Mindfulness: enabling a mindset for sustainable finance?
Financial firms are increasingly looking to mindfulness training as a way to improve staff well-being and performance. But could it have broader implications for the future of finance?
Sustainable investing “must go mainstream”, urged Mark Carney, Governor of the Bank of England, earlier this year.
Since then, the stream of claims about putting sustainability issues at the heart of finance continues. Christine Lagarde spoke last week about making climate change a “mission-critical” priority for the European Central Bank. At a conference on Ethical Finance in October, meanwhile, political and industry leaders repeatedly called for a new paradigm in finance, with Gary Gillespie, Chief Economist for the Scottish Government, calling for “a complete systems change” and “holistic thinking”.
The sentiment is fair enough, if the rhetoric is translated into concrete plans for action. But as well as details of the ‘what’, there is also the general question of ‘how’. In particular, we might ask: what are the psychological requirements that industry leaders and professionals need in order to realise the new paradigm that everyone is talking about?
I put this question to Dr Friedhelm Boschert, the former CEO of a co-operative banking group and an honorary professor at IMC Krems University in Austria, where he lectures on corporate social responsibility. Dr Boschert is also a certified meditation teacher with extensive experience in bringing mindfulness techniques to leaders and professionals in the financial sector.
The cultivation of human capacities of mind, Dr Boschert believes, will be crucial if we are to build a new financial sector that truly addresses sustainability issues from the inside out.
Why are financial institutions turning to mindfulness?
Mindfulness refers to our ability to pay attention to our present-moment experience in a gentle, non-judgmental way. Scientists consider it to be an inherent human capacity: we are all mindful, to some degree, but it is trainable. Teachers like Dr Boschert introduce it through simple meditation exercises, like sustaining your attention on the sensation of breathing, as well as through practical ways to apply mindfulness to everyday tasks, both at work and at home.
One reason it is becoming more popular within financial companies is that it helps individuals to focus better. Another is well-being. Mental illness is the largest cause of sick leave in the UK and extensive research seems to suggest that mindfulness programmes are effective in treating stress, anxiety and depression.
This is relevant, Dr Boschert tells me, for anyone working in a stressful environment – not just those suffering in a clinical sense.
Under stressful conditions, the release of substances like noradrenalin to the brain significantly affects the choices you go on to make, even if you think you’re making decisions in a more-or-less ‘objective’ way: “Evaluating different possible options gets more and more difficult and the ability to prioritise, especially, takes a massive hit,” he tells me. Clearly, this has substantial implications when it comes to the big money decisions that finance professionals make every day.
Can mindfulness support a “sustainability mindset”?
But Dr Boschert believes that the benefits of “mindful finance”, which he defines as “creating a container of mindfulness around financial matters”, extends much further than this. Mindful finance could also underpin a new mindset across the sector that supports the transition to a sustainable world.
Last year, Dr Boschert co-founded the Mindful Finance Institute, a not-for-profit which aims to contribute to such a paradigm change “from the inside out”, providing resources and information on mindful finance as well as establishing a community for those interested in this approach.
From my own reading of the scientific literature on mindfulness, and from speaking with Dr Boschert, I see three main ways in which mindfulness techniques could support such a change in paradigm.
The first is about promoting new ways of thinking. By practising mindfulness, you learn to regulate where you place your attention, and this, in turn, makes it easier to notice – and let go of – old patterns of thinking. For instance, mindfulness training has been associated with a reduction in the “sunk cost” bias (where one sticks to a particular course of action even in the light of new information that points towards switching course).
Several studies also associate it with creativity, such as the capacity for ‘lateral thinking’– the ability to solve problems in ways which require you to overcome your pre-held beliefs and habitual reactions.
By practising mindfulness, you learn to regulate where you place your attention
True, reducing cognitive rigidity need not lead to more sustainable outcomes. You might simply become more creative in pursuing short-term profit. But the findings are at least consistent with more mindful people experimenting with new ways of working, and potentially finding new business models entirely, in response to the generation-defining challenge of climate change.
The second angle is about “finance with purpose”. Increasingly, firms are moving away from a narrow focus solely on profit. By slowing down from the busy pace of the “doing” mind, simple mindfulness exercises are thought to help connect individuals to their values and intentions better. Mindfulness, per se, will not dictate what “higher purpose” one works towards. But it could help finance professionals – individuals, but also at the level of teams or organisations – to check in with what they care about most. That, in itself, could be helpful in the current context.
Finally, mindfulness may help in quietening the ego and fostering empathy.
In particular, studies associate it with the ability to see other people’s perspectives, to be open to there being different viewpoints. It has also been linked to what some psychologists term “integrated functioning”, in recognition of the various dimensions – attentional, cognitive, emotional – through which mindfulness is effective.
Each of these factors – new ways of thinking, connecting with a sense of purpose and quietening the ego – could, in theory at least, contribute to a mindset that supports sustainable finance.
In her review of the evidence, Professor Christine Wamsler of Lund University concludes that mindfulness could help in the transition to a more sustainable world, highlighting especially how mindfulness reduces our tendency to react in an automatic or impulsive way. Instead, one responds to events intentionally, open to the full range of options available.
Reflecting on the current state of finance, there is probably something to be said for reactivity to events, as a default mode of operating, being part of the problem. A Bank of England survey conducted last year, for instance, found that only 10% of financial firms have a forward-looking, strategic response to climate change, with over half of all companies admitting to being reactive to events.
The road ahead: a potential role for “mind training” in shaping finance?
Of course, to make a meaningful difference requires changes not just in attitude but in concrete action. A measure of caution is needed before proclaiming that mindfulness could deliver real change, especially systemic change. The initial findings on the links between mindfulness and sustainable behaviour are promising – mindfulness appears to support ethical decision-making and choices that do less harm to the environment for instance. But the scientific literature in this area remains in its early stages. More research and trials – especially focussed on financial contexts – are needed to ascertain exactly how mindfulness could change the business of finance.
Dr Boschert himself is clear that mindfulness is not a panacea. Getting the board members of all the largest banks to take a programme of mind training would probably not transform the way things are done, absent other initiatives for reform.
The basic point that we should consider the psychological capacities needed to underpin a holistic, forward-looking response to climate change is, however, a fair one.
Fundamental change requires us to engage not only with the ‘what’ but also the ‘how’ of finance. Here, mindfulness offers an interesting approach since it is experiential in nature, rather than being about absorbing new theories or facts. This represents a departure from the norm.
Time will tell whether mindful finance can play an important role. But for now, any approaches that might help industry professionals to see themselves as part of the system, rather than acting in silos, and embrace a more long-term perspective, are worth engaging with.
Dan Nixon, a former economist at the Bank of England, is a freelance writer on technology and sustainability. He leads research programmes for several NGOs, including Perspectiva the Mindfulness Initiative and the Mindful Finance Institute. His discussion paper on mindfulness and the 21st Century economy is available here.