As the recent Tomorrow’s Company report “Tomorrow’s Innovation, Risk and Governance” highlights, creating an effective organisational culture is an essential part of building successful and sustainable organisations in the finance sector and elsewhere.
So following my post on the Archbishop of Canterbury’s speech, I was fascinated by this contribution from Cognitive Policy Works on the role of fun (aka motivational psychology) in “saving the world”.
OK, so maybe fun isn’t quite the right term – but what we do need today is more focus on values and culture in the finance sector – and fun isn’t a bad place to start!
Showing posts with label Cultural / social norms. Show all posts
Showing posts with label Cultural / social norms. Show all posts
Wednesday, October 21, 2009
Monday, October 19, 2009
Archbishop highlights a shared cultural crisis
Creating a more responsible finance sector requires rebuilding its connection to the wider world and rediscovering a sense of both responsibility for the future of the natural world and joy in making a positive contribution. Or at least that was my conclusion after reading a powerful speech by the Archbishop of Canterbury on climate change delivered last week.
The Archbishop talks about a shared cultural crisis that “could be summed up rather dramatically by saying that it’s a loss of a sense of what life is … a web of interactions, mutual givings and receivings”. He talks about “our calling to nourish” life and secure “a future for all living things”.
He says “a good deal of the talk and activity around the financial collapse has the marks of .. ‘displacement activity’ – precisely because it fails to see where the roots of the problem lie; in our amnesia about the human calling” and “whatever we do to combat the nightmare possibilities of wholesale environmental catastrophe has to be grounded not primarily in the scramble for survival but in the hope of human happiness”.
Even if – like me - you don’t share his religious lens, the speech contains valuable and inspiring insights. Many thanks to UKSIF Vice Chair Helen Wildsmith for pointing me to it.
The Archbishop talks about a shared cultural crisis that “could be summed up rather dramatically by saying that it’s a loss of a sense of what life is … a web of interactions, mutual givings and receivings”. He talks about “our calling to nourish” life and secure “a future for all living things”.
He says “a good deal of the talk and activity around the financial collapse has the marks of .. ‘displacement activity’ – precisely because it fails to see where the roots of the problem lie; in our amnesia about the human calling” and “whatever we do to combat the nightmare possibilities of wholesale environmental catastrophe has to be grounded not primarily in the scramble for survival but in the hope of human happiness”.
Even if – like me - you don’t share his religious lens, the speech contains valuable and inspiring insights. Many thanks to UKSIF Vice Chair Helen Wildsmith for pointing me to it.
Thursday, July 16, 2009
From Crisis to Recovery: Reshaping Capital Markets
I have contributed a chapter on sustainable capital markets to a new Green Alliance pamphlet “From crisis to recovery: New economic policies for a low carbon future".
In it, I describe our policy recommendations to tackle the underlying issues that drive today’s dysfunctional investment approaches. We think this needs not just better regulation but also improvements to leadership, cultural norms and external scrutiny.
Specific proposals include:
In it, I describe our policy recommendations to tackle the underlying issues that drive today’s dysfunctional investment approaches. We think this needs not just better regulation but also improvements to leadership, cultural norms and external scrutiny.
Specific proposals include:
- Pension funds and other major investment owners should be required to report on how they implement their sustainable investment policies
- Publicly owned investment holders should be required to be responsible owners and report annually on their progress
- Greater transparency should be demanded of both companies and institutional investors
- The objectives of financial regulators should enable them to take greater account of the wider public interest, including sustainable development.
It would be great to have your comments on these suggestions and the rest of the chapter.
Tuesday, April 28, 2009
Beyond regulation: PIRC and Aviva Investors on ownership and capital market reform
I am more and more convinced that apparently robust interventions like improved regulation will deliver effective ownership and sustainable capital markets only if there is associated cultural change. This is not an argument against regulation – but it is an argument against regulation alone.
It is good to see a range of proposals now coming forward on responsible ownership and capital market reform – but one test is how they will change cultures and norms so that new behaviours are “what we believe in doing around here” rather than “what our compliance department says we have to be seen to do”.
Anita Skipper, Corporate Governance Director at Aviva Investors and Alan MacDougall and his colleagues at PIRC have both just published thoughtful contributions to the debate.
