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THE CHANGE MAKERS’ MANUAL
EDITION 12 | 2024
Blame Game
Have we been nudged in the wrong direction?
How bosses can harness boredom 6 | The sustainability paradox 14 Managing the midlife crisis 24 | Are you making biased errors? 43
FIRST WORD
Accelerate your career Accelerate your progression Accelerate
former Prime Minister David Cameron. Among them is Nick Chater, winner of last year’s David E. Rumelhart Prize for his contribution to cognitive science. In our cover story, he argues that focusing on individual responsibility has distracted policymakers, business leaders, and academics from the need for system-wide change. How can we use behavioural science more effectively to combat the wicked problems we face? Elsewhere Daniel Read, Andrea Isoni, and Despoina Alempaki explore how companies that use nudges can prevent their profits from tainting public perception of the social benefits they provide. This behavioural science-themed edition of Core also sees Nick Lee reveal why Rishi Sunak and Keir Starmer should learn to smile like Boris Johnson. Redzo Mujcic warns that managers should support employees who are experiencing a midlife crisis. And Tina Kiefer explains why bosses should help staff find joy in their work. As always, we also offer valuable insights on sustainability, strategy, future of work and leadership – all based on our world-class research at WBS.
Core Edition 12 Executive editor: Warren Manger Cover: Rebecca Cutts Staff contributors: Mark Udall Charlotte McMahon Donna Morris Simon Wilcox © 2023 The University of Warwick. All rights reserved. Neither this publication nor any part of it may be reproduced, stored in a retrieval system, or transmitted in any form or by any means electronic, mechanical, photocopying, recording or otherwise without the prior permission of the department of Warwick Business School at the University of Warwick. Published by Warwick Business School, the University of Warwick, Coventry, CV4 7AL. E enquiries@wbs.ac.uk T +44 (0)24 7652 4306 W wbs.ac.uk @warwickbschool warwickbschool wbs.ac.uk/go/linkedin Where opinion is expressed, it is the opinion of the author and does not necessarily coincide with the views of the publisher or the University of Warwick. All information in this magazine is verified to the best of the authors’ and the publisher’s ability. However, Warwick Business School and the University of Warwick do not accept responsibility for any loss arising from reliance on it. warwickbschool warwickbschool
I t is 15 years since the best- could be subtly influenced to improve their behaviour was seized upon by politicians, who set up government teams to transform nudge theory into public policy. Several Warwick Business School faculty members from our outstanding Behavioural Science Group have been invited to advise the UK’s own ‘nudge unit’, which was founded by selling book Nudge propelled its branch of behavioural science into the mainstream. The idea that individuals
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IN THIS ISSUE
CONTRIBUTORS We believe that business should be used as a power for good. Our faculty of research and teaching academics is constantly striving for excellence in everything it does, from the latest groundbreaking research impacting society, to inspiring our students. Contributors to Core include research-active academics, who produce cutting-edge theories with real-world impact, and Professors of Practice, who bring their knowledge gained from successful senior business and industry experience.
FUTURE OF WORK
LEADERSHIP
Learn how companies, policymakers, and individual managers can apply behavioural science more effectively to achieve better outcomes for their stakeholders and society.
48 Plump for joy by Tina Kiefer
06 Get on bored
Can dating apps teach firms to engage staff? by Anh Luong
ANH LUONG Assistant Professor of Business Analytics Anh.Luong@wbs.ac.uk
NAOMI MUGGLETON Assistant Professor Naomi.Muggleton@wbs.ac.uk
NICK CHATER Professor of Behavioural Science Nick.Chater@wbs.ac.uk
SUSTAINABILITY
DECISION-MAKING AND ANALYTICS
19 Green with envy How to make customers crave eco-friendly products by Hugh Wilson
30: Cover story Blame game by Warren Manger 37 Grin it to win it
FREDERIK DAHLMANN Associate Professor of Strategy and Sustainability Frederik.Dahlmann@wbs.ac.uk MARIANNA FOTAKI Professor of Business Ethics Marianna.Fotaki@wbs.ac.uk
MATTIE TOMA Assistant Professor Mattie.Toma@wbs.ac.uk TIM MULLETT Associate Professor of Behavioural Science Tim.Mullett@wbs.ac.uk NEIL STEWART Professor of Behavioural Science Neil.Stewart@wbs.ac.uk
UMAR TAJ Associate Professor Umar.Taj@wbs.ac.uk
DIGITAL INNOVATION AND ENTREPRENEURSHIP 51 Keep the faith Making sure your staff trust AI technology by David Allen
08 Mum's the word How an MBA helped Claudia Akemi Umemura return to work
TINA KIEFER Professor of
HEATHCARE AND WELLBEING
Why Sunak and Starmer should smile like Johnson by Nick Lee
Organisational Behaviour Tina.Kiefer@wbs.ac.uk
22 A nudge a day… by Ivo Vlaev and Aikatarini Grimani
HUGH WILSON Professor of Marketing Hugh.Wilson@wbs.ac.uk
SARAH JACKSON Alumni and MBA Careers Manager Sarah.Jackson@wbs.ac.uk DAVID ALLEN WBS Distinguished Research Environment Professor David.Allen@wbs.ac.uk
DAVID ELMES Professor of Practice David.Elmes@wbs.ac.uk
NICK LEE Professor of Marketing Nick.Lee@wbs.ac.uk
40 Profit or purpose? by Despoina Alempaki, Andrea Isoni and Daniel Read 43 Rose-tainted glasses by Nick Chater
11 What caused the scandal that shook British industry? by Marianna Fotaki
CAREERS
IVO VLAEV Professor of
ANDREA ISONI Professor of Behavioural Science Andrea.Isoni@wbs.ac.uk DANIEL READ Professor of Behavioural Science Daniel.Read@wbs.ac.uk DAWN EUBANKS Associate Professor of Behavioural Science & EI Dawn.Eubanks@wbs.ac.uk DESPOINA ALEMPAKI Associate Professor of Behavioural Science Despoina.Alempaki@wbs.ac.uk
NITA LAD WBS CareersPlus
54 How to make a successful
24 Crisis management Helping employees through a midlife crisis by Redzo Mujcic
Behavioural Science Ivo.Vlaev@wbs.ac.uk
& Employer Relations Nita.L.Lad@wbs.ac.uk
career transition by Sarah Jackson and Nita Lad
SUSTAINABILITY
AIKATERINI GRIMANI Research Fellow Aikaterini.Grimani@wbs.ac.uk
CHRISTIAN STADLER Professor of Strategic Management Christian.Stadler@wbs.ac.uk
14 Chain smoking
FINANCE AND MARKETS
STRATEGY AND ORGANISATIONAL CHANGE
