Shared Value - changing the corporate mindset

Michael Porter and Mark Kramer's work on "Shared Value" has sparked much debate since its publication earlier this year. There has been much discussion as to whether their approach is viable, or even sustainable in the corporate context.
One of the more interesting blogs since then has come from Valerie Bockstette who discusses how companies are beginning to change from a "safety net" mindset when it comes to social objectives to a "trampoline" approach. She discusses the way Audi has shifted its objectives from simply making a car out of renewable energy, to assisting in the development  of excess renewable energy capture.
Her blog is both interesting and practically based.

HBR Blog Network

VALERIE BOCKSTETTE

Valerie Bockstette, HBS MBA 2005, is a Director at FSG and has over ten years of experience in advising leading organizations in Europe and the U.S. on issues of strategy, evaluation, and organizational capacity.

Create Shared Value with a Trampoline Approach

8:16 AM Wednesday November 16, 2011
by Valerie Bockstette | Comments (0)

Too often companies approach their engagement with social and environmental issues with a safety net mentality: reacting to vocal stakeholders, minimizing risk, doing the bare minimum to comply with standards, and at best, striving for footprint reduction rather than ecological value creation.
This approach is nowhere near enough to tackle the pressing problems we all face — water scarcity, low quality education systems, an aging population in some parts of the world, a rapidly growing one in others, and so on. Indeed, I see some of our most vexing societal problems as opportunities for the private sector. But these are opportunities that can only be seized through a different approach: a trampoline approach.
A trampoline approach is one that is focused on value creation, not the mitigation of value destruction. An approach that turns societal challenges into new markets. Safety nets prevent things from falling; they are responsive and defensive. But trampolines propel things forward.
Creating shared value, a paradigm for how companies engage with society pioneered by Michael Porter and FSG, captures this trampoline mentality very well. Michael Porter and Mark Kramer argue that shared value encompasses corporate policies and practices that enhance the competitiveness of a company while simultaneously advancing social and economic conditions in the communities in which it operates. When corporations create shared value they increase their profits and create greater social impact, resulting in powerful transformations and innovations in both business and society.
Last month, I had the privilege of attending and speaking at a conference about innovation, and specifically, about how shared value can infuse new innovation into companies competing in the 21st century. One of my fellow speakers, Reinhard Otten from Audi, introduced a new initiative where Audi will become a trampoline for the whole renewable energy movement in Germany. Audi is seeking to build a car that is carbon-neutral — one that when driven does not create any new net emissions. This is laudable, but I would argue somewhat safety-net oriented, as Audi is merely joining its competitors in an inevitable trend for the automobile industry.
But Audi is not stopping there. Audi believes that in order for the car to be truly carbon neutral, it needs to be manufactured using only renewable energy. Easier said than done it, turns out! Germany benefits from wind farms and solar energy, and in any given year from net excesses of these renewable sources of energy. However, Germany currently lacks the capacity to store excesses from sunny or windy days at scale, meaning that on the many days of deficits in these renewable sources, conventional sources of energy are still needed. So Audi has decided to become a trampoline. Audi helped spearhead a technology solution to this problem, which will enable excess renewable energy to be captured, stored, and used in its production processes. While this is good for Audi, it is also good for the country and society as a whole, as this solution was badly needed to move toward more renewable energy.
This initiative is new, and it is too soon to tell if it will work at scale the way Audi hopes it will. But it is energizing to see that a car company — which in the old paradigm of safety nets could have easily said that helping to solve Germany's energy storage problems was not part of its mandate — has decided to become a trampoline for renewable energy.
In the world of shared value, companies need to ask themselves a broader set of questions to compete:

• What are the key societal issues in my company's context? If you're a car company like Audi, you are worried about access to renewable energy. If you're a healthcare technology provider like GE, you're worried about the healthcare sector at home and abroad. Or, if you're an F&B company like Nestlé, you're worried about the practices in your supply chain.
• Which of these are impeding growth (or representing untapped markets)? In Audi's case, it is the inability to capture daily excesses in renewable energy. In GE's case, it is the quality, cost, and access issues plaguing healthcare, and for Nestlé, it is excess water use in agricultural production.
• How can I — and capable partners from all sectors — actively solve the problem? For Audi, it is engineering an energy storage solution in cooperation with multi-sectoral partners. For GE, it is the multifaceted healthymagination campaign. And for Nestlé, it is working with agronomists to help hundreds of thousands of smallholder farmers improve their farming practices.

