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Conscious Capitalism: Building Businesses for Profit and Good

LASTING LEGACY COLUMN

by Jeanne Lee

Two friends in Brooklyn poured their hearts into an ice cream business and found a unique way to connect with women in need in Rwanda and Haiti. A Salt Lake City entrepreneur teamed up with llama farmers in South America to produce llama-fleece insulated jackets for first-world markets. When it comes to creating a legacy of good in the world, people traditionally look to nonprofit organizations.

CotopaxiBut a new generation of business leaders is showing that for-profit businesses—or hybrids of the two models—can effectively help solve humanity’s problems. The concept is called conscious capitalism, and it is rapidly gaining traction.

Consider the outsize growth of purpose-driven brands over the past decade. When Blake Mycoskie founded TOMS Shoes, he had the simple goal of selling 250 pairs of canvas shoes in order to donate 250 pairs to Argentinian children who had no shoes.

The idea resonated so profoundly with consumers that his company reached a $625 million valuation within eight years. It inspired more successful buy-one-give-one businesses, like Warby Parker, the eyeglass e-tailer that has raised more than $200 million from venture investors since 2010, and Bombas socks, which started in 2013 with the notion of doing something about the fact that socks are the most requested item at homeless shelters.

About two-thirds of global consumers say they’re willing to pay more for products that are sustainable, produced by socially conscious companies, or made from organic ingredients, according to a 2015 Nielsen study.

The term, “conscious capitalism,” coined by Nobel Peace Prize winner Muhammad Yunus, was popularized by Whole Foods Market cofounder John Mackey. In his book, Conscious Capitalism: Liberating the Heroic Spirit of Business, Mackey advocated doing business in a way that considers the interests of all stakeholders—employees, customers, and community—rather than just shareholders. He argued that earning high profits was the means by which Whole Foods would fulfill its mission of improving health through quality food. Many business owners have taken such ideas to heart.

Bringing Sweetness to Rwanda and Haiti

In 2007, Jennie Dundas and Alexis Gallivan opened an ice cream shop in the Boerum Hill neighborhood of Brooklyn. They named it Blue Marble to reflect their aspirations of caring for the planet through their business practices and products. Their store was outfitted with reclaimed wood and tables made from sorghum stalks. Their ingredients included certified organic cream, fair-trade sugar, and cacao from a small-farmer collective in the Dominican Republic. With biodegradable bowls and spoons, they sent out love in the form of high-quality ice cream.

The authenticity of Blue Marble’s message resonated with people from the neighborhood and beyond, and the business took off in ways they hadn’t imagined.

Odile Gakire Katese from Butare, Rwanda, happened to meet Dundas and was so enamored with Blue Marble that she asked for help to bring the concept back home. She felt such a business was needed to foster economic development and bring happiness to a place that was still in despair after the 1994 genocide.

In 2010, she and Blue Marble opened the first-ever ice cream shop in Butare, a town that had never tasted ice cream. It employed dozens of women and became a hub of the community—and was the subject of a 2014 documentary film, Sweet Dreams.

Following that success, Blue Marble’s nonprofit arm looked for more ways to invest in women-owned enterprises in areas recovering from conflict or natural disasters, “with the belief that these sweet, small enterprises can help revive both the spirit and the economy of a community,” according to the organization’s website. It developed a similar project in Port-au-Prince, Haiti.

Blue Marble now has three locations and distributes its ice cream through more than 40 retailers, including Gourmet Garage, Heinen’s, and Whole Foods. When customers indulge in a sweet treat, they’re primarily concerned with the taste, Dundas says. “However, I do strongly believe that for those who are aware of the social component of our business, it is an added bonus that makes people feel even better. The value-added ethical identification is the cherry on top.”

Apparel Startup Works to Alleviate Poverty

Whenever a customer purchases a Cotopaxi product—whether it’s a jacket, a backpack, or a sporty water bottle—it comes with a 61-year warranty. The odd number refers to the average person’s lifespan in the developing world. That’s about 18 years shorter than the average in the U.S. and is a reminder of the humanitarian work that the three-year-old outdoor apparel startup has committed to do.

Cotopaxi is named for a volcano in the mountains of Ecuador, where Founder and Chief Executive Officer Davis Smith spent time as a child. His experiences growing up in Latin America inspired him to contribute toward health care, education, and livelihood causes for those in need. With a group of friends, he formed Cotopaxi as a social company that celebrates adventure travel while using business to do good.

A signature product is the company’s Kusa hooded jacket, lined with llama fiber from the Bolivian Altiplano desert. The company says the hollow hairs trap warm air and are naturally insulating even when wet. By designing jackets that utilize it, Cotopaxi helps to create income for llama farmers who live a traditional lifestyle and would otherwise earn less than $100 a year.

Each year, the company donates 2 percent of its revenue to causes like girls’ education in India and malaria-preventing mosquito nets in sub-Saharan Africa. In Salt Lake City, Cotopaxi heads up a computer science training program for refugees. Volunteers teach computer literacy and coding to people from Bhutan, Congo, and elsewhere to help them find jobs and settle into the community.

“We believe businesses should be a force for good and not have a social mission for the sole purpose of increasing sales,” says Stephan Jacob, co-founder and chief operating officer at Cotopaxi. “Cotopaxi’s social mission and ‘Gear For Good’ message is so core to the business that it’s impossible to know how sales and growth would be without it.”

Recognition

CAPTRUST Tops Latest List of DC Aggregator Firms

CAPTRUST has acquired 28 advisor practices in 12 years. In the latest InvestmentNews list of aggregator firms, CAPTRUST ranks as the largest of firms active in this space, with $221 billion of defined contribution (DC) plan assets under advisement and 95 DC-focused advisors.

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