Conscious Capitalism and a future of economic growth

Throughout the nation and around the world, we continue to witness horrific acts of terrorism and violence, the spread of infectious disease, unprecedented natural disasters and a lack of gender, racial and economic equity. One needs to look no further than the New Haven Green to see the crippling effects of poverty.

Corporate America and our country’s business community cannot turn a blind eye to today’s biggest challenges. Business has a responsibility to answer the call for change and to recognize the role it can and should play in elevating society. That’s the promise of Conscious Capitalism, a growing, purposedriven movement that believes business must take stock of its impacts on our neighbors and on the world at large.

When business is used as a force for good, it generates inclusive economic growth that creates benefits for workers, communities and the environment. It brings prosperity into all corners of our community and world, including those who have struggled for decades with inequality and limited opportunities.

According to a Bankrate 2017 survey of American workers, 57 percent of our fellow citizens are living paycheck to paycheck and cannot afford to make a $500 repair to their home or car without going into debt. Even as effective as the Affordable Care Act has been in reducing the percentage of Americans without health insurance from over 13 percent of the population to below 7 percent, too many Americans with insurance cannot afford their deductibles and coinsurance, let alone the loss of income associated with a hospital stay. Yet there is ample evidence that wealthy Americans are doing better than they ever have.

The combination of social, political and economic stress is not likely to positively respond to traditional economic policies of reducing taxes on corporations and wealthy taxpayers in the hope that some of their good fortune will trickle down to the majority of the less fortunate. Federal Reserve policies lowering interest rates may spur further investment and increase the value of equities, but only a slight majority of Americans own stocks (51.9 percent). And of all the stocks owned, the top 10 percent of American income earners own 92 percent of the total value of the stock market.

Is it any wonder that Americans are increasingly frustrated with their ability to accumulate enough savings to take care of themselves now and in retirement — if they are lucky enough to conceive of a real retirement? The Social Security system is doomed to run out of cash reserves in 2034, less than 15 years from today, unless some fundamental structural changes are made.

Bottom line: Economic prosperity is of limited value if it is not shared by all people. Companies that adopt Conscious Capitalism as an operating philosophy recognize and respect what an inclusive economic system looks like and how it can be a force for good in our society and for all stakeholders. For example, conscious companies maintain compensation policies that recognize that they bear some responsibility to the crisis of growing income inequality by raising the wages of their lowestpaid workers.

Seeking inclusive growth through Conscious Capitalism isn’t just a feelgood activity, it is a competitive advantage that any business would be wise to pursue. According to the book “Firms of Endearment: How World Class Companies Profit from Passion and Purpose,” research covering a 15year period showed that by following the principles of Conscious Capitalism, companies improved their cultures and outperformed their peers 141.

Consumers increasingly expect that the companies they do business with have a social mission and a higher purpose, while 86 percent of potential employees believe it is important that their employer be responsible to society and the environment. In the past three years, 85 percent of companies guided by a higher purpose showed positive growth, while 42 percent of non-purposeled companies showed a decrease in revenue. This gap is likely to grow even wider as more young people enter the job market.

It is increasingly clear that more and more purposedriven leaders and companies are tackling the world’s challenges and making the transformational changes that are needed to create new value that leaves our communities and the world better places.

While capitalism has had its share of bad actors, it has had an immeasurably positive impact on the lives of people around the world. By finding its soul through Conscious Capitalism, business can move all the world’s people forward.

Larry Bingaman is the president and CEO of the Regional Water Authority, and founder and chair of the Connecticut chapter of Conscious Capitalism, Inc., an international organization.

Dr. Fred McKinney is the Carlton Highsmith Chair for Innovation and Entrepreneurship and the director of the People’s United Center for Innovation and Entrepreneurship at Quinnipiac University.