Introducing PIRC’s “Manifesto for corporate governance and capital market reform”, Alan says “Too many institutions fail to take their ownership responsibilities seriously, therefore post-crisis reform must consider their role too. There can be no return to business as usual.” The manifesto aims to “stimulate debate and spark further ideas, but most importantly to begin the process of pulling together ... radical but realistic policy reforms”. PIRC is seeking comments on its suggestions.
Anita’s piece “Corporate governance and the economic crisis: what can shareholders do differently?” appears in Aviva Investors’ The Investors Journal (Volume 3). (NB. To get access, just click either “I am a private investor” or a more appropriate category.)
She highlights barriers to good governance including “Lack of client interest”, “Human behaviour” and “Managing conflicts of interest”. Her solutions include “More client focus on governance” and “Focus on culture”.
Importantly, she says “With the right corporate culture in place, companies, boards and fund managers are more likely to make the “right” decisions, irrespective of any weaknesses of accountability, regulation, accounting standards and conflicts of interest.”
It is good to see a range of proposals now coming forward on responsible ownership and capital market reform – but one test is how they will change cultures and norms so that new behaviours are “what we believe in doing around here” rather than “what our compliance department says we have to be seen to do”.
Anita Skipper, Corporate Governance Director at Aviva Investors and Alan MacDougall and his colleagues at PIRC have both just published thoughtful contributions to the debate.
Introducing PIRC’s “Manifesto for corporate governance and capital market reform”, Alan says “Too many institutions fail to take their ownership responsibilities seriously, therefore post-crisis reform must consider their role too. There can be no return to business as usual.” The manifesto aims to “stimulate debate and spark further ideas, but most importantly to begin the process of pulling together ... radical but realistic policy reforms”. PIRC is seeking comments on its suggestions.
Anita’s piece “Corporate governance and the economic crisis: what can shareholders do differently?” appears in Aviva Investors’ The Investors Journal (Volume 3). (NB. To get access, just click either “I am a private investor” or a more appropriate category.)
She highlights barriers to good governance including “Lack of client interest”, “Human behaviour” and “Managing conflicts of interest”. Her solutions include “More client focus on governance” and “Focus on culture”.
Importantly, she says “With the right corporate culture in place, companies, boards and fund managers are more likely to make the “right” decisions, irrespective of any weaknesses of accountability, regulation, accounting standards and conflicts of interest.”
Sunday, April 26, 2009
Do the multiplying plans address the challenge?
We’re seeing a lot of new plans at the moment, from Nick Stern’s new book to the CBI’s roadmap to a low-carbon economy.
An easy way to start checking whether these reflect our need to "shift our cultural assumptions to fit our circumstances and move into a more fulfilling, lower-energy world" is to keep the Transition Timeline scenarios in mind. These scenarios look at what might happen if we DO recognise the science of climate change, but DON’T change our culture, and the economic and other institutions that reflect it (Hitting the Wall) and vice versa (The Impossible Dream).
An easy way to start checking whether these reflect our need to "shift our cultural assumptions to fit our circumstances and move into a more fulfilling, lower-energy world" is to keep the Transition Timeline scenarios in mind. These scenarios look at what might happen if we DO recognise the science of climate change, but DON’T change our culture, and the economic and other institutions that reflect it (Hitting the Wall) and vice versa (The Impossible Dream).
Thursday, April 16, 2009
Values are back...
...and don’t just take my word for it.
Stephen Haddrill of the ABI highlighted this to investors.
An appeal to values is heard in the wider debates about the crisis and the way forward. Prime Ministers Brown and Rudd debated, in the words of the former, ‘a world of shared global rules founded on shared global values’ on the eve of the London Summit.
The disjuncture caused by the current crisis has forced many to reflect critically on the values which underpin the system and form the basis of trust.
Values clearly matter – our judgements and decisions on how to act and live are based on them. Our economic and social systems require them as a foundation stone for building trust and confidence.
These themes are discussed in an excellent piece by Amartya Sen, ‘Capitalism Beyond the Crisis’ in which he challenges the proponents of a ‘New Capitalism’ such as Sarkozy and demands a new understanding of older ideas. He invokes the work of Adam Smith to explain how the crisis is partly generated by an overestimation of the wisdom of market processes and exacerbated by anxiety and lack of trust (see also ‘Adam Smith’s market never stood alone’).
