Restoring Sustainability’s Good Name

Posted on Jan 3, 2013 | One Comment

Here’s this month’s piece from neuroeconomist Paul Zak. For those who might dismiss some of our thinking as the “soft side” of management, Paul puts “hard science” behind it.

I recently spoke at ING Group’s Sustainability Summit, held at the company’s headquarters in Amsterdam. I’m sure that some of you are now rolling your eyes, given the degree to which “sustainability” has become an overused—and impotent—term in business.

But I was surprised by ING’s broad definition of the concept, as well as the company’s deep commitment to putting it into practice.

ING is a financial giant, serving some 66 million private, corporate and institutional customers in more than 40 countries in Europe, North America, Latin America, Asia and Australia. Its HQ is a gleaming silver scoop known colloquially as “the shoe.” The company’s CEO, Jan Hommen, and other senior executives attended the sustainability summit. Many spoke there.

As ING’s Dailah Nihot explained it, the company views sustainability as having three facets: organizational longevity, human capacity and environmental impact.

Peter Drucker would have greatly appreciated this multipronged approach. “An important task for top management,” he wrote, is “to balance the three dimensions of the corporation: as an economic organization, as a human organization and as an increasingly important social organization.”

ING policies meant to ensure the company’s longevity include transparent accounting, risk mitigation and a strategy for continued growth at a reasonable rate—all of which are very Drucker-like practices.

“Strategic positions,” Drucker declared, “should have a horizon of a decade or more, not a single planning cycle.”

Meanwhile, ING’s focus on human capacity translates into a robust slate of personal and professional development opportunities for its 90,000-plus employees. This includes training seminars and educational subsidies that provide new skills and pathways for advancement, as well as 20 to 30 paid hours annually for employees to volunteer in their local communities.

As for being green, ING was recently ranked No. 1 for its environmental policies by a leading Dutch newspaper. Years ago, ING signed the Equator Principles, pledging not to make loans to projects that do not meet certain social and environmental standards. These principles have become widely accepted by major international banks and, as an early adopter, ING likely influenced others to sign.

As with its accounting, ING’s environmental practices are transparent, too. The company is taking part, for instance, in a Carbon Disclosure Project, which highlights how businesses in northwestern Europe are doing in terms of climate-change management. (ING’s assessment score rose from 64 points in 2011 to 93 points in 2012.)

Such transparency is a potent way to build trust among both employees and customers. As my research has shown, by being candid with all its stakeholders, ING may well be inducing the release of the “moral molecule” oxytocin.

If ING keeps it up, perhaps the company can help restore sustainability’s good name.

Paul Zak is the director of the Center for Neuroeconomics Studies at Claremont Graduate University and the author of The Moral Molecule.

1 Comment

  1. Richard Straub
    January 5, 2013

    I like the direction of the article – to relate to the 3 top priorities for management as defined by Drucker 1. Keep the business viable – otherwise you cannot be a good citizen 2. People assigned according to their strength i.e. where they can best contribute and 3. contribute to the community and society at large which includes social and environmental aspects. However, I have some reservations about the second part of the post – what is actually happening is that large companies (I am talking about several anecdotal experiences) use their bureaucratic machinery to “test” the small partner and suppliers about their conformance with standards that some international organization has established. They do this to be able to produce their own reports. This goes to the point that micro companies are required to upload their CSR and Carbon related policies (assuming they are equally equipped as the large bureaucracies), because someone had thought out that this was a way to be qualified as a supplier. While big companies are thus showing themselves as totally sustainability driven they don’t worry too much that with their procurement rules (lengthy process to get the famous PO numbers and additional bureaucratic hurdles, they put very small businesses in jeopardy. It reminds me the Drucker thought about the “temptation to do good”. However, let’s face reality: despite the grand CSR and environmental policies we finally end up in a situation where coal will take over the number one place as energy source in the world by 2017 according to the IEA!!! Shouldn’t we ask ourselves what is going on here? On the one hand we have these great declarations and now suffocating standards (in the West) and on the other hand we have no result globally. Even worse – we have the most negative result we can think of if we believe the carbon changes the Climate. The religious fervour has taken us nowhere – good management is about achieving results and this only works with pragmatic and realistic approaches – not with fanaticism and the conviction of holding the only truth. Isn’t this the time to step back and rethink also the third element of the broader sustainability notion as outlined above?

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