The following article is authored by Danielle Kent.

• Dire messaging around climate change has not motivated adequate institutional action to combat climate change and may even be counterproductive.
• Motivate institutional climate action by adopting a human-centred approach that reframes and highlights benefits and opportunities.
• Target decision-makers in our key institutions to make the biggest gains in global sustainability.
   

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To effectively transition away from fossil fuels, we need to target decision makers in our biggest institutions: governments, banks and businesses. Due to their scale and influence, these institutions have enormous impact on global sustainability. While there have been extensive efforts worldwide to individualize sustainability, encouraging citizens and customers to contribute through actions such as recycling or reducing electricity usage, less attention has been focused on the institutional scale. For institutions who have set ambitious sustainability targets, effective strategies are now needed to ensure that their actions align with their ambitions.

Greening the global financial system is key to achieving a low-carbon economy (Carney et al., 2019), yet the global proportion of sustainable investment assets under management is only 36 per cent (Global Sustainable Investment Alliance, 2019). Institutional investors play a particularly important role in the divestment from fossil fuels because they have the most influence over the proportion of responsible investments. For example, in Europe, the institutional investors accounted for 72 per cent of all assets under management as of 2020 (EFAMA, 2021). Better communications strategies targeted towards institutional investors are needed to improve global levels of sustainable and responsible investing.

When it comes to the framing of sustainable business decisions, we have, as a global community, gotten it incredibly wrong. Dire messaging around climate change is proving inadequate in motivating the necessary actions to address global warming. It may even be counterproductive. Catastrophic information can conflict with our profoundly held beliefs that the world is orderly and stable (Feinberg and Willer, 2011). Decision makers may then respond to catastrophic information by disengaging to maintain their beliefs. Thus, a radical change in the way we frame sustainable decisions is necessary. Behaviourally informed strategies that target and reframe institutional policies and decision making around sustainability are needed for an effective global response to climate change.

The human brain is not designed to register climate change as a moral imperative (Markowitz and Shariff, 2012) as moral judgements are driven by emotion (Haidt, 2001). Climate change, failing to elicit a strong emotional response, is therefore vulnerable to inaction. Further, there is no explicit moral transgression around climate change in that there is no identifiable individual acting intentionally to harm another individual – a context which would provoke action. Institutional decision makers are further impeded because they make decisions on behalf of entities void of human emotion. 

Research has demonstrated that our decisions are influenced by the way information is presented, or ‘framed’ (Tversky and Kahneman, 1981). Different framing can lead to very different choices even when the options are the same. Framing effects are particularly prevalent in financial decisions involving uncertainty (Pinon and Gambara, 2005). Institutional decision makers are not immune to the reframing of sustainable decisions. Indeed, evidence indicates that trained professionals evaluate moral judgements the same way that untrained individuals do (Francis et al., 2018).

Bearing this in mind, we must reframe sustainability decisions, highlighting them as an opportunity for permanent future benefits to the environment in exchange for a temporary transition cost. By recognising the ongoing benefits in contrast to the temporary costs, the benefits of action begin to outweigh the costs. The power of reframing is that it translates the moral imperative for sustainability into a language that is understood by institutions: one of benefits and costs.

One way of reframing sustainable decisions is to redesign decision-making frameworks within an organisation. By incorporating an evaluation of the temporary costs of taking action compared to the ongoing benefits to the environment, the moral imperative is explicitly addressed with a long view. Similar reframing can be applied to an organisation’s strategic plan so that decisions on allocating resources are evaluated against sustainability objectives. Through balanced scorecards, a strategy management tool, internal reporting can likewise be reframed to track and encourage activities that align with an organisation’s sustainability targets.

The process of reframing should also entail more positive messaging in order to motivate action-orientated behaviour. This is crucial, as optimism has been shown to predict pro-environmental behaviour (Kaida and Kaida, 2019; Ojala, 2012; 2015), whereas helplessness has been shown to act as a barrier to pro-environmental behaviour (Landry et al., 2018). Optimism is also associated with greater resilience (Segovia et al., 2012), which can further motivate adaptive action in times of transition.

