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Rob Lake: Help build the sustainable organisations we need!

Part 1 of a 2-part piece looking at the leadership, values, cultures and relationships that will help create the responsible companies of the future.

Be part of the debate! We are holding a breakout session on Purpose, Values, Leadership and Culture at the RI Europe conference in London on 11 June, 2019. To play your part in shaping that session, complete a short, anonymous survey on your own experiences in your organisation on the issues explored in this article. We will discuss the results of the survey at the conference. Click here to take the survey. It will take no more than fifteen minutes.

What’s the problem?
Sustainable investment and finance are making rapid progress. We know what kinds of investment beliefs, policies and processes we need to make investment and finance sustainable and responsive to the real needs of clients, society and the planet. We know how many trillions of dollars, pounds, euros, renminbi and yen need to be shifted from ‘brown’ to ‘green’. We know what investors should be asking companies and policymakers to do. We have – or we will soon have, in some parts of the world – taxonomies and definitions, regulations and requirements.
Yet amid all this activity we have devoted little attention to a crucial part of the system – the internal workings of the organisations that are conducting the activity that we need to deliver more of, and faster. We have looked at the hardware of structures, policies and processes. But hardly at all at the ‘software’ of styles of leadership: values, internal cultures, and the quality of relationships among the people in organisations.
Policies, organisational processes and investment decisions are visible in the ‘outside world’, and we think of them as being products of the rational mind. Yet they are strongly influenced by the ‘inside world’ of our values, emotions, memories of life experiences, and assumptions and beliefs that we may not even consciously realise we hold. This is the reality of being human. And since organisations are collections of human beings, this interplay between the rational and the ‘other than rational’ – between the head and the heart – is at the very core of what organisations are all about.
What characteristics might we therefore want investmentorganisations to display if our objective is that they should provide the most fertile possible soil for sustainability and responsibility? And if as an essential part of this – and as an equally important objective – we want them to be humane workplaces that allow people to flourish and grow?This two-part article is a relatively informal attempt to explore this territory in the hope that it will add a new dimension to the discussion about how to achieve a sustainable financial system.
What works?
Looking at organisations that have made the greatest progress towards fully embracing sustainability, I think we can observe three interlinked characteristics that they have in common:

  • a strong and clear sense of purpose and values that extends beyond maximising profit, shareholder value or investment returns and embraces true service to clients and society
  • innovation and learning – because fully incorporating sustainability into investment decisions and devising ways to finance the Sustainable Development Goals requires both of these in large amounts
  • engagement and commitment by employees – because the scale of the challenges we face requires every ounce of energy and passion we can all muster.

What do we know about each of these characteristics: why they matter to organisations and how they can be generated?
Purpose and values.
‘Purpose’ has become such a buzzword that reading it might cause you to groan. Yet it has become so widespread in part because, in the words of Professors Dan Cable and Freek Vermeulen of London Business School, ‘research repeatedly shows that people deliver their best effort and ideas when they feel they are part of something larger than the pursuit of a paycheck’.
That sense of ‘something larger’ cannot just come from speeches by the person at the top of the organisation.
A real sense of purpose is felt emotionally, not just intellectually. People who experience direct contact with customers and others who benefit from their work are more strongly motivated than those who are simply told by their superiors what the purpose of that work is. Moreover, a sense of contributing to sustainability and society also helps to meet fundamental psychological needs for safety, security, and relatedness with others.
Doing good makes you feel better!
We are often told, or we come to believe, that our personal values are not welcome in the workplace. A friend at a leading investment organisation who told her manager that one of her overarching goals in her work was ‘to make the world a better place’ was told firmly that she should ‘go and do that before 9.00 am and after 5.00 pm’. However, given the challenges the investment industry faces to demonstrate real service and environmental sensitivity, these values should be seen as assets rather than taboos.
We all hold a range of values, from the selfish to the selfless. The situations in which we find ourselves and the stimuli to which we are exposed bring different combinations of our values to the fore. Financial incentives and messages that money and material rewards are the main priorities, or the only ones, direct our attention more towards self-interest than concern for others. If the messages we receive at work about what is important stress a purpose beyond organisational and personal self-interest, our more selfless values will be activated.
Innovation and learning
To meet the challenges of sustainable investment we need very large amounts of innovation and learning. Learning, for example, about how sustainability issues affect companies and markets, or how to measure the impact of investments in relation to the SDGs. Innovation in (among other things) investment structures, company engagement, client communication and relationships,stakeholder dialogue. Crucially, this learning has to be about changing the organisation’s identity – its sense of who it is and what it’s for: its purpose. Doing the existing job better – just generating returns for beneficiaries or clients, or delivering profit to shareholders and financial rewards to employees – is not enough. Organisations have to learn how to do a different job – how to change their identity. As the organisational consultant John Atkinson puts it, ’this is a qualitative change in how people are in relationship with each other, how they decide what matters, how they respond to new information and new people’. Change like this does not happen overnight. It is a long process – as we are seeing with sustainable finance.
Among the critical building blocks of a learning organisation are:

  • psychological safety: confidence that if we speak up with new ideas, we will be listened to and taken seriously, not dismissed and belittled
  • recognition of the value of diverse perspectives and worldviews
  • leaders who actively question and listen to employees, signalling that they do not have all the answers and that everyone matters
  • systematic knowledge sharing – e.g. via efficient cross-functional responsible investment teams with a clear understanding of their purpose
  • a clear focus on the development and growth of employees at all levels.

In part 2 of this article, we’ll look at what a sustainable organisation and leaders might look like based on these building blocks.

Be part of the debate! We are holding a breakout session on Purpose, Values, Leadership and Culture at the RI Europe conference in London on 11 June, 2019. To play your part in shaping that session, complete a short, anonymous survey on your own experiences in your organisation on the issues explored in this article. We will discuss the results of the survey at the conference. Click here to take the survey. It will take no more than fifteen minutes.