It’s not just the financial planning industry that’s experiencing its moment of reckoning. Industries and professionals all around the world have already made varying degrees of progress along the pathway towards a new style of doing business, says Dr Attracta Lagan, chief executive of business ethics consulting firm Managing Values.
In fact, she says, Australian companies lag behind those in most other developed countries when it comes to exercising and harnessing the benefits of “conscious capitalism”.
Conscious capitalism is a recognition by business leaders that, with an understanding that business is the major institution in the world comes an accountability for companies’ social, environmental and economic impact.
In choosing to take the path of conscious capitalism, business leaders are deciding to change the goal of the system from “savage capitalism” to “profits with principal”, with the aim of creating a net positive for society, explained Lagan, who helped establish the St James Ethics Centre and was previously head of KPMG’s national sustainability and business ethics practice.
Throughout the hearings at the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry this year, there have been countless examples of leaders of the country’s largest financial institutions revealing practices designed with profit as the prime motivation, ahead of the interests of stakeholders and the broader interests of society.
Meanwhile, employees and customers are increasingly selecting companies they want to work for and do business with based on their ethical and social impact, Lagan explained.
“Most people come to work and they want to do a good job, they also want to align themselves with a bigger story,” she said. To do that, they need to have a purpose beyond profits that has a positive effect on society. Employees are going to look for those companies because they want to feel like they’re part of a solution in the world, rather than feeling like the organisations they’re working for are creating the problems in the first place.”
Australian companies are at an early stage in their journey towards conscious capitalism, a movement Lagan reckoned would continue to gain momentum here, propelled by events such as the royal commission.
Leaders of Australian companies are being dragged into this new reality kicking and screaming – with the a few exceptions, Lagan pointed out.
Qantas’s Alan Joyce speaking out on gay marriage, former AGL chief executive Andy Vesey speaking out on climate change and Atlassian founder Mike Cannon-Brookes speaking out on energy policy are examples of the conscious capitalism movement finding traction locally.
“Every business decision you make has an ethical dimension,” Lagan said. “Being human is also about being ethical and considering your impact on other people.”