities on the environment.
However, while most companies specify an intention to adopt environmentally sustainable policies on water usage, waste management and emissions, most fail to follow through. To overcome this challenge, business leaders must develop robust sustainability targets and governance mechanisms to review their performance.
Purpose beyond profits
The social fabric has undergone a tremendous change over the past few years. Conversations on issues ranging from diversity to mental health have turned into social inclusivity movements and set the pace for addressing critical cultural matters. Businesses, too, are adapting to these changes and reviewing existing processes to address them. Several Indian beauty and lifestyle brands have already set the tone for more brands to generate such conversations in the country. Online clothing retailer FabAlley, for instance, ran a campaign around body positivity with a clothing line that promised variety and quality in design for women of all shapes and sizes. Similarly, Fae Beauty (Free and Equal Beauty) is another young brand that promises an inclusive approach to beauty through its products.
Business leaders can—and must—elevate the purpose of their companies beyond just accruing profits to larger societal good. Brewing company SABMiller, for instance, consistently advocates for responsible drinking behaviour and has run multiple campaigns against drunk driving and underage drinking in key Indian cities. Most recently, it is implementing a new data-driven approach to road safety in India, which resulted in a 16 percent decrease in road fatalities over four years during a test run in São Paulo, Brazil.
Such businesses also succeed in growing faster and building a loyal consumer base. According to a Deloitte study, companies that embody purpose as an all-pervasive part of their operations grow three times faster than their competitors and gain higher market share. They also attain higher employee satisfaction and attract and retain more consumers, many of whom identify with their purpose.
People-first approach to business operations
Businesses drive economic growth and play an undeniable role in uplifting social standards of living by creating employment, making investments, paying taxes and driving technological advancements. Taking this a step ahead, every business, which is essentially a corporate citizen, has the larger responsibility to create value for all its stakeholder—including producers, suppliers, consumers, investors, stakeholders, community and even nature.
Companies, therefore, have to take onus of create lasting impact on the environment, community and society they operate in. Today, most corporates have a concrete and elaborate social responsibility programme in place, which aims to tackle several issues including education, sanitisation, safe eating practices, rural upliftment and farmer welfare amongst many others.
Further, organisations today also need to be responsible corporates for their suppliers by providing them with the best-in-class automation and technological tools that enables efficiency in their undertakings. Lastly, corporates today also have the duty of passing on value to their consumers through the goods and services they provide, while also aligning themselves with the ideals and notions they stand for. As a result, companies are repositioning themselves as “brands with a purpose” that care for a social cause as well as the environment.
Clearly, companies belonging to the fourth generation of the industrial revolution must, at its core, strive, aim to “treat its people and community with dignity and respect.” It must honour diversity and enable “continuous improvements in working conditions and employee well-being.” To follow this, companies can ensure continued employability by offering their human resource the necessary L&D tools and access to continuous upskilling and reskilling.
Ultimately, companies that integrate capitalist systems with social and environmental governance have the power to transform in tandem with the changing sensibilities of the world. There is no denying that these conscious businesses will eventually find themselves on the right side of history. The long term impact of shareholder value will be significant for companies that continue to do good for all stakeholders.
The writer is MD & CEO of Marico Limited.
The thoughts and opinions shared here are of the author.
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