It is easy to be a safety net; you just react to trends, regulations, and loud voices that fall into your lap. It is much harder to be a trampoline and to spot opportunities for societal progress and competitive advantage proactively. However, in the 21st century companies with safety-net mentalities will soon find themselves in need of one. Only a trampoline mentality will allow companies to successfully compete in this world.

Sculpting the 'flexible' corporate form - providing for companies with both "for profit" and "not for profit" objectives

One of the more vexing issues confronting new social ventures, is how to structure the form of organisation to get the benefit of tax exempt charitable status while having a business which may produce profits. Additionally, where an organisation is set up as a company, how does the not for profit attract directors who, on the one hand will not be paid for their work, but on the other, face the full suite of liabilities in the event of a mis-step or failure by the company.
In California, the state has introduced laws for two different types of corporation - each of which tries to grapple with and make provision for these issues. Gibson Dunn, lawyers, in California have written an excellent summary of the provisions of the two types of corporation which I have set out below.
These legislative provisions are the first steps in recognising that social ventures no longer necessarily fall within the traditional "charity" structures. Moreover, they attempt to address some of the difficulties facing directors of social venture organisations which are organised as a company.
We need to stoke the dialogue in Australia to help foster a regime which provides protection to directors of such corporations, whilst also introducing some flexibility in the types of corporation which fall within the tax exemption for charitable institutions.
Here is how the State of California is attempting reform.
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October 25, 2011
CALIFORNIA ADOPTS TWO NEW CORPORATE FORMS TO ADVANCE SOCIAL BENEFITS
To Our Clients and Friends (of Gibson Dunn, Lawyers):
On October 9, 2011, California Governor Jerry Brown signed into law competing bills that create two new corporate forms in California -- a "flexible purpose corporation" and a "benefit corporation" -- intended to allow entrepreneurs and investors the choice of organizing companies that can pursue both economic and social objectives. The new corporate forms differ from traditional for-profit corporations that are organized to pursue profit (and not social purposes) and non-profit corporations that must be used solely to promote social benefits. These laws will take effect on January 1, 2012.
The flexible purpose corporation is created by California Senate Bill 201 ("SB 201"), which adds Division 1.5 to Title 1 of the California Corporations Code (the "Code") and amends other related sections of the Code, and the benefit corporation is created by California Assembly Bill 361 ("AB 361"), which adds Part 13 to Division 3 of Title 1 of the Code. State Senator Mark DeSaulnier authored SB 201, and a full copy is available here. AB 361 was authored by Assemblyman Jared Huffman, and a full copy is available here. Both new laws take effect January 1, 2012.
Background
The new laws offer two versions of a solution to an identified gap in the Code and the corporate laws of many states. Existing law in California permits formation of for-profit corporations that operate within a construct that places interests of shareholders, and specifically return to shareholders, as the primary, if not sole, objective of the corporation and its various agents. A corporation might engage in philanthropy, act in an environmentally conscious manner and promote employee- or community- friendly policies, to name a few, but such pursuits ultimately are rationalized in the corporate governance context as being acts taken to promote long-term value growth for shareholders, and directors of a corporation could face exposure if they lean too far in favor of social objectives at the expense of shareholder returns. In contrast, a non-profit corporation in California is mandated to serve public interests and is specifically prohibited from pursuing private gain. A non-profit corporation that strays too far toward profit-producing activities risks action by the State Attorney General and loss of tax-exempt status (if applicable). This has left a gap for some entrepreneurs and investors that desire a business vehicle which can pursue both profits and social objectives.
SB 201 and AB 361 are the result of efforts by two groups working over the last two years to introduce a new "hybrid" corporate form in California. SB 201 originally was written by a group of corporate attorneys from major law firms in California, including this firm, who sought to create a new "flexible" form of corporation in California that would allow shareholders to devise their own mix of economic and social corporate objectives, ensure that future investors would have adequate notice of the purposes pursued, and provide protections to ensure that the new corporate form is not easily foisted upon shareholders of traditional corporations. AB 361 resulted from efforts of B Lab, a non-profit organization that offers certification of corporations as "B corporations" (which B Lab describes as "a new type of corporation which uses the power of business to solve social and environmentalpurposes") and promotes adoption of benefit corporation legislation in states across the country. Enactment of AB 361 follows the adoption of similar benefit corporation legislation in Hawaii, Maryland, New Jersey, Vermont and Virginia. The fact that both SB 201 and AB 361 were enacted is likely to create confusion going forward among entrepreneurs, investors and lawyers as they try to understand differences among the new entities and traditional for-profit and non-profit corporations (as well as limited liability companies and limited partnerships). Both of the new entities will be taxed the same as for-profit corporations under current tax law.
Flexible Purpose Corporations
A flexible purpose corporation will be set up much like a traditional for-profit corporation, with shareholders and a board of directors, but its articles of incorporation and share certificates must state that it is organized as a flexible purpose corporation, and its articles must identify a "special purpose" from the following list:
(1) One or more charitable or public purpose activities that a nonprofit public benefit corporation is authorized to carry out; or
(2) The purpose of promoting positive short-term or long-term effects of, or minimizing adverse short-term or long-term effects of, the flexible purpose corporation's activities upon any of the following:
