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THE CONSCIOUS COMPANY
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To understand the movement, you’ve gotta
know the lingo. Whether you’re a seasoned
pro or new to the field, this A to Z guide
to the most important terms in conscious
business will help you keep it all straight.
CONSCIOUS COMPANY MAGAZINE | SEPTEMBER / OCTOBER 2017 11
CONSCIOUS COMPANY MAGAZINE | SEPTEMBER / OCTOBER 2017 13
BLENDED VALUE
A conceptual framework,
first introduced by impact
investor Jed Emerson,
which posits that it makes
no sense to think of the
economic or financial value
created by an organization
or an investment as sep-
arate from its social and
environmental value —
whether the investment or
organization is a nonprofit
or for-profit entity. See
also: Shared value, Triple
Bottom Line
BUSINESS
An economic system in
which organizations pro-
duce goods, offer services,
or sell existing goods in
exchange for money — ide-
ally creating value in the
process. That value is typi-
cally measured in financial
profit, though other met-
rics of value are increas-
ingly being considered,
including ones related to
human and environmental
wellbeing. The term also
refers to individual organi-
zations participating in the
economic system.
CAUSE
MARKETING
An increasingly popular
marketing technique in
which a brand aligns with
a nonprofit or social cause
to raise both money and
awareness around an
issue and to profit from
the “halo effect” of being
associated with said cause
or issue. See also: Cause
Washing
CAUSE WASHING
Inauthentic cause market-
ing, which occurs when a
company’s demonstrated
practices don’t match the
values it’s purporting to
uphold or support by align-
ing itself with a nonprofit
or social cause. Conscious
companies, by contrast,
integrate solving social
problems not just into their
marketing plans but also
into their full business
strategies and operations.
COALITION
An alliance formed be-
tween entities or groups,
especially for some tempo-
rary and specific reason.
Forming coalitions with
other groups that hold
similar values, interests,
and goals allows members
to combine their resources
and become more pow-
erful. Because conscious
companies often exist to
solve social problems larg-
er than themselves, they
sometimes band together
with other like-minded
organizations to accom-
plish goals such as advocat-
ing for policy changes. See
also: Collective Impact
COLLECTIVE
IMPACT
“Collective impact occurs
when organizations from
different sectors agree
to solve a specific social
problem using a common
agenda, aligning their
efforts, and using common
measures of success,”
according to fsg.org. Also
the name of a specific,
structured approach to
such a collaboration.
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It’s important now more than ever for businesses to
stand up for the change they want to see in the
world. No longer can a business stand on the side-
lines and hope elected o¢cials create change.
– Bryan Papé, CEO and founder, MiiR
““
BOTTOM OF THE PYRAMID
The largest but poorest
socio-economic group;
the 2.7 billion people
worldwide who live on
less than $2.50 a day.
Many social
entrepreneurs have
targeted the vast
untapped opportunity
to harness market
forces for good in
creating products and
services to reach this
underserved market.
The term was first
popularized by
management scholar
C.K. Prahalad
in his 2004 book
“The Fortune at the
Bottom of the
Pyramid.”
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CONSCIOUS COMPANY MAGAZINE | SEPTEMBER / OCTOBER 2017 15
CRADLE TO
GRAVE
The practice of taking
responsibility for disposing
of the goods one produces
once consumers are done
with them.
DELIBERATELY
DEVELOPMENTAL
ORGANIZATION
(DDO)
A term coined by Harvard
University researchers
Robert Kegan and Lisa
Laskow Lahey to describe
companies that do every-
thing within their power
to create conditions that
enable workers to over-
come their own internal
barriers to change, take
stock of and transcend
their own blind spots, and
see errors and weaknesses
as prime opportunities for
growth. According to the
pair’s research, deliberate-
ly developmental organi-
zations reap more profits,
have more satisfied and
functional teams, and are
more innovative than com-
panies that don’t take this
approach.
DIVERSITY
In business, this term
usually refers to a het-
erogenous mix of attri-
butes within a workforce,
including but not limited to
gender, race, age, back-
ground, and education.
Extensive research has
documented that increased
diversity drives innovation,
creativity, and adaptabil-
ity within a company. See
also: Belonging, Inclusion
ESG (ENVIRON-
MENTAL, SOCIAL,
AND GOVER-
NANCE)
Environmental sustain-
ability practices, social re-
sponsibility commitments,
and governance policies
are three factors socially
conscious investors use to
evaluate and screen invest-
ments for sustainability
and ethical impact. Grow-
ing evidence suggests that
companies with strong ESG
indicators may perform
better in the long term
and have superior business
models. See also: Socially
Responsible Investing
EMPLOYEE
ENGAGEMENT
An employee’s involvement
and satisfaction with and
commitment to work —
or, put another way, the
emotional connection a
worker has with their job.