I am hopeful that we can, in Sen’s words, ‘go beyond short-term solutions and contribute to producing a more decent economic world’ with greater regard given to the long term social and environmental impacts of our action.
Stephen Haddrill of the ABI highlighted this to investors.
An appeal to values is heard in the wider debates about the crisis and the way forward. Prime Ministers Brown and Rudd debated, in the words of the former, ‘a world of shared global rules founded on shared global values’ on the eve of the London Summit.
The disjuncture caused by the current crisis has forced many to reflect critically on the values which underpin the system and form the basis of trust.
Values clearly matter – our judgements and decisions on how to act and live are based on them. Our economic and social systems require them as a foundation stone for building trust and confidence.
These themes are discussed in an excellent piece by Amartya Sen, ‘Capitalism Beyond the Crisis’ in which he challenges the proponents of a ‘New Capitalism’ such as Sarkozy and demands a new understanding of older ideas. He invokes the work of Adam Smith to explain how the crisis is partly generated by an overestimation of the wisdom of market processes and exacerbated by anxiety and lack of trust (see also ‘Adam Smith’s market never stood alone’).
I am hopeful that we can, in Sen’s words, ‘go beyond short-term solutions and contribute to producing a more decent economic world’ with greater regard given to the long term social and environmental impacts of our action.
Wednesday, April 8, 2009
Has Turner reclaimed “bravery” from Sir Humphrey?
I spot one achievement from the Turner Review already. It may have legitimised “bravery”.
The 1980s comedy “Yes, Minister” embedded the terms “brave” and “courageous” deep in the British psyche as synonyms for “politically suicidal”. But now, some twenty five years after Jim Hacker and Sir Humphrey left their Ministry for Administrative Affairs, this could be changing.
Such is the FSA’s language shaping power that not only are we now all considering “outcomes-focused regulation” but also the need for genuine bravery.
The Turner Review Discussion Paper says that “The new model of supervision … requires a ‘braver’ approach to decision-making by supervisors” (ie. by regulator employees) and the FSA aims to have a culture that “attracts and retains quality people who act in a ‘brave’ and ‘decisive’ manner”.
Talking to others in pensions and investment recently, I get the impression that this is having an impact. With this FSA support, suddenly bravery has become a more respectable characteristic.
Many would say that - with notable exceptions - bravery has not traditionally been a strong feature of the culture of pension fund trustees and managers. But, as Hugh Wheelan’s recent Responsible Investor article highlights, trustees like the PRI’s Chair Donald MacDonald have stepped forward to share responsibility for the crisis with a notable demonstration of what we might call the “new bravery”.
I look forward to “bravery” becoming a core competency within City job specifications. It is part of the answer to one of today’s key challenges: “How do you regulate for character not for compliance?” After all, as FSA Chief Executive Hector Sants said recently “a principles-based approach does not work with individuals who have no principles”.
The 1980s comedy “Yes, Minister” embedded the terms “brave” and “courageous” deep in the British psyche as synonyms for “politically suicidal”. But now, some twenty five years after Jim Hacker and Sir Humphrey left their Ministry for Administrative Affairs, this could be changing.
Such is the FSA’s language shaping power that not only are we now all considering “outcomes-focused regulation” but also the need for genuine bravery.
The Turner Review Discussion Paper says that “The new model of supervision … requires a ‘braver’ approach to decision-making by supervisors” (ie. by regulator employees) and the FSA aims to have a culture that “attracts and retains quality people who act in a ‘brave’ and ‘decisive’ manner”.
Talking to others in pensions and investment recently, I get the impression that this is having an impact. With this FSA support, suddenly bravery has become a more respectable characteristic.
Many would say that - with notable exceptions - bravery has not traditionally been a strong feature of the culture of pension fund trustees and managers. But, as Hugh Wheelan’s recent Responsible Investor article highlights, trustees like the PRI’s Chair Donald MacDonald have stepped forward to share responsibility for the crisis with a notable demonstration of what we might call the “new bravery”.
I look forward to “bravery” becoming a core competency within City job specifications. It is part of the answer to one of today’s key challenges: “How do you regulate for character not for compliance?” After all, as FSA Chief Executive Hector Sants said recently “a principles-based approach does not work with individuals who have no principles”.
Subscribe to:
Posts (Atom)