(a) The flexible purpose corporation's employees, suppliers, customers, and creditors; (b) The community and society; or (c) The environment.
The obvious breadth of potential purposes was intended by the drafters of SB 201 -- to allow shareholders to define their desired special purposes without regard to what third parties might deem to be valid or desirable societal objectives.
A flexible purpose corporation can amend its "special purpose" by amending its articles of incorporation. If the amendment would materially alter any special purpose stated in the articles, such amendment must be approved by the affirmative vote of at least two-thirds of the outstanding shares of each class of the corporation's stock, or a greater vote if required in the articles, regardless of whether a class is entitled to vote, and a majority of the outstanding shares of all classes entitled to vote. A similar vote is required for a flexible purpose corporation to amend its articles to convert into a traditional California corporation (which can be done by amending the articles to eliminate the special purpose provisions). A unanimous vote of all shareholders, regardless of whether shares are entitled to vote, is required to amend a flexible purpose corporation's articles to convert it into a non-profit corporation.
In discharging his or her duties, a director of a flexible purpose corporation "may consider those factors, and give weight to those factors, as the director deems relevant, including the short-term and long-term prospects of the flexible purpose corporation, the best interests of the flexible purpose corporation and its shareholders, and the purposes of the flexible purpose corporation as set forth in its articles." SB 201 specifically states that there shall be no private right of action created for members of the public to sue a flexible purpose corporation for failure to pursue or achieve its special purposes, and directors are not responsible to any parties other than the flexible purpose corporation and its shareholders.
A flexible purpose corporation's board of directors is required to send an annual reportto shareholders each year that includes a management discussion and analysis (MD&A) concerning the short-term and long-term objectives of the entity relating to its special purpose or purposes, the material actions taken during such year to achieve such objectives, the impact of such actions, and the causal relationships between the actions and outcomes, future material actions expected to be taken in the short-term and long-term to achieve the entity's special purpose objectives, the measures used to evaluate the entity's performance in achieving its special purpose objectives, and any expenditures incurred in achieving these objectives. The entity's board of directors also must make the annual flexible purpose MD&A publicly available by posting it on the entity's website or providing it through similar electronic means.
Flexible purpose corporations also must send to shareholders and make publicly available current reports summarizing (i) any expenditure or group of expenditures that are likely to have a material adverse impact on the entity's results of operations or financial condition for a quarterly or annual fiscal period or (ii) any decision by the board or action by management to (a) withhold expenditures that were to have been made in furtherance of the entity's special purpose where the planned expenditures were likely to have a material positive impact on the entity's impact in furtherance of its special purpose objectives or (b) determine that the special purpose has been satisfied or should no longer be pursued. The shareholders of a flexible purpose corporation with fewer than 100 shareholders can elect to waive the requirement for the entity to send and publish annual and current reports, and the disclosure requirements are deemed satisfied for any corporation with securities registered under Section 12 of the Securities Exchange Act of 1934 if the corporation includes the required disclosure in its periodic reports.
A flexible purpose corporation can merge with any other California or non-California entity in the same manner as for-profit corporations, except that if the disappearing corporation in a merger is a flexible purpose corporation and the surviving corporation is not, or the surviving corporation in a merger is a flexible purpose corporation with materially different special purposes than a disappearing flexible purpose corporation, then in addition to other approvals typically required the merger must be approved by the affirmative vote of at least two-thirds of the outstanding shares of each class of stock of the disappearing flexible purpose corporation, or a greater vote if required in the articles, regardless of whether a class is entitled to vote. If the disappearing corporation in a merger is a California for- profit corporation and the surviving corporation is a flexible purpose corporation, the merger must be approved by at least two-thirds of the outstanding shares of each class of stock of the disappearing corporation, or a greater vote if required in the articles, and all shareholders of the disappearing corporation not voting in favor of the merger must be afforded the opportunity to sell their shares to the surviving corporation for cash at their fair market value (i.e., exercise dissenters' rights). Essentially the same requirements apply if a California for-profit corporation chooses to convert to a flexible purpose corporation. If a flexible purpose corporation merges with a non-profit corporation and the surviving entity in the merger is the non-profit corporation, the merger must be approved by all shareholders of the disappearing flexible purpose corporation, regardless of whether shares are entitled to vote.
Benefit Corporations
A benefit corporation also will be set up much like a traditional for-profit corporation, but its articles of incorporation must state that it is a "benefit corporation" and it must be organized to pursue a "general public benefit" and, if it chooses, one or more other "specific public benefits." A general public benefit is defined as a "material positive impact on society and the environment, taken as a whole, as assessed against a third-party standard." The optional specific public benefits can include any of the following:
(1) Providing low-income or underserved individuals or communities with beneficial products or services.
(2) Promoting economic opportunity for individuals or communities beyond the creation of jobs in the ordinary course of business.
(3) Preserving the environment. (4) Improving human health. (5) Promoting the arts, sciences, or advancement of knowledge. (6) Increasing the flow of capital to entities with a public benefit purpose. (7) The accomplishment of any other particular benefit for society or the environment.
