There is a global movement in business that is called by many names. Conscious business, social entrepreneurship, benefit (“B”) corporations, teal organizations, and even the trade name, “Conscious Capitalism” are on a spectrum that recognizes that businesses can be responsible, that they can create benefits for people, planet, and profit. The movement of “impact investors” now include some of the world’s largest funds where ESG, Environmental, Social, and Governance, non-financial factors are part of the analysis process for financial risk and growth opportunities.
The old ways of doing business were designed for businesses that didn’t care about their impact, where profit was their only motive. Those old ways were not sustainable and recent research has shown that, even when profit is the primary motive, purposeful, values-based approaches lead to more desirable results – more profit, better employee retention, better reputation, and a sense that doing business with that company feels good!
As businesses shift, so too must the legal tools and structures. Law is designed to change slowly, recognizing the value of stability and predictability in our planning processes. But a foundational principle that tracks back in common law for hundreds of years is the freedom to contract. That is, that parties can enter agreements with each other without government oversight. (Government has created exceptions to this. You can’t enter a contract that is unconscionable, that is so unfair that it is unethical. You can’t violate minimum wage requirements or circumvent immigration laws. But, mostly people can enter contracts without going to court for approval.)
The Conscious Contracts® model is one example of the evolution of law to reflect new perspectives. It shifts the paradigm of contracting by starting with what matters: why the parties are entering the agreement, what they want to create in the world together, and how they are going to treat each other. With those essential elements distinguished, they can then discuss the nuts and bolts.