REVIEW OF FINANCIAL MARKETS
TABLE 4: FINDINGS AT THE REFLECTING STAGE OF THE PROPOSED ACTIVE MINDSET MODEL
Task-related attributes Assumption analysis
Contextual awareness Examples
• Test your frame of reference • Challenge the way of thinking
• Type of institution influences climate response • Size of institution influences climate response • Location of institution influences climate response
Imaginative speculation • Think innovatively about how to fund sustainable projects
• Engage with policymakers
Reflective scepticism • Test information coming from management • Challenge your own opinions
Hambrick’s (1997) and Wincent et al.’s (2010) observations on the importance of board interlock to innovation and performance.
2. Leverage the bank brand to drive climate response, using the “emotional connection and trust” customers feel towards the bank to drive a progressive climate response.
talk about”, reflecting the need for reflective scepticism (Rimanoczy, 2021). Another director spoke of needing to build a certain fluency in climate- related issues before feeling “that you’re competent to properly test assumptions”, supporting the importance of cognition and perceived self-efficacy. In terms of testing one’s own
assumptions, directors expressed a need to challenge the way of thinking, using the analogy that if you have a hammer (a patterned way of thinking), everything looks like a nail, supporting Tuckett and Nikolic’s (2017) observations on the value of awareness of one’s conviction narrative and underlying mental states. Interestingly, directors gave examples of how changing their thinking about one issue, for example shifting their thinking about suspected credit card fraud to presuming the customer was innocent rather than guilty, “changed how the board thinks about everything”, including climate. This observation is a useful reminder that directors are not making climate-related decisions in isolation, and, although their conviction narratives and underlying mental models vary issue by issue, by increasing awareness of their conviction narrative, significant shifts in thinking can be achieved.
Imaginative speculation Several directors described ways they are thinking innovatively about how to fund sustainable projects, for example reimagining a large mortgage portfolio
CISI.ORG/REVIEW
and reorganising the bank around data, and two directors mentioned engaging with regulators to help shape the future of finance, through, for example, advocating for lower capital requirements for sustainable products. This supports the innovation and engaging with policymaker behaviours associated with active mindset (CISL, 2020) and also suggests high perceived self-efficacy (Bandura, 1997; Forbes, 2005).
Reflective scepticism The importance of doubt and healthy cynicism as a general habit was mentioned as “an essential ingredient of the active mindset” by one director. This supports the importance of awareness of one’s mental state, whether divided (not open to conflicting information) or integrated, as suggested by Tuckett and Nikolic (2017), and generally higher perceived self-efficacy (Bandura, 1997).
ADDITIONAL ACTIVE MINDSET BEHAVIOURS IDENTIFIED IN THE DIRECTORS’ ACCOUNTS I identified two: 1. Leverage the board composition (meaning the personal experiential and psychological attributes of the directors as well as the connections that exist due to board interlock), which was mentioned by all respondents, supporting the importance of social capital as advocated by Adner and Helfat (2003) and Hambrick and Mason (1984), and Geletkanycz and
MEDIATING FACTORS IN THE DIRECTORS’ ACCOUNTS In addition to the active mindset model components of scan, plan, transform, and reflect existing in the directors’ accounts, the factors identified in the previous article (
cisi.org/rofm-feb22) as mediating dynamic capabilities: human and social capital; cognition; emotional capital; and objective reality/context were also apparent in the directors’ accounts. Thus, it appears that the components of the active mindset model exist in practice and the active mindset model is an effective conceptualisation, achieving my third research aim: test for the validity of the model. In terms of answering my research
question (To what extent and in what ways are bank directors using an active mindset in their decisions about climate response matters?) and addressing my second aim (test how the active mindset is working in practice, identifying areas where practice can be improved), it is apparent from the accounts that active mindset regarding climate response exists, but what directors perceive as an adequate response is heavily influenced by their context (predominantly type of bank). This supports the importance of objective reality/context as a mediator of dynamic capabilities, although, importantly, some directors are pushing against this constraint. I also identified that there are significant opportunities to improve performance through developing another mediator of dynamic capabilities, emotional capital, in particular. I discuss objective reality/ context as a constraint and the opportunity to develop emotional capital to improve practice elsewhere in the overall paper.
For a copy of the full paper, please email Clare Nickson Havens at
cn438@cam.ac.uk.
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