Highly engaged employees
tend to outperform their
peers, and companies
that succeed in nurturing
high levels of engagement
throughout their workforce
enjoy numerous benefits,
including higher profitabili-
ty, better productivity, and
improved customer met-
rics. Conscious companies
tend to benefit from high
employee engagement.
EMPLOYEE
STOCK
OWNERSHIP
PLAN (ESOP)
A program that provides
employees with shares of
the company they work
for, usually through a
third-party trust, and
often at no upfront cost to
the employee. Unlike in a
cooperative, the employees
don’t directly own shares
and typically don’t gain
voting rights in the com-
pany. Employees typically
receive the cash value of
the shares in their account
when they leave the com-
pany. See also: Cooperative
CRADLE TO CRADLE
“A phrase invented by Walter R.
Stahel in the 1970s and popular-
ized by William McDonough and
Michael Braungart in their 2002
book of the same name. This
framework seeks to create pro-
duction techniques that are not
just efficient but are essentially
waste-free. In cradle-to-cradle
production, all material inputs
and outputs are seen either as
technical or biological nutri-
ents. Technical nutrients can be
recycled or reused with no loss
of quality and biological nutri-
ents composted or consumed,”
according to sustainabilitydictio-
nary.com. See also: Biomicmicry,
Regenerative Economy
The packaging on this chocolate is Cradle to Cradle Certi¦ed™.
WHAT // WHY // WHO // HOW
16 SEPTEMBER / OCTOBER 2017 | CONSCIOUS COMPANY MAGAZINE
EQUITY
CROWDFUNDING
A process of raising money
to fund a venture through
multiple small contribu-
tions from a large number
of people, with the back-
ers each receiving a share
of ownership in the com-
pany. This type of crowd-
funding became legal in
the US for non-accredited
investors in 2016.
EVERGREEN
BUSINESS
This term, coined by the
Tugboat Institute, de-
scribes a purpose-driven
company that plans to
remain privately owned,
focuses on long-term out-
comes, and avoids raising
capital that puts money
before mission. See also:
Small Giant
EXTERNALITY
A side effect or conse-
quence of business activity
that isn’t reflected in the
monetary cost of providing
related goods or services.
For example, nitrogen run-
off into local waterways is
a negative externality of
some livestock farming.
EXTRACTIVE
Tending to withdraw
resources with no pro-
vision for replenishing
them. Examples include
removing groundwater for
agricultural or manufac-
turing use at a faster rate
than that at which the
aquifer recharges, or not
allowing for adequate rest
when scheduling employee
work hours. The term can
apply to business models
or even whole economies,
and is a major element of
what conscious companies
seek to avoid.
FAIR TRADE
Any one of a number of
certifications that verify
that suppliers, especially
in developing countries,
receive above-market
rates for their goods (usu-
ally commodities) and that
those goods were produced
according to particular
environmental and social
standards. Two examples
of certifying bodies are
Fair Trade USA and Fair
Trade International.
FOR-BENEFIT
A term used to describe
organizations that gener-
ate earned income and/or
profits but primarily exist
to fulfill an explicit social
mission. See also: Fourth
Sector, Hybrid Organization
FOURTH SECTOR
A category of enterprise
at the intersection of the
public, private, and social
sectors that uses earned
income to maximize social
benefit. See also: For-
Benefit, Hybrid Organiza-
tion
GLOBAL
REPORTING
INITIATIVE (GRI)
An independent interna-
tional organization that
provides standards for
sustainability reporting,
encompassing both envi-
ronmental and social im-
pacts. As of 2017, almost
11,000 organizations used
these standards for their
reports.
GREEN BUSINESS
An informal term de-
scribing a company that
prioritizes environmen-
tal sustainability in its
practices and policies. See
also: Sustainable Business
HOLACRACY™
A peer-to-peer system of
organizational governance
created by former program-
mer Brian Robertson that
distributes authority and
decision-making through a
network of self-organizing
“circles.” Features of the
system, which is trade-
marked by HolacracyOne
LLC, include focusing on
roles as opposed to job
descriptions, distributed
authority, and transparent
rules. The approach gained
traction in 2013 when it
was adopted by Zappos
under CEO Tony Hseih.
HYBRID
ORGANIZATION
A business that operates
under a combination of
nonprofit and for-profit
principles, and often legal
structures, in order to
maximize the advantages
of both models — for ex-
ample, a nonprofit’s ability
to accept tax-exempt do-
nations and a for-profit’s
ability to accept invest-
ment in exchange for
equity. The nonprofit and
for-profit arms can relate
to each other in a variety
of ways; for example, a
nonprofit can own equity
in a related for-profit
subsidiary.
