What is conscious capitalism, and how does it differ from corporate social responsibility?

View all blog posts under Articles | View all blog posts under Master of Business Administration

Conscious company with cooperating stakeholders.

While many businesses have expanded their corporate social responsibility initiatives, including sustainability programs, some industry experts want companies to push for more. Conscious capitalism is part of this drive for greater accountability to all business stakeholders.

Here’s a comparison of conscious capitalism and corporate social responsibility (CSR) to prepare you to lead companies with these sustainability initiatives in mind.

What is conscious capitalism?

This business philosophy comes from John Mackey, co-founder and co-CEO of Whole Foods Market, and Professor Raj Sisodia, who together wrote a book on the concept and founded the nonprofit Conscious Capitalism, Inc. The organization defines conscious capitalism as a “way of thinking about capitalism and business that better reflects where we are in the human journey, the state of our world today, and the innate potential of business to make a positive impact on the world.”

While conscious capitalism still pursues a profit, it emphasizes doing so in ways that sincerely consider the interests of all principal stakeholders. The philosophy recognizes that some stakeholders, namely the environment, cannot speak for themselves but are still necessary considerations when making business decisions.

More than implementing standalone programs or funding charitable events, conscious capitalism promotes an ongoing, integrated approach to social responsibility, self-awareness, and purposeful decision-making.

The four guiding principles

The conscious capitalism framework includes four interconnected disciplines and suggests that conscious businesses are committed to each of these principles.

1. Higher purpose: While profits are essential for a vital and sustainable business, conscious capitalism focuses on purpose beyond the profit. The purpose establishes a deeper meaning, which in turn inspires and engages employees, customers, and other stakeholders.

2. Stakeholder orientation: Conscious companies operate with their entire business ecosystems in mind, meaning they concentrate on optimizing equal value for all of their stakeholders. This includes customers, employees, suppliers, investors, shareholders, funders, communities, and the environment.

3. Conscious leadership: With a “we” rather than “me” mentality, conscious leaders embrace the company’s purpose, create value for all stakeholders, and inspire actions that contribute to a conscious culture.

4. Conscious culture: Conscious capitalism contributes to a culture of trust, care, and cooperation among the company’s employees and all other stakeholders.

The benefits

Businesses that practice conscious capitalism benefit from advantages such as:

  • Increased harmony between employers and employees
  • Greater employee and customer satisfaction
  • Enhanced stakeholder loyalty
  • Heightened community engagement
  • Improvements in surrounding communities and environments

Research from Mackey and Sisodia further shows that these benefits often lead conscious companies to outperform their competition.

Conscious capitalism examples

An increasing number of recognizable brands demonstrate the principles of conscious capitalism, including Whole Foods Market, Starbucks, Trader Joe’s, and The Container Store. Southwest Airlines is another example, with its triple bottom line approach that attributes equal value to people, planet, and profit.

What is corporate social responsibility (CSR)?

The CSR business model encourages companies to be socially accountable, operating in ways that enhance or positively contribute to society and the environment. CSR in action usually takes the form of philanthropy programs and volunteer efforts, whereby companies can support their communities while simultaneously growing brand awareness.

Investopedia noted that companies must have an established place in the market to make giving back to the community a feasible endeavor. These organizations’ wide-reaching visibility also instills a sense of responsibility to set industry standards in ethical business behavior. As such, CSR is primarily a fitting strategy for large corporations.

Companies that embrace CSR initiatives can follow the guidelines set by the International Organization for Standardization. While ISO 26000 helps companies implement CSR, it provides voluntary rather than required standards, as its qualitative nature means the business model cannot be certified.

The benefits

Implementing CSR programs can have a significant impact on company success, with benefits including:

  • Increased employee morale
  • Greater customer loyalty
  • Improved public image
  • Enhanced community engagement

As consumers become increasingly environmentally and socially conscious, they’re more likely to support companies that demonstrate similar values.

Corporate social responsibility examples

Companies can engage in CSR activities, including making donations to social causes, attending charitable events, or sending executives and employees to volunteering events in the community. They can also implement long-lasting CSR efforts, such as reducing their carbon footprints with better manufacturing procedures and following ethical labor practices. Investopedia highlighted Starbucks as an example, noting the company’s efforts to ethically source coffee, create a global network of farmers, hire refugees, reduce the environmental impact of cups and straws, and engage employees with community service.

The defining differentiators

The significant difference between conscious capitalism and CSR is that the former is a more comprehensive and holistic approach to the relationship between business and society. Conscious capitalism is rooted in a company’s philosophy, whereas CSR programs are often attached to traditional business models as separate entities.

More than conducting business in an ethical manner, conscious capitalism works to create new values for its internal and external stakeholders. In their book, Conscious Capitalism: Liberating the Heroic Spirit of Business, Mackey and Sisodia explained that conscious companies don’t necessarily have to do anything outside of normal operations to be socially responsible, arguing that creating value for major stakeholders is inherently socially responsible. However, conscious companies often implement CSR initiatives.

Earning an Online MBA in Sustainability

As a top priority for both consumers and companies, sustainability is an important concept covered in Northeastern University’s Online MBA program. Students who pursue our Online MBA can choose to study the Sustainability concentration by picking three out of their five electives from this topic of interest. The concentration discusses sustainability as a business practice, covering environmentally conscious strategies, renewable policies, and growth initiatives. The curriculum prepares students to lead sustainable initiatives backed by science, credible research, and policy recommendations. Courses like Sustainability and the Business Environment, for instance, examine environmental problems and discuss how companies can contribute to resolving such issues by reducing their impact.

Graduates with an MBA in Sustainability often pursue positions such as sustainability manager, operations manager, business development manager, university sustainability director, or environmental portfolio analyst.

If you’re interested in earning an Online MBA in Sustainability, visit the Online MBA program page to request more information and learn more about the sustainability concentration.

Recommended Readings:
What is a sustainable business?
What an MBA can do for your career aspirations

Sources:
Northeastern University’s Online MBA Program
What is conscious capitalism? by Conscious Capitalism, Inc.
Conscious capitalism by Investopedia
Corporate social responsibility by Investopedia
The rise of conscious capitalism by EY Consulting Hub
Why Consciousness Is the Key to Unlocking Capitalism’s Greatest Potential by Round Table Companies
ISO 26000 Social Responsibility by the International Organization for Standardization