Scope 3 emissions could harm your firm’s health by Frederik Dahlmann
REDZO MUJCIC Associate Professor of Behavioural Science Redzo.Mujcic@wbs.ac.uk GIORGIA BARBONI Assistant Professor of Finance Giorgia.Barboni@wbs.ac.uk
27 Red alerts Can texts stop borrowers defaulting on loans? by Giorgia Barboni
56 Recipe for success Redeploying staff to share expertise by Christian Stadler
46 Driving progress Umar Taj is improving decision-making
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Leadership
LEARNING FROM TECHNOLOGY
GET ON BORED Can dating apps teach firms to connect with disengaged workers?
V ogue dating columnist Annie Lord recently bemoaned the general discontent with the apps that have come to dominate the modern world of courting. She cites data from the Pew Research Center showing that nearly half of dating app users end up feeling more of a sense of frustration than optimism about the prospects of finding ‘the one’. Underpinning this discontent is a strong sense that people don't behave particularly well when they are participating in dating apps. Behaviours such as ghosting (when dates vanish without an explanation), benching (when people are put on hold until somebody better comes along), and breadcrumbing (giving just enough attention to maintain interest but never committing) are now common. In our research of popular dating apps – namely Tinder and Bumble – we found ghosting is something that often occurs because people are simply... bored. In fact, many are bored to begin with, so install the apps to try to alleviate that boredom. They're then made more bored by the many unfulfilling encounters they have via the apps, which prompts them to ghost people, despite considering the act rude and inappropriate when it happens to them. The apps don’t help, with few providing any means to make conversations more interesting. This is compounded by the sense among the dating app companies themselves that the users’ experience is in fact altogether positive. When they assess the usage of the apps by simplistic and aggregate measures, such as number of users, time spent on the site, and the number of messages users
exchange, then these apps could be seen as a roaring success. Indeed, the lack of seemingly viable alternatives prompts many of those that delete the apps in frustration to reinstall them. This cycle of dismay gives the impression that boredom and dissatisfaction are actually key factors that drive engagement. It is a discovery where the implications run far beyond the confines of the online dating industry, with the rest of the economy in the midst of the so-called ‘quiet quitting’ phenomenon that is driven by similar levels of boredom and lack of fulfilment at work. For instance, an anonymous survey conducted at Blind, an online community for tech professionals, revealed around two-thirds of respondents were bored at work. Meanwhile, Gallup data states just 32 per cent of employees are engaged at work, with nearly one in five saying they're actively disengaged, largely because their workplace needs aren't being met. Our research into boredom in online dating has two implications for business. The first is that it's important to measure the right things when gauging the level of workforce engagement. As with dating apps, it can be tempting to focus on things that are relatively easy to measure and assume this accurately captures engagement. For instance, employee attendance ticks that box, and managers might assume that an employee sitting at their desk must be engaged, but of course, the quiet quitting phenomenon tells us otherwise. To effectively measure employee engagement, managers must understand what's important to their staff. This is unlikely to be
one-size-fits-all, as some may want teamwork while others want career development or effective communication. Managers can then perform what's known as a ‘driver analysis’ to identify the things that really impact on engagement through employee surveys, using Likert scales for each factor. Producing a percentage share for each factor will give managers a good indication of what drives engagement among their staff and address any shortcomings. The second key takeaway is that it is easy to fall into the trap of assuming boredom is always a bad thing. After all, we're driven by the desire for our workforce to be as engaged as possible, so boredom must mean those efforts are failing. Research shows, however, that a degree of boredom can make us more creative. “Small amounts of boredom The researchers found that participants who were given a boring task to perform before trying to create some interesting artwork ended up producing more creative projects than those who were not induced by boredom beforehand. This was especially true of participants with personality traits such as cognitive drive, openness to new experiences, intellectual curiosity, and a desire to learn new things. Inducing boredom in such people triggers something known as ‘divergence-seeking behaviours’, might actually be beneficial”
when the curious among us try to break out of the intellectual straitjacket we've been placed in. It remains to be seen whether (and how) organisations should deliberately try and engineer boredom in the workplace, but it is a reminder that small amounts of boredom might actually be beneficial. At the moment, this boredom is not being channelled in the right way. Some of our interviewees revealed they mostly used dating apps while they're bored at work. Managers could try to provide more productive outlets for the divergence-seeking behaviours that are produced by boredom, perhaps via enterprise social media and channels that encourage employees to come forward with ideas. Many of the dating app users we studied stuck it out because they didn't believe other apps were any better. However, their continued use resulted in increasingly cynical and lacklustre engagement, which further exacerbates the boredom spreading through the dating app network. For managers, it is important that they avoid falling into the same trap and ensure that false engagement isn’t sought just for the sake of gaming the metrics without having substantial progress being made in terms of things that truly matter to employees and the organisation. Failure to do so seems likely to hurt organisations and result in similar disenchantment among employees as we see among the dating users we interviewed.