IMPACT
INVESTING
Placing capital into compa-
nies, organizations, or
funds with the intention
to harness the power of
Trade International.
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CONSCIOUS COMPANY MAGAZINE | SEPTEMBER / OCTOBER 2017 17
enterprise to generate pos-
itive social and environ-
mental results alongside
a financial return. The
Global Impact Investing
Network estimated that
the 2016 impact invest-
ing market included $114
billion of assets under
management.
INCLUSION
In the context of work-
place culture, inclusion
means harnessing the
power of diversity by
creating a welcoming
environment of connec-
tion, support, and respect
where people of different
backgrounds are able to
contribute at their fullest.
See also: Belonging,
Diversity
INCUBATOR
A program, often run by a
nonprofit, designed to help
foster success in startup
businesses by providing
entrepreneurs with re-
sources, connections, and
services. Many focus on
mission-driven business.
In contrast to an acceler-
ator, incubators often do
not have strict timeframes
and usually don’t take an
equity stake in a company.
See also: Accelerator
INTEGRATED
REPORTING
A method of communicat-
ing the value a business
creates that includes
both traditional financial
measures and information
about non-financial re-
sources such as human and
social capital and environ-
mental benefits.
INTRAPRENEUR
An individual who be-
haves like an entrepreneur
by taking initiative to
innovate, but from within
an existing organization.
While the subject of the
innovation can vary, the
term is often used to de-
scribe changemakers who
seek to drive a business
toward more conscious
practices.
L3C (LOW-
PROFIT LIMITED
LIABILITY
COMPANY)
A legal designation avail-
able in eight US states and
2 Native American tribes.
Unlike a standard LLC, an
L3C has an explicit charita-
ble mission, yet, unlike a
nonprofit, it can distribute
profits to its members or
owners. See also: Benefit
Corporation, Community
Interest Company, Social
Purpose Company
LIVING WAGE
A wage high enough
to maintain a normal
standard of living in the
residential area in which it
is earned. Paying a living
wage to all employees is a
common commitment of
conscious companies.
MISSION
STATEMENT
A statement that sets out
a business’s purpose and
what it means to achieve it
both now and in the future.
The term is sometimes
used interchangeably with
“purpose,” especially in
the context of describing
a business that prioritizes
achieving self-transcen-
dent goals. See also:
Mission-Driven Business,
Purpose Statement
MISSION-DRIVEN
BUSINESS
A for-profit enterprise
that incorporates a social
purpose into its strategy
and operations.
NEW ECONOMY
A term used within the
conscious and sustainable
business movements to
describe a future economic
system that works for all
people, including those
who have historically been
left out of economic pros-
perity, and which supports
regeneration of human and
natural systems.
NONPROFIT
Also known as “not-for-
profit,” these organiza-
tions conduct business for
the benefit of the general
public, and legally must
reinvest any profits beyond
normal operating expenses
into the cause or mission
they serve. The legal struc-
ture does not allow for pri-
vate owners or sharehold-
ers. Nonprofits are usually
exempt from income taxes
and able to accept tax-ex-
empt donations.
NATURAL
CAPITAL
The world’s stocks of
planetary assets —
such as water, sun,
soil, and air — from
which humans
derive the conditions
and processes
necessary to make
life and business
possible.
OPEN HIRING™
A human resources and
community development
technique pioneered by
New York-based Greyston
Bakery in which certain
job openings in the busi-
ness are offered to the
next person on a waiting
list with no background
checks or interview pro-
cess. The practice demon-
strates that with proper
support, many people who
would not be hired via a
traditional process can be
excellent employees.
OPEN-BOOK
MANAGEMENT
A management philosophy
in which a company shares
all its financial informa-
tion with all employees in
order to empower and en-
able them to make better
business decisions. This
level of trust and transpar-
ency can also enhance be-
longing and engagement.
ORGANIC
An agricultural certifica-
tion that attests that foods
are grown and processed
according to strict guide-
lines that prohibit the use
of synthetic fertilizers and
pesticides, antibiotics,
hormones, genetically
modified organisms, and
more.
PATIENT
CAPITAL
A financial investment
with no expectation of a
short-term profit. Invest-
ments that are aligned
with an organization’s
social or environmental
mission are often patient
with regards to financial
returns.