The "third-party standard" utilized by a benefit corporation refers to a "standard for defining, reporting, and assessing overall corporate social and environmental performance to which all" of a long list of requirements apply. B Lab, the original proponent of AB 361, reportedly has developed such a standard and offers its certification services at fees ranging up to $25,000 per corporation per year.
Any traditional for-profit corporation can become a benefit corporation simply by amending its articles to state that the entity is a benefit corporation, and likewise a benefit corporation can terminate its status as a benefit corporation simply by amending its articles to delete such statement. In either case, the amendment requires approval of at least two-thirds of the outstanding shares of each class or series of stock of the corporation, regardless of any limitation stated in the articles or bylaws on the voting rights of any class or series. In addition, the corporation changing its status must provide dissenters' rights to all shareholders not voting in favor of the proposed change. A benefit corporation may amend, add or delete any additional, specific public benefits identified in its articles by amending its articles with approval of at least two-thirds of the outstanding shares of each class or series of its stock (or higher threshold if specified in its articles).
In discharging their respective duties, the board of directors, committees of the board and individual directors of a benefit corporation are required to "consider the impacts ofany action or proposed action upon all of the following:
"(1) The shareholders of the benefit corporation;
(2) The employees and workforce of the benefit corporation and its subsidiaries and suppliers;
(3) The interests of customers of the benefit corporation as beneficiaries of the general or specific public benefit purposes of the benefit corporation;
(4) Community and societal considerations, including those of any community in which offices or facilities of the benefit corporation or its subsidiaries or suppliers are located;
(5) The local and global environment;
(6) The short-term and long-term interests of the benefit corporation, including benefits that may accrue to the benefit corporation from its long-term plans and the possibility that these interests may be best served by retaining control of the benefit corporation rather than selling or transferring control to another entity; and
(7) The ability of the benefit corporation to accomplish its general, and any specific, public benefit purpose."
Having to consider all these factors for every issue that comes before a board of directors may be a tall order. AB 361 specifically provides that directors are not required to give particular weight to these specific factors or interests unless the corporation's articles of incorporation state a preference for particular factors or interests. While this approach provides much flexibility, the new law does not make clear what standards directors should follow in making decisions, resulting in some commentators expressing concern that directors of benefit corporations may have too much discretion and lack accountability to shareholders.
AB 361 limits directors' liability for monetary damages for failure of a benefit corporation to create a general or specific public benefit and states that directors shall owe no fiduciary duties to beneficiaries of the benefit corporation's general or specific public benefit purposes. Nevertheless, AB 361 expressly contemplates that a "benefit enforcement proceeding" may be brought against a benefit corporation or its directors or officers by the corporation itself or derivatively by shareholders, directors, persons who hold more than 5% of the equity of a parent entity or other persons specified in the articles or bylaws of the corporation. AB 361 also specifically requires an officer of a benefit corporation to consider the same interests and factors that board members must consider (as described above) whenever an officer has discretion to act and an action may materially impact such interests or factors, and the officer shall be deemed not to have violated his duties when he or she so acts.
Similar to the reporting regime required for flexible purpose corporations, a benefit corporation is required to deliver to each shareholder and make publicly available on its website (if it has one) an annual benefit report that (i) details for the applicable year the process and rationale for selecting a third-party standard used to prepare the report, the ways in which it pursued a general public benefit and any specific public benefits and any circumstances that have hindered the creation of such public benefit purposes, (ii) assesses the social and environmental performance of the benefit corporation according to the third-party standard, (iii) identifies any person that owns five percent or more of the corporation, (iv) includes a statement of the corporation's board of directors regarding whether the corporation failed to pursue its public benefit purposes in all material respects during such year, and (v) identifies any connections between the corporation (or its directors, officers or material owners) and the entity (or its directors, officers or material owners) that created the third-party standard used by the corporation to assess its pursuit of its benefit purposes, in any case that might "materially affect the credibility of the objective assessment of the third-party standard." There is no mechanism for a benefit corporation or its shareholders to opt out of these annual reporting and disclosure requirements.
Anticipated Usage
It remains to be seen whether entrepreneurs and investors will embrace these new forms of corporate entity in California. Organizing a flexible purpose corporation or benefit corporation will require more initial thought and work than forming a traditional for-profit corporation, particularly in 2012 as practitioners come up to speed on the requirements for the new entities. As between the two forms, the flexible purpose corporation offers greater flexibility in terms of defining the special purposes to be pursued by the corporation and less onerous governance requirements, while the benefit corporation offers the advantage of being used and recognized in a handful of other states.
Gibson, Dunn & Crutcher's lawyers are available to assist with any questions you may have regarding these issues. For further information, please contact the Gibson Dunn lawyer with whom you work or either of the following:
David M. Hernand - Los Angeles (310-552-8559, dhernand@gibsondunn.com) Stewart L. McDowell - San Francisco (415-393-8322, smcdowell@gibsondunn.com)
© 2011 Gibson, Dunn & Crutcher LLP
Attorney Advertising: The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice

