ESGs have become the standards used to assess a company’s ability to advance social and environmental goals, as per the United Nations’ Sustainable Development Goals (SDGs). In recent years, more and more businesses have been increasing their ESG commitments. In fact, as of 2020, 88% of publicly traded companies, 79% of venture and private equity-backed companies, and 67% of privately-owned companies have ESG initiatives in place. Although this may seem like a step in the right direction, relying on ESG alone isn’t the solution with the most impact. For true change to occur, companies must focus on solving one problem in a meaningful way, rather than trying to help advance a plethora of issues.
I sat down with Kent Gregoire, one of the first certified conscious capitalism consultants around the world-Founder and CEO of Symphony Advantage, which has been providing advisory and consulting services to executive level management for over 35 years to learn more about the shift from ESG to conscious capitalism.
“The reality is that such ESG efforts are typically a side initiative and not a central part of an organization’s operating system. More often than not, the goal remains to maximize profits at all costs. To be successful in making an impact, companies must focus on one single area of significance and align their entire operating systems accordingly. And, when this occurs, a business truly becomes purpose-driven. While many ESG-driven companies may believe that they are led by a concrete purpose, they are still relying on a traditional business model that don’t integrate said purpose into every facet of their operations. And companies are starting to notice the effects of this disconnect, as only 50% of businesses believe that they are performing effectively against societal and environmental metrics, ” says Gregoire
In the midst of a global pandemic and economic uncertainties, the need to effect true, meaningful change is greater than ever. But, when ESG initiatives aren’t enough, how can businesses play a concrete role in advancing society? This is where conscious capitalism comes in. Conscious capitalism is a modern-day business model that expands on the foundations of capitalism and focuses on higher purpose, stakeholder orientation, conscious leadership, and caring culture. Here are Kent Gregory’s tips to maximize your company’s impact on society and the planet by fully pivoting towards a more caring way of conducting business:
- Define one problem your organization is committed to solving: You started your company to fulfill an unmet need in the world. Now, it’s your chance to use this same mindset to elevate humanity through your business practices. What is one problem in your community, or even the world, that your business can solve?
- Realign your KPIs to advance change, including your financial performance indicators: Measure your impact by identifying and tracking relevant KPIs. With your newfound purpose in mind, there will be certain objectives and results you hope to achieve. Realigning your KPIs around a singular issue will help you find gaps and make both strategic and operational corrections. And, while financial KPIs remain important as profit fuels your mission, they’re not enough – you must advocate for performance indicators other than those that measure financial returns.
- Create an ecosystem of partners and vendors around you to advance this issue: Your entire supply chain should be aligned toward supporting your purpose. Therefore, you must be intentional in your vendor selection and choose those that have similar values and can assist in your mission. For example, if your higher purpose is relevant to your community, you can partner with small, local vendors that have unique understandings of the people and places you want to uplift.
- Advocate for change outside of your core business by becoming a voice among elected officials: Drive positive change by using your voice to advance human rights stewardship and environmental sustainability.
- Be bullish about recruiting in accordance with your mission to create a culture of change: To create a cohesive culture, every one of your employees should reflect the same mission upheld by your business. When recruiting new talent, be sure not to only look for those with the right skills, but also the right values and motivations.
- The little things matter – start every meeting with your company mission: By communicating your organization’s higher purpose, every member of your team gets reminded of the reason they show up for work each and every day.
- Promote accountability: Be transparent about your progress or lack thereof. And by engaging a third-party audit to verify your results, you bring in a fresh pair of eyes that can provide recommendations for growth and improvement. Such neutral assessments often help you get closer to accomplishing your company’s mission.
According to Gregoire, “Gone are the days of cutthroat businesspeople whose only aim is to maximize revenue. Conscious capitalists operate with the conviction that companies exist for reasons beyond profit. And, adopting a conscious business model is not only the right thing to do, but also the smart thing to do. Many still fall victim to the misconception that, to do good, you must sacrifice revenue. However, that couldn’t be further from the truth, as conscious businesses often see more engaged and productive employees, attract loyal customers who advocate for them, and experience improved stock market performance. It’s their strong reputation as companies that truly care about the world and its inhabitants that position them for success.”
Written by Parul Agrawal.
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