Sustainable Financial Innovation

Karen Wendt

• Publisher: CRC Press
• Year: 2018
• ISBN:
  9781351652261
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

Innovations and consequently future-fitness must form new models and address existing hurdles and new forms of collaborations. They must enable faster innovation cycles and "intelligence mining" by combining open and closed source systems, organic communities, open space techniques and cross-fertilization. Innovations must apply to and integrate incubation and acceleration networks. This book explores new concepts for future-fitness with five capitals: financial, ecological, social/cultural, human/personal, and manufactured/technological. It offers a new integral framework bringing researchers and business leaders together in one volume.

1

The Purpose of Doing Business is not Business—It is Flourishing

Why an Intelligent Sustainable Impact Investment Dedicates Resources to the Cultivation of the Mind and the Heart

Diego Hangartner

[email protected], The Wheel of Mental Balance.

Email: www.diegohangartner.org.

Introduction

Most people are about as happy as they make up their minds to be.

Abraham Lincoln

We all strive for flourishing and be happy. Some of us look at economic means to give us a sense of prosperity, while others find pleasure in society, organisation or family as a source of purpose and success. Without question, these aspects of success are important.

But when the basic requirements of our biological survival are fulfilled and there still remains an unfulfilled longing, it seems that something more important is missing. It is alarming to see that in the midst of our society of plenty, many apparently successful people still feel empty. When things are ‘fine’ and our biological survival is secure, the question that arises: is why do our feelings of unrest, dissatisfaction and depression continue?

This leads us to ask more profound questions: What do we mean by success and prosperity? What is life’s purpose? What brings real well-being?

When thinking about these questions sincerely, it becomes obvious that the pivot where we can find answers to these questions is at the mental level, in the deeper domains of our mind. Answers to these large and central questions are not limited to societal, economic, environmental or organisational well-being; they require involvement of the personal dimension. If we want to lead a fulfilled and truly happy life, we need to understand how our actions and behaviours are formed, what they result in, and ultimately, we need to concentrate on the reasons that can truly lead to well-being.

Business, society and individuals share one commonality—they all aim to prosper. In the modern context, these aspects are highly interrelated and interdependent. Unfortunately, most discussions on economic changes, environmental degradation, social well-being and individual prosperity look at these domains in a very compartmentalised and incomplete manner. Most approaches assume that these domains are independent and that the challenges can be resolved outside of the larger context of complexity and human nature.

Fundamentally, people aspire to prosper in order to lead a good and happy life. Accordingly, their well-being depends on multiple aspects of health—physical and mental health of individuals, a healthy society, business and environment.

However, largely due to human activities including the running of business, the world is facing many critical challenges—the cities have become inhospitable and threaten health, cause environmental degradation, loss of species, water shortage, acidification of oceans and climate change. Only through a pooling in of resources and in particular, a dedicated will and determination of politicians, governments, the NGO sector and, foremost, businesses and individuals can collectively address these issues.

It is evident that we cannot economically ignore the global climate change and financial market challenges because pursuance of economic growth has led us to them in the first place.

It is increasingly clear that the current challenges cannot be solved with the present mind-set and values. These questions cannot be addressed without including the human mind, inner values and their expression in the form of corresponding actions.

The present-day mode of doing business, such as governmental regulations, monetary incentives, tapping into new markets, more (or less) spending will not help to deal with the current challenges. We are expected to consider our inner resources and what defines us as humans—our heart, our courage, our dreams, and our hopes.

In the context of business, most initiatives look at improving the performance of leaders and teams, aim at developing better management tools and practices, help envisioning and implementing strategies and support adaptive change management. Many of these initiatives fail as leaders and workers tend to fall into the same old traps and mental habits. The tools and programmes that leaders learn are rarely directed at the human being who is placed in the midst of such initiatives. As a consequence, individuals often show decrease in resilience, exhaustion, burnout, fears, even depression and suicide, thus making businesses, communities, leaders and co-workers suffer unnecessarily.

If we aspire for a fulfilled life, we cannot disregard the current insights of science, the mental dimensions and the need to balance our minds. A similar sentiment is expressed by the leading business thinker, Gary Hamel, who says,

“The biggest barrier to the transformation of capitalism cannot be found within the observable realm of org charts, strategic plans and quarterly reports, but rather within the human mind itself. … The true enemy of our times is a matrix of deeply held beliefs about what business is actually for, who it serves and how it creates value.”¹

In the following pages I will address many of these questions. I will begin by exploring the current situation, what this means within the context of business and look at the complexities involved. Then I will look at some of the recent scientific explanations about some of the assumptions and values we hold dear, particularly in view of our motivation/incentive system, values and money, and how to transform them. By drawing on an ever-increasing body of research around cultivation of positive qualities for flourishing, it will become evident how important positive qualities of the mind, like happiness and compassion, are and how these aspects can be trained. Next I will explore some of the consequences for leadership training. A section will follow on different aspects of sustainability (inner vs. outer), the need for identifying and changing mind-sets and the importance of teaching and educating inner values. The exploration will finish with a focus on the connections between organisations, purpose and values, and conclude with an appeal to take interdependence seriously for personal and social well-being.

Where are We Now?

No society can surely be flourishing and happy of which the far greater part of the members are poor and miserable.