Baroness Susan Greenfield - Brain Change from Digital Overload?

Baroness Susan Greenfield is a British scientist, broadcaster and member of the House of Lords who has been widely acknowledged as one of the leaders in the fields of Parkinson's and Alzheimer's Diseases. She is engaging, entertaining and makes complex topics such as neuroplasticity accessible to those of us who know nothing about science.


She argues convincingly, that our malleable brains may need protection from the information overload of the digital world. Baroness Susan Greenfield, suggests that the impact of screen culture on the human brain merits the same public debate and funding for research as climate change. She warns that as the online world continues to expand, excessive screen culture may be changing the way our brains are wired.


The research shows that the effect of screen culture on the brain is not dissimilar to symptoms associated with attention deficit disorder, such as a shorter attention span and decline in empathy.  The “yuck and wow” scenario of the internet “where you live in the short-term world where you have immediate reactions to things that flash up in your face and bombard your ears” might drive brain connections and brain cell circuitry in a way that shortens the attention span. In the UK alone, the number of prescriptions for ADHD has trebled in the past decade.

Professor Greenfield is researching whether these “environmental” changes will have an impact on our capacity for creative and long term thinking, and if so, what we should be doing in response. Her lectures recorded on TED, and the recent debate on the ABC entitled "The Great Brain Debate" with Peter Williams, Social Media exponent are compelling viewing: 

http://www.abc.net.au/tv/bigideas/stories/2011/02/08/3131943.htm

Is the Big Independent Corporate Board less Effective?

In the recently published "Governance Gone Wrong? The High Cost of Big Boards", Peter Swan, a professor of finance at the Australian School of Business, reports on his study of 284 major Australian listed companies for the period 2000-2010.

He posits that companies with a large number of Board Directors who have little or no shareholdings in the Company results in less effective board monitoring and weak decision making. His research (together with researcher Serkan Honeine) assessed performance through a comparative analysis of market-to-book ratio of the surveyed companies.

These findings stand in direct contrast to views held by regulators which encourage/ mandate a majority of independent directors on boards, particularly in light of large US corporate failures such as Enron. Under the ASX Listing Rules, a majority of directors is required to be "independent" ie holding less than 5% of stock in the company or not having worked in an executive capacity for the company or another group member for at least three years. The authors say this is "counterintuitive" as it fails to align interests of directors with shareholders.