PRINCIPLES FOR
RESPONSIBLE IN-
VESTMENT (PRI)
A set of six voluntary,
aspirational investment
principles drafted in 2005
by investors in partnership
with the United Nations,
including, for example,
“we will seek appropriate
disclosure on ESG [envi-
ronmental, social, and
governance] issues by
the entities in which we
invest.” The principles
now have about 1,750
signatories representing
$70 trillion committed to
incorporating ESG issues
into investment practice.
WHAT // WHY // WHO // HOW
18 SEPTEMBER / OCTOBER 2017 | CONSCIOUS COMPANY MAGAZINE
Resilient people and
companies face reality
with staunchness, make
meaning of hardship
instead of crying out in
despair, and improvise
solutions from thin air.
Others do not.
— Diane Coutu, “How Resilience Works”
“
“
New York’s Greyston Bakery practices Open Hiring™.
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CONSCIOUS COMPANY MAGAZINE | SEPTEMBER / OCTOBER 2017 19
PURPOSE
STATEMENT
A statement made by a
person or organization about
why they exist, and about
the difference they seek to
make in the world. Research
suggests that both individ-
uals and businesses with a
strong, self-transcending
purpose are more likely to
thrive. See also: Mission
Statement, Vision Statement
RESILIENCE
The capacity to recover
quickly from difficulties.
Conscious companies tend to
favor mindsets and practices
that enhance resilience at
the individual, organization-
al, and societal levels.
RIGHT
LIVELIHOOD
An ancient idea, particular-
ly explicit in Buddhism as
part of the Eightfold Path
to enlightenment, that each
person should choose an
occupation that leaves the
world better than they found
it. While the term itself is
just starting to find its way
out of religious contexts,
there is strong evidence that
the Millennial generation in
particular tends to value the
ideals of right livelihood and
seeks meaning and purpose
through work.
SERVANT
LEADERSHIP
A philosophy for guiding a
group that involves flip-
ping the typical hierarchy
of “power at the top” and
instead focuses primarily on
the growth and wellbeing
of those being led. Servant
leaders put the needs of
others first and help people
develop as much and per-
form as highly as possible.
The term was first coined
by Robert K. Greenleaf in
a 1970 essay called “The
Servant Leader.” See also:
Authentic Leadership
SHARED
LEADERSHIP
Any of a number of manage-
ment philosophies and prac-
tices that broadly distribute
responsibility across an
empowered team. See also:
Holacracy
SHAREHOLDER
ADVOCACY
According to US law, any-
one who owns shares of a
company has the right to
influence its policies. At the
annual general meeting of a
company, every shareholder
is asked to vote on a range
of issues including electing
the board, approving CEO
pay, governance and policy
questions, and an array of
environmental and social is-
sues that shareholders have
raised. Shareholder advo-
cacy is the practice of using
that right to influence a cor-
poration’s behavior by filing
resolutions or otherwise re-
questing dialogue. In recent
years, shareholder advocacy
has proved to be an effective
technique for improving the
environmental, social, and
governance policies of major
corporations.
SHORT-TERMISM
Short-termism refers to an
excessive focus on short-
term results at the expense
of long-term interests. Many
conscious leaders are critical
of excessive short-term
focus by corporate leaders,
investors, and analysts
because of the belief that
this orientation can discour-
age long-term value creation
and investment.
SMALL GIANTS
A term coined by author
Bo Burlingham in his 2006
book by the same name.
He defines small giants as
“companies that choose to
be great instead of big” by
prioritizing mission and the
act of taking care of multiple
stakeholders over growth
for growth’s sake. See also:
Evergreen Business
SOCIAL CAPITAL
An economically valuable
network of relationships
between individuals and
entities. Social capital has
often been ignored, harmed,
or undervalued by traditional
business practices, and the
lack of it can be as much of a
barrier to economic prosper-
ity in disadvantaged popula-
tions as the lack of financial
capital.
SOCIAL
ENTREPRENEUR
A person tackling a broad
social or environmental goal
— often in an area such as
poverty alleviation, health
care, sustainable farming,
or protecting public lands —
by creating or operating a
startup or new organization.
While the organization could
be a nonprofit, it’s becom-
ing more common for social
entrepreneurs to aim for
impact by filling a market
demand that simultaneously
generates a positive return
to society. In many cases,
the altruistic mission of the
CORPORATE
ASSETS
SOCIAL
NEEDS
BUSINESS
OPPORTUNITIES
SHARED
VALUES
SHARED VALUE
A term coined by Mark
Kramer and Harvard
economist Michael Porter
to describe the idea of
maximizing the business
opportunity of solving
social problems.
See also: Blended Value
enterprise takes priority
over strong financial gain
or valuation, with revenue
as a fuel to sustain the
service being offered.