by Anh Luong
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Leadership
Claudia Akemi Umemura used her MBA to help her re-enter the workplace and now helps other women to progress. MEET THE CHANGE MAKER Mum ’ s the word
I f Claudia Akemi for the female pupils. “Never allow society to define who you are. Only ever be defined by your dreams.” It is the maxim by which she has lived her own life, first as a young girl growing up in a third- generation immigrant Japanese family in rural Brazil, as an executive, and then as an expat mother in three different countries. Finding herself consistently overlooked in the jobs market, she decided to take destiny into her own hands and apply for the Global Online MBA at Warwick Business School. “My story is probably very similar to those girls in India,” Umemura ever returns to the schools of Pune, a hill town in Maharashtra in India where she worked as a volunteer, she will have an important message says Claudia. “I grew up in a very traditional community in a small place called Navirai. Some of my relatives were more interested in girls getting married than in them going to university. “But I did go to university with the encouragement of my father, and that set me on my career.” A psychologist by training, she worked for many years in large organisations such as Cargill and FESA, where she led talent management for one of the largest executive search firms in Brazil. She subsequently started up her own executive search and HR-related business when she moved to the United States with her husband, who had been offered an overseas posting at Volkswagen. As she followed her husband on to Germany and India, starting a family along the way, things became more difficult. Barred
from working in India by strict visa rules, she maintained her skills by volunteering for a charity that connected international travellers with schools in Pune, which lies southeast of Mumbai, helping them to hold talks with pupils about their experiences. As enjoyable as this experience was, Claudia felt herself slowly being isolated from the corporate world – a feeling made worse when she decided it was time to return to that after seven years abroad. The business world, however, had other ideas. “When you become a mother and leave the traditional career path, it is much harder to find your way back into the corporate world,” Claudia says. “You are pigeon-holed as someone who is focused on her family. I felt I had so much to offer with the experiences I had abroad, the courses I did, and the diversity of people and cultures I had learned to interact with. But due to the gap in my resume, I was automatically excluded from candidate shortlists, or so it seems to me. It is really unfair.” “Don’t seek to win approval or try to make everyone happy. Instead, follow your dreams” The only way back, she decided, was to follow a long-term dream and apply for an MBA. “By now, I wanted to go back to Brazil, but I knew I wanted an
MBA that would keep me in touch with the international world and be about more than Brazil.” Warwick’s Global Online MBA (then called the Distance Learning MBA) caught her eye. “I had heard good things about WBS, particularly the diversity of its cohort. That was a draw for me,” she says. “As a Japanese Brazilian, you know, I never felt like I belonged to one country. I was always interested in the wider world, excited by different cultures and perspectives. “And of course, I saw the rankings – regularly the best distance learning MBA in the world according to the Financial Times .” She did not look back. With the MBA in progress and pregnant with her second child, she returned to her home country, settling in São Paulo; and although the Covid pandemic hit soon afterwards, it was not long before she was back in work, in a new role, with consulting giant Accenture. Claudia credits the Global Online MBA as being a major factor in this turnaround. Not only was it flexible enough in pattern and timeframe to suit her family life, but the careers service at WBS also shared valuable strategies on how to approach the jobs market.
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Leadership
CORPORATE GOVERNANCE
WHAT CAUSED THE SCANDAL THAT SHOOK BRITISH INDUSTRY?