Insights from individuals can be translated to an institutional scale when we recognise that an institution’s decisions is the outcome of a coordinated collection of individual human decisions all responding to incentives and information. Applying insights from individuals to institutions, scales the power of reframing beyond their sum because institutions are coordinated.  

Overall, reframing decisions around sustainability in an institutional setting requires a human-centred approach. Instead of focusing on the consequences of global warming, institutional decision frameworks could incorporate the permanency of future benefits over the transitory costs associated with sustainable action. The positive impacts of such policies are flourishing ecosystems, improved longevity and health, shared economic prosperity and greater global security. In taking this different approach, we can connect the analytical facets of business and investment to our human bias towards hope (Sharot, 2011) for greater action around climate change.

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References

Carney, M., de Galhau, F. V., & Elderson, F. (2019) The financial sector must be at the heart of tackling climate change. The Guardian, https://www.theguardian.com/commentisfree/2019/apr/17/the-financial-sector-must-be-at-the-heart-of-tackling-climate-change.

EFAMA (2021) Asset management in Europe. An overview of the asset management industry. 13th annual review. Brussels: EFAMA. https://www.efama.org/sites/default/files/files/Asset%20Management%20Report%202021_3.pdf.

Feinberg, M., & Willer, R. (2011). Apocalypse soon? Dire messages reduce belief in global warming by contradicting just-world beliefs. Psychological Sci. 22(1), 34-38.

Francis, K. B., Gummerum, M., Ganis, G., Howard, I. S., & Terbeck, S. (2018). Virtual morality in the helping professions: Simulated action and resilience. British Journal of Psychology, 109, 442-465.

Global Sustainable Investment Alliance (2021). Global Sustainable Investment Review 2020. http://www.gsi-alliance.org/wp-content/uploads/2021/08/GSIR-20201.pdf 

Kaida, N., & Kaida, K. (2019). Positive associations of optimism–pessimism orientation with pro-environmental behavior and subjective well-being: A longitudinal study on quality of life and everyday behavior. Quality of Life Research, 28, 3323-3332. 

Landry, N., Gifford, R., Milfont, T. L., Weeks, A., & Arnocky, S. (2018). Learned helplessness moderates the relationship between environmental concern and behavior. J. of Environ. Psych. 55, 18-22.

MacKinnon, M., Davis, A. C., & Arnocky, S. (2022). Optimistic Environmental Messaging Increases State Optimism and in vivo Pro-environmental Behavior. Frontiers in Psychology, 1889.

Ojala, M. (2012). Hope and climate change: the importance of hope for environmental engagement among young people. Environ. Educ. Res. 18, 625–642. doi: 10.1080/13504622.2011.637157

Ojala, M. (2015). Hope in the face of climate change: associations with environmental engagement and student perceptions of teachers’ emotion communication style and future orientation. J. Environ. Educ. 46, 133–148.

Pinon, A., & Gambara, H. (2005). A meta-analytic review of framing effect: risky, attribute, and goal framing. Psicothema, 17, 325–331.

Sadiq, M., Paul, J., & Bharti, K. (2020). Dispositional traits and organic food consumption. Journal of Cleaner Production, 266, 121961.

Segovia, F., Moore, J. L., Linnville, S. E., Hoyt, R. E., & Hain, R. E. (2012). Optimism predicts resilience in repatriated prisoners of war: A 37‐year longitudinal study. Journal of traumatic stress, 25(3), 330-336.

Sharot, T. (2011). The optimism bias. Current Biol. 21(23), R941-R945.

Tversky, A., & Kahneman, D. (1981). The framing of decisions and the psychology of choice. Science, 211, 453-458.

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Danielle Kent is a Behavioural Economist and Lecturer at Macquarie University, Australia, and formerly worked in Papua New Guinea for the World Bank designing randomised controlled trials.

The facts, ideas and opinions expressed in this piece are those of the authors; they are not necessarily those of UNESCO or any of its partners and stakeholders and do not commit nor imply any responsibility thereof. The designations employed and the presentation of material throughout this piece do not imply the expression of any opinion whatsoever on the part of UNESCO concerning the legal status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries.