FEI (Financial Executives International) and the Minnesota Chapter of NACD (National Association of Corporate Directors) hosted a panel discussion on Conscious Capitalism earlier this month. The panelists were Brad Anderson, former CEO and Vice Chair of BestBuy, Stephen Young, Global Executive Director of the Caux Roundtable and Christopher Michaelson PhD, Associate Professor of Ethics and Business Law at the University of St. Thomas.  The panel was moderated by Neal St. Anthony, business columnist and reporter for the Star Tribune.

The idea for this program began over a year ago at the 2013 NACD Annual leadership conference. Raj Sisodia was one of the keynote speakers. He discussed the book he co-authored with John Mackey, “Liberating the Heroic Spirit of Business: Conscious Capitalism”. He started his speech by highlighting the positives of capitalism; “No human creation has had a greater positive impact on more people more rapidly than free-enterprise capitalism. Capitalism is unquestionably the greatest system for innovation and social cooperation that has ever existed. In the past 200 years, business and capitalism have transformed the face of the planet and improved the complexion of daily life for the vast majority of people, allowing us to lead more vibrant and fulfilling lives.”

The panelists addressed the idea that companies are about more than making a profit. The benefits of capitalism extend far beyond the walls of individual businesses into the lives of the entire population. After centuries in which the vast majority of human beings lived on less than a dollar a day in today’s terms, worldwide per capita incomes have increased nearly fifteen-fold in constant dollars. Today, about 16% of the world’s population lives on less than a dollar a day. Adjusting for quality and affordability, it is estimated that the average American is 100 times better off today than 200 years ago.

The proponents of conscious capitalism hold these truths to be self-evident: business is good because it creates value, it is ethical because it is based on voluntary exchange, it is noble because it can elevate our existence and it is heroic because it lifts people out of poverty and creates prosperity. Free enterprise capitalism is the most powerful system for social cooperation and human progress ever conceived. It is one of the most compelling ideas we humans have ever had.

But in spite of all this change, capitalism is coming under fire.  Capitalism is now often synonymous with greed and power.  This change in attitude is at the root of the conscious capitalism movement. Clearly capitalism has gotten a bad rap lately. To quote Bill George, the former CEO of Medtronic and now a business professor at Harvard: “As a committed capitalist, I worry a great deal to see how capitalism has gone off the rails the past quarter century and acquired such a bad name, much of it deserved. We know that leadership matters. We need to be conscious leaders. With the enormous loss in confidence of our leaders in the past decade, developing conscious leaders is the best way to rebuild trust in our leaders and in capitalism.”

So what is conscious capitalism and why should we as directors and financial executives care? Conscious Capitalism is not about being virtuous or doing well by doing good. Rather, it is a way of thinking about business that is more conscious of its higher purpose, its impacts on the world, and the relationships business has with its various stakeholders. Conscious capitalism reflects a deeper consciousness about why businesses exist and how business can create more value.

As board members and corporate executives we recognize that every stakeholder is important, and that the business must seek to optimize value creation for all of them. You cannot have a conscious business without conscious leadership. We need to motivate the leaders around us to create value for all the stakeholders. The culture of a conscious business ensures that its purpose and core values endure over time ultimately creating value for all stakeholders.

With the theme of conscious capitalism as a backdrop, the panelists addressed the following themes:

1. The theme of creating shared value for business and society is gaining currency among capitalists.  What practical advice do you have for leaders seeking to create share value?
2. What elements are required to build a conscious capital enterprise?
3. What are the duties to shareholders and stakeholders in conscious capitalism?
4. Can you make a purely financial return on investment argument for conscious capitalism?

The takeaway from the panel discussion is the importance of having a conversation in the board room on how director’s duties intersect with conscious capitalism.