Adam Smith

Over the past 100 years, the standard of living has improved greatly. However, global economic development has also led to a widening of the gap between the rich and the poor besides contributing to environmental changes. The damage done by these ‘accomplishments’ is not foreseeable and it becomes evident that scarcity of water, oceanic acidification, challenges to the food chain and other domains will only increase and ultimately be felt by all.

Unfortunately, the dominant economic model overlooks the fact that we cannot have unlimited growth depending on unlimited resources, after all, we only have one planet. We cannot outgrow the current condition with established models that have caused the problem in the first place. The emerging situation is increasingly challenging us in our established worldview, particularly because the issues are extremely complex, interdependent; they will not be resolved with one single approach nor with the current mind-set.

The present prevailing mode of business is established on competition, market forces and winning at all costs. It might be argued that these are the rules of the game and that it will be impossible to change them. But if we learn something from history, then it is that changes have always happened. Research in many domains clearly shows that patterns of behaviour are not biological traits but results of conditioning, overarching systems and entrenched habits. Surrendering to our assumed beliefs will not save the society we care for, the businesses we depend on for food and survival and to protect the planet we live on.

Besides taking care of the external limitations and environmental constraints, we need to learn to take care of our internal resources. Concepts and practices of sustainability need to be expanded and applied both to the external world (environment, business, society) and to the inner dimensions of our minds and hearts.

Context of Business

We have always known that heedless self-interest was bad morals.
Now we know that it is bad economics.

FD Roosevelt

Most business activities invest with the aim to turn investment into profit, but the question remains: What is considered profit? Is it just financial, or are there other forms of profit?

It is often said that business works independent of persons and that values, attitudes, society and environment do not matter. But ask any leader or employee, and it will be clear that the person, her character, his kindness and the style of interaction with others highly matter. In the current landscape of business, the major challenge is to align personal values with external circumstances and in order to align inner purpose with external requirements, we are nothing short of a deep personal and institutional transformation.

If we look closely, the majority of reasons why we work and how we spend our earned income are not purely for economic or for survival reasons, but largely due to emotional motives—the car model we buy, the types of food we eat, the surroundings we live in.

If the purpose of business is to increase one’s well-being and not only to maximise profit, then business leaders, employees, shareholders and organisations at large will need to learn new ways of thinking about the effects of their actions—not only the societal, environmental and monetary impact—but also their impact on the mental flourishing of all involved.

The financial crisis in 2008 showed clearly that markets are not a neutral mechanism that result in collective well-being. The theory of market equilibrium needs to be replaced by the view of a market as a dynamic, interdependent relationship that is both shaped by our mindsets and choices, and at the same time reciprocally shapes our mind-sets and choices. This requires a deep understanding of interdependence and how the mind works.

Another flaw in mainstream economic thinking is the real price and profit of a product or business. Many so-called externalities are excluded or ignored in the process of determining the price and the profit. Inclusion of externalities can be regarded as a shift from the growth-transactional model of economics toward a more sustainable-relational economic model. The new economic theory goes beyond linear supply/demand exchange models to more sophisticated models of co-creation. Of equal importance is understanding how to serve the real human needs with renewable resources and capturing the value created through this. These needs go beyond merely material ‘economic needs; they have to include emotional, social, and ecological needs.²

Unfortunately, most businesses and leaders are stuck—the existing paradigms keep them locked in a reactive mind-set, focused on their own needs and those of the stakeholders and top management. When an adverse situation develops, they just hang on and hope for improvement the next time around. It takes all their energy to keep the current business going, avoid losses and pay employees’ salaries. Yet, some companies plan for the future—they embrace a proactive mind-set. They have the mind-sets, resources and foresight to weather the storm and create shared value.³ They include multiple levels of value and complexities and represent reality more accurately.

Complexity and Interdependence

As the world becomes increasingly interdependent and fragile, the future at once holds great peril and great promise. …We must join together to bring forth a sustainable global society founded on respect for Nature, universal human rights, economic justice and a culture of peace.

UN Earth Charter

Successful global companies are becoming increasingly aware of the complexities of interdependence and interconnectivity—and their successful leaders integrate these qualities not only in the company, but foremost in themselves.

Individuals are not independent; neither are companies, societies, nations, or any system. Due to globalisation, economic, environmental and migration challenges, the current world is realising how true the concept of interdependence is. If we remain stuck with the view and value that individuals and businesses are independent, then we are prone to get into more problems because reality will reveal its nature of interdependence. It is therefore, critical to look at issues from a more interdependent and, in the words of the Dalai Lama, holistic perspective.

The concept of interdependence has been central to the Buddhist notion of the world, humans and of consciousness. Since the Buddhist tradition has an over 2500 year-long history of looking at reality as an interdependent phenomenon, it is to this tradition that I will look as a guide in the coming arguments.

In order to be able to face the highly complex challenges, Buddhist world-view suggests that it is critical to develop both wisdom (the understanding of how interdependent various phenomena manifest) and compassion (the courageous concern for the well-bein...

Table of contents

• Cover
• Title Page
• Copyright Page
• Table of Contents
• Preface
• 1. The Purpose of Doing Business is not Business—It is Flourishing
• PART 1: ENVIRONMENTAL IMPACT FINANCE
• PART 2: SOCIAL IMPACT FINANCE
• PART 3: SOCIAL ENTREPRENEURSHIP AND TECHNOLOGY
• PART 4: REGIONAL FOCUS ESG IN CHINA
• Index