She was soon using her MBA modules as a route into job interviews.
no single theory or framework that can deliver everything required to tackle the complex problems that our clients have. “No-one has all the answers, including me. It’s about working collaboratively to explore alternatives and options. “That’s one of the most valuable skills that I really developed at Warwick. It’s not just about using frameworks. It’s about criticising the limitations of them as well.” The same goes for the frameworks that have proved for so long such an obstacle to women returning to work after having children. One of Claudia’s big focus areas now is helping more women to realise their ambitions and goals, as well as to create the right
of motherhood and our life in the Strategy & Consulting team. “I hope I have been able to make a difference for her and her young child, Sofia.” Claudia has also been involved in mentoring in a programme focused on African and Indigenous Brazilians sponsored by the US Embassy in Brazil. “One of my mentees was an African Brazilian who wanted to improve her English to get a better job,” says Claudia. “Rather than focus solely on the language, though, I helped her to acknowledge her strengths and how to stand out in the interviews. “I feel like I am honouring my purpose of helping others to be their very best.” With the Warwick MBA now completed, Claudia herself is balancing her family life and her work life at Accenture. In her mid-forties, she is happy to stay in São Paulo for the time being but might go overseas again in future. She is keen to motivate her children to be ‘global citizens’ in the same way she has been. Whether or not her travels will take her to India again is uncertain. But whatever the future holds, her message for the female students in the schools of Pune is clear. “Don’t seek to win approval or try to make everyone happy. Instead, follow your dreams. “That's not being selfish. It’s about taking care of what you regard as valuable.”
“By bringing something to them that was connected to my MBA study, I was showing the value that I could bring to an organisation,” the mother-of-two explains. “It did wonders for my self-esteem.” As a talent and organisation strategist in Accenture’s Strategy & Consulting team, she helps clients to unlock human potential at scale. Business and functional transformation, leadership and culture, talent management, organisational design, and workforce transformation are just some of the ways she works with the team to add value to large corporations across different industries.
by Marianna Fotaki
“Warwick Business School wants to encourage Change Makers, people who turn challenges into dreams and break down barriers for others. “That’s what I’m doing with my clients, advising them on large programmes of change that will have a huge impact on people in terms of skills, in terms of mindsets, and in terms of ways of working.” Central to that process is the kind of critical thinking that “all the professors at Warwick Business School were really demanding students use, because there is
environment and awareness within organisations to make this happen. “I want to help more talented women back into work and help organisations to understand what they can do to make this easier.” That work involves Claudia coaching rising talent and senior leaders to achieve their potential, just like she is achieving hers. One of her counselees is a first-time working mother. “She chose me as her People Lead when she was about to have her baby. She felt I could advise her on how to juggle the challenges
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Leadership
I t was the self-styled “voice of business” in the UK. sexual harassment, and misconduct were covered up by senior figures have left the organisation in crisis. In a bid to retain its position of influence, the CBI put forward a plan to redeem itself in the eyes of its members and the public. This included a promise to review company culture and refresh its board. The plan was approved by 97 per cent of those who voted at a meeting in June. Yet the result left unanswered questions. Just 371 votes were cast and the CBI did not disclose how many of its members were eligible to vote (while it represents 190,000 firms, many of those are affiliated via trade associations). There is no such ambiguity about the departure of several high-profile members. John Lewis, BMW, Virgin Media, O2, Aviva However, it is hard to see how the Confederation of British Industry (CBI) can continue to claim that lofty title. Allegations that rape,
health, increasing absenteeism, and causing silent withdrawal. There are financial implications for companies too, with some measures putting the
of the need for the organisation’s management to shift towards promoting lived values rather than “corporate bull”.
Finally, we often assume that board and leadership actions emerge from rational considerations, ignoring the
and Mastercard are among the big names who voted with their feet and left the organisation. They were followed out the door by Tony Danker, former director general of the CBI, while several senior figures were suspended. The City of London Police have also launched an investigation into the allegations. Meanwhile, a rival group from the British Chambers of Commerce – backed by firms such as BP and Heathrow Airport – has stepped forward to “design and drive the future of the British economy”. Can the CBI rebuild its reputation and regain its position of authority and influence? It faces an uphill struggle to do so. It is extremely difficult to reboot an organisation’s culture without altering its core beliefs and redesigning its governance power structures. This takes more than words. It requires a fundamental overhaul of internal power structures. Harassment happens when attitudes within an organisation uphold power differentials between individuals based on
their gender or other attributes. Institutions that perpetuate certain beliefs about gender stereotypes enable these systems, while powerful organisational actors maintain them. “Disparities such as the gender pay gap make sexual These systems help to deny and rationalise abuse, preventing it from surfacing. At the CBI, for example, alleged offenders were not sacked. Instead, its leadership tried to find a resolution before complaints of harassment became public. This response is not unique. Major institutions including the World Health Organization and Oxfam, and the aid sector more generally, reacted in similar ways. The #MeToo movement has shown that sexual harassment is systemic in many organisations. It is often deeply ingrained in company culture and characterised by pay and power inequalities. Research by the UK Equality and Human Rights Commission in 2020 found that 72 per cent of the UK population has experienced at least one form of sexual harassment in their lifetime – with 43 per cent experiencing this in the last 12 months. Money and power are interconnected, so disparities such as the gender pay gap make sexual harassment more likely. But harassment also lowers the earning capacity of those who experience it by worsening their mental harassment more likely”
role of unconscious bias and power dynamics that can better explain sexist and misogynistic culture. The CBI is governed by a president and an executive committee chaired by a director general, who also sits on the non-executive board. Outgoing president Brian McBride said he had lost the board’s confidence and admitted the organisation had “badly let down” its staff. Former director general Danker, who was sacked following the rape accusations for an unrelated reason, apologised in a BBC interview for making some staff feel “very uncomfortable”. Rain Newton-Smith, previously the lobby group’s chief economist, has returned as director general following a stint a Barclays. She must prove to members and the wider public that the CBI can overhaul its culture in order to survive. Ensuring that informal networks do not affect the organisation’s decision-making processes and accountability will be key. The leadership of the CBI – and other organisations like it – must consider points of view that have been neglected or hitherto unheard. Otherwise, they risk failing in their mission to build appropriate governance structures and a more equitable culture.
