Conscious capitalism takes hold

Traditional capitalism, where the bottom line is profit at any cost, is morphing into “conscious capitalism,” which involves integrity, higher standards and responsibility to shareholders, employees, consumers, suppliers and communities.

Boulder County Business Report interviewed several local business leaders who discussed the impact of conscious capitalism. This group includes:

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– Patricia Aburdene, Boulder author of “Megatrends 2010: The Rise of Conscious Capitalism, Hampton Roads Publishing Company;

– Steve Demos, chief executive officer of Boulder’s Next Foods; founder, White Wave Foods;

– Barney Feinblum, chairman, Organic Vintners, and director of Greenmont Capital Partners; former chief executive officer of Horizon Organic Dairy;

– Larry Longseth, vice president, Global Server Systems Operations, IBM, Boulder;

– Mo Siegel, president of Capital Peaks Investments; founder, Celestial Seasonings, Boulder;

– Kristine Carey, brand manager, Sierra Designs, Louisville;

– Ellen Feeney, vice president, Responsible Livelihood, White Wave Foods, Boulder.

Business Report: What are the challenges, reality and costs associated with conscious capitalism?

Ellen Feeney: The soul of this concept requires that you operate profitably. If you can’t pay your bills, you cannot invest in causes beyond your walls. You must strike a balance between people, the planet and profits. It’s about the process of incremental steps toward continuous improvement. And while it takes upfront resources and investments, over time, sustainable choices can actually make a company more efficient and help to improve long-term profitability.

Patricia Aberdene: Studies show that corporate finances grow when social responsibility and shareholder concerns are taken into account. Firms on Fortune’s list of the 100 best companies to work for examined how well they rewarded shareholders. They returned 176 percent. The reason is that systems work better when all organic parts of a company are honored.

Larry Longseth: IBM is building a green data center that will provide us with 20 percent in savings. Our new building costs $86 million to build as part of IBM’s Project Green. We haven’t calculated the return on investment. But the ongoing cost of operation is favorable, as we can drive the cost of power down over time. We can bring in clients who believe in our green strategy that we may not have gotten otherwise. On Wall Street, it may be one of many factors that help us.

Mo Siegel: It’s not black and white. There are so many tradeoffs. I’m on the board of Camelback. One of the employees called me about replacing the Nalgene bottle with a new plastic that’s just as good without the chemical issues. We’re wondering how to promote it, however. Do you realize that one 16 ounce bottle of Fiji water takes three ounces of motor oil to get from Fiji to the U.S.? What’s the cost of that to consumers, the company and the environment? What’s better in the long run, the less-expensive plastic or the one that requires more motor oil?

Business Report: What does conscious capitalism mean to the consumer? 

Steve Demos: New is always risky. An unproven model has to be able to charge a premium for it to flourish. People direct their money into a responsible business, assuming their $10 will add up to $10 million to apply to what they believe in.

Longseth: IBM is No. 1 in green outsourcing. For consumers of hardware systems and servers, the fact that ours reduce energy consumption is a selling factor. We can reach out more to companies that have energy saving programs.

Feeney: We focus our resources on producing great products and supporting meaningful causes. In turn, this resonates with consumers and encourages them to support our business. Demand for corporate responsibility continues to increase, and consumers are voting with their dollars by purchasing brands or from companies that share their values.

Kristine Carey: Consumers are willing to pay upward of 20 percent more depending on the quality and features associated with a green/sustainable product. Our retailers have determined that on a few of our products for spring 2008 are worthy of space. Now the consumer needs to come in and ask for it.  Our customer wants us to be socially responsible; it is the price to entry in this market.

Siegel: It all depends on the economy. When it’s fine, of course, consumers will pay more for companies who do good. When it’s bad, they pinch pennies and go where it’s less expensive. Life is about tradeoffs.

Business Report: How can companies transform into the conscious capitalism model?

Feinblum: Bigger companies have to pay attention to issues other than profit. Johnson & Johnson is a good example to follow. While they must make a profit, it’s last on their mission statement. You must meet consumer expectations, minimize the carbon footprint, practice integrity and sell products that lend themselves to doing good in the world.

Carey: Baby steps. Companies can’t be 100 percent socially responsible and have zero environmental footprints overnight. We have to work together and form alliances to make a difference. Collaborate on programs that move the needle and have a positive impact on our playground.

Feeney: Even small steps are commendable. Sustainability is not about perfection; rather, it’s about the process of incremental steps toward continuous improvement. By choosing causes that align with your company’s mission and values, even small initiatives can make an impact and will be more meaningful to employees.

Aberdene: Many companies think that by giving profit to charity, they are socially responsible. Philanthropy is not conscious capitalism. It’s how you conduct your business. Companies have to want to change. A CEO must read books, study the successes, bring in consultants, study people.

Business Report: What is your projection for industries practicing conscious capitalism?

Feeney: What began with just a handful of companies 20 years ago is now a major movement that will continue to grow. Sustainable business practices are becoming more and more mainstream. We believe the more companies embrace sustainability, the better for the marketplace and the planet.

Demos: Natural food businesses will thrive and compete. As Whole Foods gets bigger, for example, Safeway will bring in better organic products, as will other chains. It’s a step in the right direction.

Aburdene: In Colorado, half the companies are conscious capitalists. The trend will continue because of pressure from activists, regulators and consumer demands.

Carey: Green products in the outdoor industry are on the rise and as more products are developed, awareness to the consumer will raise and the education and understanding the consumer has for green products will evolve