Some argue that the
greater agility to pivot
and reallocate resources
under the structure of a
for-profit business allows
for more freedom and
responsiveness compared
to nonprofit, grant-based
models.
SOCIAL
INNOVATION
“A novel solution to a
social problem that is
more effective, efficient,
sustainable, or just than
existing solutions and for
which the value creat-
ed accrues primarily to
society as a whole rather
than private individuals,”
according to Stanford
professors James A. Phills
Jr., Kriss Deiglmeier, and
Dale T. Miller.
SOCIAL
PURPOSE
CORPORATION
A legal category of
for-profit entity in Cali-
fornia, Florida, Texas, and
Washington that enables
— but does not require —
corporations to consider
social or environmental
issues in decision-making
instead of relying only on
profit-maximizing goals.
See also: Benefit Corpora-
tion, Community Interest
Company, L3C
SOCIALLY
RESPONSIBLE
INVESTMENT
(SRI)
Similar to impact invest-
ing, SRI involves placing
capital either in individual
companies or through
funds with an eye toward
the nature of the busi-
ness that the recipients
conduct. SRI tends to
imply having a practice
of screening out invest-
ments that have negative
effects, whereas impact
investing implies inten-
tionally fostering particu-
lar positive effects.
STAKEHOLDER
A person, group, or orga-
nization that has a direct
or indirect stake in an or-
ganization because it can
affect or be affected by
the organization’s actions,
objectives, and policies. A
key practice of conscious
companies is considering
and weighing the inter-
ests of all stakeholders
— including customers,
investors/shareholders,
employees, suppliers,
society, and the envi-
ronment — and seeking
win-for-all solutions when
making decisions. The
stakeholder theory of or-
ganizational management
was first popularized by
R. Edward Freeman with
his 1984 book “Strategic
Management: A Stake-
holder Approach.”
SUSTAINABLE
BUSINESS
A company that seeks
to meet the needs and
aspirations of the present
without compromising the
ability to meet those of
the future. While popular
perceptions of “sustain-
ability” tend to focus on
environmental concerns,
a broader definition of
“sustainable business”
also includes customer,
employee, and communi-
ty wellbeing along with
economic solvency for the
company in question. See
also: Conscious Company,
Green Business, Triple
Bottom Line
TRIPLE BOTTOM
LINE (3BL)
A business approach in
which companies track,
report, and value not just
the traditional financial
“bottom line,” but social
and environmental impact
as well. This point of view
acknowledges that a com-
pany’s long-term success
depends not merely on its
profit, but also on its in-
teraction with employees
and surrounding com-
munities and the natural
world. The concept is also
sometimes called “3P”:
people, planet, and profit.
WHAT // WHY // WHO // HOW
20 SEPTEMBER / OCTOBER 2017 | CONSCIOUS COMPANY MAGAZINE
SYSTEMS
THINKING
A management
discipline and way
of thinking that
focuses on seeing
the web of
interconnections
that create emerging
patterns among
parts of a network,
organization, or
other structure.
It’s a perspective
concerned with
how parts of a
whole interact
with each other in
complex, often
surprising ways.
The tools of
systems thinking
include causal loop diagrams, stock and flow diagrams,
and simulation models that can help map and explore
dynamic complexity. Thinking in systems is one of the skills of
conscious leadership and thinking about organizations within
systems is an important perspective for conscious business.
include causal loop diagrams, stock and flow diagrams,
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UPCYCLING
Reusing discarded materials or
waste objects to create a
valuable product.
VISION STATEMENT
A written declaration explain-
ing an organization’s desired
future. See also: Mission
statement
U.N. SUSTAINABLE
DEVELOPMENT
GOALS (SDGs)
These 17 global goals, estab-
lished by all 193 members of
the United Nations in 2015, lay
out a path to creating the world
we want for the wellbeing of
all by 2030, including ending
extreme poverty, fighting
inequality and injustice, and
protecting the planet. The
SDGs’ non-binding targets
provide a framework for all
kinds of organizations, includ-
ing businesses, to think about
and begin addressing the most
important challenges the world
faces.
WORKPLACE CULTURE
The norms, behaviors, and routines that add up to “how we do things around here” within a
workplace. Management expert Peter Drucker famously once said, “Culture eats strategy for
breakfast.” Research from Great Place to Work indicates that trust is the most important ele-
ment in creating a high-performing workplace culture. Culture is also one of the disciplines of
Conscious Capitalism, and generally an important element of creating a conscious and sustain-
able business.
CONSCIOUS COMPANY MAGAZINE | SEPTEMBER / OCTOBER 2017 21
Thanks to Rand Stagen of the Stagen Leadership Academy and Flip Brown of Business Culture Consultants for their help with this article.