What Does Socially Conscious Mean?

To be socially conscious means being deeply aware of the people around you in society – how you impact them and how they impact you. Being socially conscious can make you feel empathy for others and therefore mindful of how your actions impact them. To help make this definition clearer, the opposite of being socially conscious is being narrow-mindedly selfish, or thinking that you alone are important while those around you are not – so you don’t care how your actions impact others. Individuals, groups of people, and even companies can exhibit socially conscious behavior.

Understanding Social Consciousness

Social consciousness is a common theme across religions and cultures. It is closely related to the “Golden Rule” - the moral idea of treating others as you’d like to be treated. So a simpler way to think about being socially conscious is to just be a good person. Be good to others. Don’t treat others poorly.

For example, holding the door open for someone walking in just behind you is a simple example of a socially conscious act. It shows that you were aware of the person near you and chose to help them out. Volunteering for your local soup kitchen is another example of behavior that demonstrates an awareness of and caring for others. These are not the examples of socially conscious behavior that people might typically think of, but they help demonstrate how broad the concept of social consciousness is.

The classic behaviors of advocating for social or environmental causes would, of course, also fall under the category socially conscious actions. Working to make people aware of and stop pollution is an example of socially aware behavior. So is trying to reduce the incidence of workplace injuries in a certain industry.

Socially Conscious Companies

Whether an organization is a purely for-profit company, or a benefit corporation, it can demonstrate socially conscious behavior at the company level. There are many different ways companies can do this. They can pay their employees well and treat them fairly, rather than taking advantage of them or discriminating against them. Companies can create inexpensive products that delight their customers, rather than selling toxic or misleading products. They can provide some valuable service to society for free, rather than polluting the air that people breathe. Companies can also treat their investors well by making a profit for them, rather than defrauding them.

So if you want to know whether a company is socially conscious or not, the key question you can ask is: how is the company treating the people that it is interacting with? Is the company treating them well, or poorly? A socially conscious, or good, company treats people well. A company that is doing the opposite could be considered, in some important sense, evil, as it is, on the whole, causing people to suffer.

Traditional corporations are at a bit of a disadvantage when it comes to being socially conscious because their corporate charters typically mandate that they care only about one class of people: investors. This legally leaves customers, employees, and society out in the cold to some extent. However, benefit corporations do not suffer from this limitation – they are legally allowed to take into account positive benefits to humanity beyond the company’s impact on investors when making decisions. Companies that are organized as benefit corporations are therefore better positioned to treat people well.

Socially Conscious Investing

Socially conscious investing has grown in popularity recently. It has taken on many different names: ESG investing, socially responsible investing, sustainable investing, ethical investing, etc. All of these names basically point toward the same concept: to try and invest in companies that are doing good things for people, and use the power that investors have to push companies to further improve how they treat people. This kind of investing can appeal to people who want their social awareness reflected not only in their day-to-day decisions – being kind to others, volunteering, etc. – but in their investment decisions as well. It is also a potentially powerful way to make a positive impact.

Given that companies are formally responsible to their shareholders, it is investors who legally hold the ultimate power to choose a company’s course of action. Even more crucially, investors determine whether a company can secure funding for its operations at all. By investing in a socially conscious way, you could help push companies to make decisions that will improve the way that they treat their customers, employees, and society at large. It is important to note that an individual investor on their own may not be able to move the needle on this much. But by banding together with other like-minded investors you could be a part of a movement in the investing world that has the potential to make a big difference in how companies impact humanity.

Social Consciousness As Enlightened Self-Interest

A common concern with being socially conscious is that it must come at a personal cost. But this is not always the case. In fact, quite the opposite can be true. Individual members of a community that has a strong social consciousness can each be better off than individuals who are part of a community where one is lacking.

For example, consider a hypothetical community of people who live near a large lake who depend on fishing there for their livelihood. Every day, each fisherman simply catches as many fish as they want from the lake. This works fine for a while. However, eventually, each individual fisherman, following their own narrow self-interest, keeps working to catch as many fish as they can to sell elsewhere and one year they catch so many fish there aren’t enough fish left in the lake to reproduce and replenish the lake’s fish population. The fishing industry in that community collapses. Poverty sets in.

In a socially conscious fishing community, there could be agreed upon limits on how many fish each fisherman could catch, or protected areas of the lake where fishing was not allowed. Rules like these take into account the impact of each individual’s fishing on the community as a whole. While these rules may feel limiting to some individual fisherman, they help preserve the population of fish in the lake so that it will be able to replenish itself for the benefit of the community, including each fisherman. Individuals in this kind of community are better off, even the ones who chafe a bit at the rules, because the community can continue to flourish instead of implode.

The Enlightened Self-Interest of Socially Conscious Investing

A similar kind of logic underlies investing in a socially conscious way. Making money in your investment portfolio is a great thing, but it’s less great if the company that you’re investing in is turning around and hurting you or your loved ones outside of your portfolio. Coming back to the example of the fishing community, let’s say you lived in that community and invested in a fishing company that caught fish in that lake, but the fishing company also polluted the lake until it was unfit for the town to use as drinking water. The fishing company might help you make $100 as an investor, but you would be worse off as a member of the community if you got sick just from drinking from the tap in your house and needed to pay $1,000 in medical payments as a result. This is a little bit like the company putting money in your right pocket while robbing you from your left. Investing in a socially conscious way on the other hand would try to avoid these negative impacts outside of your portfolio, working to create the best outcome for you not just as an investor, but as a person.

It can be hard to connect these dots on how investing in certain companies can come back to harm you or help you in other areas of your life. That is why it is important to assess how a company is treating people, and the relative impact of all the company’s actions on humanity at large. There is a concept called Humankind Value which is meant to capture the full economic value that a company is providing to humanity. It’s a kind of socially conscious measure of economic value. Investing in companies with high Humankind Values could in theory help investors not just inside their portfolio, but also as human beings living in society, or as customers and employees of these companies. But doing this kind of research can be a full-time job. In fact, at Humankind Investments, it is. If you’re interested in learning more about ethical investing, or want to take the next step to actually invest in a socially conscious way, check us out!

________________________________________________________________________________________

A company’s Humankind Value is an estimate of how much value the company creates for humankind, is published annually, and is current as of April 29, 2022. It is based on a quantitative analysis that calculates the comprehensive economic value of a company based not only upon its financial performance metrics but also on the costs and benefits to society from conducting its business. This calculation also attempts to take into account the Humankind Value of the company’s critical supply chain partners. The components of the calculation include: (i) Investor Value, which is the estimated value to investors on the basis of multi-year profitability; (ii) Consumer Value, which is the estimated value to customers based on the offering of a product or service; (iii) Employee Value, which is the estimated value to employees based on their salaries, bonuses and benefits; and (iv) Societal Value, which is the estimated unaccounted costs and benefits to society from the operation of the company’s business.

Humankind Investments calculates a single dollar value of a company’s Humankind Value, which is intended to capture the aggregate worth of a company based upon its economic impact on humanity, defined as investors, customers, employees, and society at large. It’s important to understand that this single dollar value of Humankind Value for a company is not a precise measurement of the economic impact that companies have on humanity – rather, it represents a best faith estimate based on our internal model of how these companies behave and what the estimated impact on humanity of their behavior is. In other words, we’ve created a simplified mathematical representation of the real world, and are using that to derive this single dollar value for a company.