average cost at more than £18,000 in productivity per harassed person. The actual costs to society are likely to be much higher. The recent emphasis
on organisational culture reflects a shift across much of the Western world from the management of skills to the management of values. Employees’ commitment to their organisations can enhance firms’ performance by fostering innovation and creativity. But the focus is often on rituals, marketing slogans, and corporate image – the superficial elements that academic Edgar Schein called “visible artifacts”. Values are much harder to address. They are often unconscious assumptions about the world. As a result, culture change programmes may lead to superficial compliance, rather than the real commitment to the profound shifts that organisations like the CBI really need. Organisational culture cannot be easily measured or visibly altered to enhance performance or win support. Instead, it is a collective mental state that is in perpetual flux and must be constantly renegotiated by the organisation. US academics Caren Siehl and Joanne Martin called organisational culture “the glue that holds members of an organisation together by encouraging them to share patterns of meaning” or ways of understanding values, beliefs and how to behave. Some (female) leaders of former CBI member companies understood this when they spoke
Those wielding power in an organisation need to be truly committed to examining their own assumptions and values to achieve this. So how can they do it? Research on the effectiveness of boards shows corporate governance failures (even by companies with otherwise excellent governance records) happen when there is a separation between ownership and control of an organisation. Independent, non-executive directors can provide much-needed checks and balances to ensure that executive members represent the organisation’s interests, not just their own. However, their impact will be minimal if they merely ‘rubber stamp’ executive decisions. A lack of diversity in terms of age, gender, expertise, experience, or ethnicity on a board can lead to groupthink that promotes cohesion over accountability. Recruitment of certain types of men, while excluding women, and the development of informal networks among board members can also reinforce poor decision-making.
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Sustainability
SUSTAINABLE SUPPLY CHAINS
TO THE CORE D
eadly wildfires on the islands of Rhodes and Maui, hail storms that sent ice flowing through the
greenwashing if disclosing Scope 3 emissions produces unfavourable new insights on their total environmental impact compared to their smaller direct carbon footprint. Indeed, my research with my colleagues Stephen Brammer and Jens Roehrich suggests that when companies begin the process of measuring their Scope 3 emissions, their data increases year-on-year, even when controlling for the growth of the firm. The risk of a subsequent backlash from activists and investors creates a strong deterrent for other companies to follow suit. Yet there are good reasons for why we should expect Scope 3 emissions to follow this initial trend. As companies begin measuring their indirect emissions on an annual basis, the efforts they invest in providing a more accurate picture is likely to reveal exactly that – a larger figure summarising GHG emissions from all elements covered under a wider-ranging scope. While many companies initially rely on their own estimates or widely available conversion tables to provide Scope 3 emissions data, over time they are likely to move towards more accurate figures based on data directly obtained from their suppliers and customers. To achieve this, companies employ a variety of formal and informal processes of collecting such data from their different supply chain partners. This includes, for example, companies requesting emissions data during tender stages and later demanding annual updates, enforcing this through their supply contracts. As these vendors and buyers begin to up their game in terms of more accurately accounting for their own Scope 1 and 2 emissions, the overall effect is that the emissions reported under Scope 3
Chain smoking
1. There are growing calls for firms to report Scope 3 emissions from across their value chains. This is time- consuming, challenging, and carries reputational risk. 2. When companies begin measuring Scope 3 emissions, the footprint they report increases year-on-year as they obtain better data from suppliers and customers. 3. If investors and analysts take that out of context, it can damage a firm’s reputation and performance.
streets in Italy, and a heatwave in the United States that may have killed as many as 300 people in the city of Phoenix as temperatures topped 43C for 31 consecutive days. The extreme weather patterns that have ravaged the Western world this summer are a stark reminder of the urgent need to respond to global climate change. Companies have long faced pressure to play their part by measuring and disclosing their corporate carbon footprint to investors and the wider public. These have typically been divided into Scope 1 emissions – Greenhouse Gases (GHG) a company creates itself, for example, from its industrial combustion processes or by using fossil-fuel-powered vehicles – and Scope 2 emissions, which are produced on a company's behalf when it buys energy to electrify, heat or cool its buildings. Now there are growing calls for firms to do the same for GHG emissions occurring up and downstream in their value chains. The number of firms currently disclosing these Scope 3 emissions is comparatively low. After all, the process is entirely voluntary. It is also fraught with ambiguity and complexity. Accurately reporting the emissions data for 15 different business activities across the lifecycle of a product, as well as for employee travel and commuting, is a time- consuming and challenging task. On top of this, many companies fear the arduous process could backfire and lead to claims of
4. After about five years,
companies begin to show improvements on Scope 3 emissions. Activist investors should recognise this trend to avoid punishing the wrong firms.
“The extreme weather patterns that have ravaged the Western world this summer are a stark reminder of the urgent need to respond to global climate change”
How Scope 3 emissions could harm your firm’s health
by Frederik Dahlmann
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Sustainability
are equally prone to increase. This is primarily the result of making more comprehensive efforts to measure such emissions, rather than emissions actually growing. The same investors, analysts, and other stakeholders who demanded that these companies disclose their Scope 3 emissions – to better assess their risk exposure and efforts to move towards net zero emissions – may become concerned if that data is taken out of context, without recognising the relative stage of Scope 3 emissions disclosure a company is in. However, our results also suggest that after about five or six years of reporting Scope 3 emissions, companies begin to show year-on- year improvements compared to firms that are at an earlier stage in this journey. “The number of firms currently disclosing these Scope
17 SUSTAINABLE DEVELOPMENT GOALS (SDG S ) TO TRANSFORM OUR WORLD
3 emissions is comparatively low”
face a paradox. On one hand, measuring and engaging with supply chain partners initially reveals a larger footprint. But over time, the same processes are necessary precursors to a wider transformation towards net zero. Firms must become comfortable with navigating this paradox by anticipating that their best efforts will initially make them look worse if taken out of context. They should prepare to manage this effectively with clear communications. Equally, outsiders must take this into account and avoid comparing Scope 3 emissions footprints without acknowledging that companies may be at different points on this journey.
Finally, companies should remember that their efforts will eventually enable them to demonstrate reductions in emissions, especially if they are calculated as changes over time rather than annual emissions footprints. We don’t yet know whether it is possible to speed up the journey, so companies don’t have to wait for five years before emissions are likely to fall. However, companies may be able to accelerate the wider transition towards sustainability by sharing the insights they have gained from measuring and reducing their own footprints. It is also likely that companies will experience similar tensions
in other complex and ambiguous sustainability areas of their supply chains, such as the Carbon Disclosure Project’s new annual and voluntary survey on companies’ plastic waste. If so, the lessons learned on Scope 3 emissions should help companies to manage their own and stakeholders’ expectations accordingly.
The 17 SDGs, represented by the icons above, lie at the heart of the United Nation’s Agenda for Sustainable Development. They were adopted by all UN member states in 2015, creating a blueprint for a global partnership to provide peace and prosperity for all. They recognise that ending poverty and other deprivations must go hand in hand with strategies that improve health and education, reduce inequality, and spur economic growth – all while tackling climate change and preserving our oceans and forests. Warwick Business School is committed to embedding the SDGs in its research, teaching, and day-to-day operations. Alongside each article in Core , you will see one or more of the 17 SDG icons to show you which goals the associated research aligns to.
It turns out that greater experience of Scope 3 emissions disclosure, combined with a broader approach towards engaging suppliers and customers in the process of measuring and reporting GHG emissions data, are also essential to drive performance improvements by identifying and implementing technological and organisational changes. In other words, companies
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Sustainability
ENVIRONMENTAL MARKETING
“The programme has helped me to gain understanding and insight into our institution‘s function and has opened many doors.” Berna Altun MSc Global Central Banking and Financial Regulation, current participant
How to make customers crave eco-friendly products GREEN WITH ENVY
by Hugh Wilson
Global Central Banking and Financial Regulation qualifications
Expand your knowledge and gain invaluable insight into the world of central banking or financial regulation with our part-time, online programme, delivered in collaboration with the Bank of England.
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Sustainability
T he road to hell is paved with good intentions. And while many firms want to be seen combatting global warming, they cannot do it alone. Designing a greener product is one thing, but that effort will be wasted if nobody buys it. Companies need customers to work with them to achieve their sustainability goals. Securing that co-operation isn’t easy. One approach is educating customers, explaining how a product lowers carbon emissions or benefits workers in the supply chain. Sometimes that works. Often it doesn’t. Habits are hard to change and consumers often need more encouragement. There are many ways to try to change customer behaviour. Firms can limit choice or adjust prices; make emotional appeals; or highlight supplementary
All hands to the pumps by David Elmes
benefits, such as saving time. Another approach is to appeal to a customer’s social identity. This is a powerful option, but is often poorly understood, even among experienced marketers. The key is recognising the social goals people have, based on the groups they belong or aspire to. People will work hard to retain their status and make the group look good to others. However, social identity is not constant. The same individual may view themselves as a parent, music-lover, traveller, or business executive in different contexts. The trick is to establish which identity is the most salient and work on that. Used responsibly, this can help customers to do the right thing. Three organisations I have been working with demonstrate different ways of doing this. 1 We’re all in this together California start-up Enervee, which sells home appliances
and electronics online, is one company that successfully focuses on social identity. Rather than simply offering every conceivable fridge or TV, it tries to nudge consumers towards energy-efficient items. All products are given a ‘green’ score out of 100, highlighting how much money buyers can save on their electricity bills. The website tailors the way it presents other information to home in on the benefits that will appeal to different people. Someone browsing for a television might be told that if everyone in the US who bought a TV opted for a particular model with a high green score, it would save enough energy to power New York City for an entire year. Appealing to a consumer’s identity as an American suggests we’re all in this together and if everyone acted responsibly, we would achieve something to be proud of. Identifying a national group can work better than appealing to our status as humans on a shared planet. Generally, the smaller and more specific the group, the more motivated we are. 2 Good things in smaller packages Unilever has a fabric conditioner called Comfort One Rinse that requires less water – a useful feature in water-stressed parts of the world. It can also save time. Despite positive feedback from early trials, the company found the conditioner met resistance in parts of Asia. Further research identified that in some rural areas, women gathered to wash their household laundry using a communal water supply. The social norms of that group dictated that they use the same amount of water and time washing clothes as everyone
else. Any less might make them look like a poor homemaker. Extolling the benefits of saving water was of little use here. Instead, Unilever asked high-status homemakers to tell the women about how they used the time they saved to look after their families in other ways, appealing to their social role as homemakers. 3 Invent your own group If it’s hard to identify a relevant social identity, the alternative is to create one. Shujaaz was launched in Kenya in 2009 to improve the lives of young locals by creating a social identity imbued with the positive attributes they wanted to encourage. This centred on a monthly comic about a teenage DJ who set up a pirate radio station. Written in the local slang, ‘Sheng’, the comic now reaches seven million people, is supported by TV and radio shows, and has a vibrant social media presence. Through the choices made by characters in the comic, Shujaaz (which means ‘heroes’ in Sheng) has promoted safe sex and vaccination, and encouraged young entrepreneurs to launch businesses. The positive impact is demonstrated by the fact that readers are far more likely than non-readers to use contraception and engage in family planning. As these examples show, tapping into social identity is not always straightforward. But by homing in on the most relevant social group, it can be a powerful motivational tool.
D omestic heating and cooling account for 14 per cent of UK carbon emissions. Of that, 85 per cent comes from gas boilers. Decarbonising heat is a priority if the country is to reach its net zero target. But how do we do that if heat pumps cost more than three times as much as a gas boiler? That was the question my colleagues and I set out to answer through the Interdisciplinary Centre for Storage, Transformation, and Upgrading of Thermal Energy, a five-year programme funded by the Government’s Engineering and Physical Sciences Research Council. We found that behavioural science could nudge people towards installing heat pumps instead of gas boilers, but some messages were more effective than others. Take the problem of cost. We found that customers were more patient than expected, waiting for a return on their investment, but high upfront costs still put people off. To address this, households with traditional oil or gas boilers can now apply for a £5,000 grant for an air source heat pump and £6,000 for a ground source. We also looked at how consumers compare products. The problem is that heat pumps work very differently to gas boilers, and people tend to prefer what they know to unfamiliar products.
So we avoid comparisons when presenting the benefits. Unsurprisingly, people were more interested when heat pumps were framed as an environmental issue. More intriguing, the ‘messenger’ was less critical. We concluded that installing a heat pump was a spending decision that people thought about, rather than relying on someone else’s view. Government policies now frame heat pumps in a way that encourages uptake, but broader issues need addressing so the industry can meet the UK’s green targets. For example, who will pay for upgrading the electricity network, and have the right companies been trained to carry out all the instillation work? “Decarbonising heat is a priority if the country is to meet its net zero target” Homeowners must have approved cavity wall and loft insultation, plus a valid Energy Performance Certificate, to qualify for subsidies. Many are unaware of the extra cost and disruption, while few companies currently offer a holistic view of household energy. Joined-up thinking is required to address these system-wide issues.
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Healthcare & Wellbeing
OPTIMISING HEALTHCARE
T here is no panacea for the huge challenges facing the NHS. The Covid-19 pandemic, arriving after a decade of austerity, stretched services like never before. This has been exacerbated by a crisis in social care and a shortage of doctors and nurses. Curing these ills requires major policy change and investment. In the meantime, behavioural science can be an invaluable tool, encouraging medics, managers, and patients to make manageable and cost-effective changes. Here are three ways nudges can support better outcomes, drawn from our policy briefs. 1 Protecting public health The Covid-19 pandemic shone a spotlight on the challenges that policymakers face in mobilising the population to protect public health. This was particularly apparent with the reluctance of many people to have the Covid-19 vaccine. By better understanding their reasons for hesitating, we could make several recommendations to increase uptake. To boost confidence, information about the safety and effectiveness of the vaccine needed to be widely accessible, branded by the NHS, and personalised by people’s local GP where possible. The vaccine-booking system had to be user friendly, offer information about how the jab was delivered, and emphasise that it was free. It was also important to tap into individual’s desires, such as protecting those close to them, rather than themselves, and easing lockdown restrictions
to return to normal life. A similar approach to
of the menu on its touchscreen kiosks, and Coca-Cola to the bottom, increased sales of sugar- free drinks by up to 30 per cent 3 Sustainable practices There is also potential to nudge patients and practitioners towards behaviours that reduce waste and improve the performance within the NHS. We found that well-worded text messages, warning patients that each missed appointment costs £160, could prevent 400,000 missed hospital appointments each year, saving the NHS an estimated £64 million (or more if the NHS had mobile numbers for more than 20 per cent of patients). Text message reminders can also increase the number of women who attend cervical screening. NHS leaders can also use behavioural science to encourage healthcare practitioners to implement guidance on prescribing antibiotics or sedatives and making referrals. Targeting practitioners with personal letters is a low-cost intervention. Our findings suggest that it can significantly enhance decision-making. Again, framing is key. Letters that highlighted characteristics that the sender and the recipient shared, appealed to social norms, and supported a positive self-image were more effective. So were those providing clear instructions for the recipient and explaining the consequences for their patients.
understanding individual motives and barriers to immunisation can be applied to other health protection programmes, such as the annual flu vaccination programme. 2 Encouraging healthy behaviour We all know that obesity, sedentary lifestyle, and excess alcohol consumption are key contributors to ill health and lost years of life. But many of us struggle to convert that into a healthy lifestyle. This is fertile ground for carefully constructed nudges to deliver better outcomes and significant savings for the NHS and society more generally. Take alcohol, for example. We sent 101 students, all of whom drank excessively, four different text messages over four weeks and found the framing had a significant affect on the impact. When their drinking was compared to the recommended limits, just 5 per cent requested links to alcohol education websites. This rose to 45 per cent when it was compared to what others drank. Messages about healthy diet could deliver similar benefits. Losing weight through diet and exercise is only half the battle. Most people regain half of what they have lost within a year and 80 per cent return to – or exceed – their pre-diet size. But teenagers who were sent texts encouraging them to commit to healthy behaviours, such as eating a bowl of cereal each morning or fruit for dessert, and checking on their progress, were more successful at keeping the weight off. Even something as simple as changing the order that items appear on a menu can help. Our research with McDonald’s showed that moving Coke Zero to the top
A nudge a day… by Ivo Vlaev & Aikaterini Grimani
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Healthcare & Wellbeing
WELLBEING IN THE WORKPLACE
Technological University, and Ahmed Tohamy of the University of Oxford, conducted one of the first in-depth studies on this topic that uses both objective and subjective markers of psychological distress. To study the human ageing process properly, researchers would naturally and ideally want to follow the same people throughout their lifespan. So we analysed longitudinal data related to approximately half a million men and women of all ages and backgrounds, residing in the some of the world’s richest nations, including the UK, the US, Australia, Canada, France, and Germany, among others. Our findings show that the midlife crisis is a real phenomenon, affecting both men and women between the ages of 45 and 50. Around this age, people tend to experience a peak in a range of indicators of severe distress. This is a troubling paradox. More precisely, we find that midlife is a time when people suffer a litany of distressing symptoms.
lives, have trouble sleeping, be clinically depressed, spend time thinking about suicide, feel life is not worth living, find it hard to concentrate, forget things, feel overwhelmed in their workplace, suffer from disabling headaches, and become dependent on alcohol. Perhaps the most surprising aspect of our findings is that, for many people in developed countries, the midlife is a time marked by peak life-time earnings and professional achievements. In their late 40s and early 50s, people are generally at the top of their career and have achieved financial stability. Moreover, the individuals from our analysed datasets reside in some of the richest societies around the world, which are also known to be considerably safe in terms of crime and more medically equipped. So, one would also expect people living in these countries to be generally more satisfied, yet this does not appear to be true for those at the midpoint in their lives. impact how one feels around midlife, such as having dependant children, getting a divorce, changing jobs,
TO THE CORE
1. Men and women are more likely to experience distress between the ages of 45 and 50, despite reaching the top of their careers and achieving financial stability. 2. Managers should recognise this, especially in candidates for senior positions, and offer the right support. This could include offering staff more time off and mentors, or making changes to their workload to reduce stress levels. 3. Happier workers tend to be more productive, so businesses are likely to reap the rewards of offering more support to staff experiencing a midlife crisis.
P opular media has always painted the midlife crisis in amusing ways, with men in their fifties buying flashy cars, investing heavily in their physical appearances, or abruptly engaging in thrill-seeking activities. To scientifically assess whether the midlife crisis actually exists, I, along with Osea Giuntella of the University of Pittsburgh, Sally McManus of City University of London, Andrew Oswald of the University of Warwick’s Economics Department, Nattavudh Powdthavee of Nanyang “Midlife is a time when people suffer a litany of depressing symptoms”
They are disproportionately more likely to take their own
How can firms help employees experiencing a midlife crisis by Redzo Mujcic TO THE CORE
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