Moreover, Swan and Honeine question the "independence" and ability of directors to challenge management effectively by the normative effect of the "boys club" where directors want to be accepted and referred for other boards by their peers. This leads to behaviour which is more collegiate, rather than challenging:

"Non-executive directors who are often appointed through friends on the board would be more partial to showing allegiance to their friends and overlook activities by management to expropriate the wealth of shareholders... Paper independence aside, high levels of fixed compensation for attending scheduled meetings, along with the barriers to equity ownership provide for little incentive for them to seek and endorse strategies that add value to a company, as the non-executive directors would re eive little in the way of the fruits for their labour."http://knowledge.asb.unsw.edu.au/article.cfm?articleId=1488

Their findings suggest that while reduced monitoring of management by directors lessens performance, share ownership by directors enhances firm performance. They refer to a "free rider" problem when large boards with "non-shareholding aligned" directors have little incentive to rock the boat.

While the recent spate of cases including James Hardie, Fortescue and clearly Centro would seem to raise the bar in terms of a director's requirement for close participation and monitoring of a business (with some arguing that the bar is raised so high that it almost involves a quasi executive requirement), Swan and Honeine counter that this is not enough without a material decrease in size of the board.

Interestingly, similar results were found by F Cornelli (London Business School) and O Karakas (Boston College) in their study "Corporate Governance of LBOs: The Role of Boards." where they examined the correlation between enhanced performance of companies taken over by private equity and the size and nature of the corporate board. They found that where the board size decreased by 15% and the presence of outside directors was drastically reduced and replaced by individuals employed by the private equity sponsors, there was an outperformance by those companies to other companies of comparative size and industry. See article http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1875649


On the other hand, there is equally strong argument that the best performing boards are those that work closely with the CEO/ management to encourage a meaningful flow of information - both positive and negative to the board - irrespective of size or "alignment." This is because a board can only contribute effectively where they know what the issues are, and all the competing issues that must be balanced in the process.


It is clear that there is no definitive best practice for board composition which can be legislated. However, where there are interested and well informed board members, with an effective chairman who encourages and supports management to bring all relevant information to the board, these boards will be more effective than any board which is simply mandated for "size" or shareholder alignment. It will be interesting to see in a post Centro environment, whether the evidence will show that a smaller board can achieve these results more effectively than the larger board.

Business Case for Sustainability - Results of McKinsey 2011 Study

For an interesting analysis of the Business Case for adopting Sustainability practices in the for profit corporation, the results of the recent McKinsey Survey (July 22, 2011) prove interesting. Views of 3,202 executives from a range of regions, industries, company sizes and functional specialties were canvassed and indicated a higher awareness and adoption of such practices since their 2010 survey.

In summary, companies are more actively integrating sustainability principles into their businesses and seeing business gains beyond the merely reputational. Savings in energy useage, employee motivation and improving operational efficiencies were some of the responses given for integrating more sustainable practices into their businesses.

Reasons given by companies for adopting sustainability objectives were given as follows:

• 33% - for purposes of operational efficiency and lowering costs 
• 32% - for reputation
• 27% - for new growth opportunities

McKinsey's provides interesting analysis on where sustainability provides competitive advantage and in which industries. Their conclusion is that "more businesses will have to take a long-term strategic view of sustainability and build it into the key value creation levers that drive returns on capital, growth and risk management..., as well as the key organizational elements that support the levers. Each company's path to capturing value from sustainability will be unique, but these underlying elements can serve as a universal point from which to get started." https://www.mckinseyquarterly.com/Energy_Resources_Materials/Environment/The_business_of_sustainability_McKinsey_Global_Survey_results_2867?pagenum=5

For the analysis of the full survey: see https://www.mckinseyquarterly.com/Energy_Resources_Materials/Environment/The_business_of_sustainability_McKinsey_Global_Survey_results_2867 

Teens respond to pleasure not pain

Nancy Darling, PHD has recently released a very interesting article about research released on the Teenage brain. In her article in Psychology Today, she summarises the work of development psychologist, Laurence Steinberg, who argues the rate of development of the Incentive Processing area compared with the Impulse control area in the teen brain occur differently.

The Impulse control area develops much slower than the Incentive Processing Area which is sensitised right after puberty, meaning risky behaviours are experienced by teens as more rewarding.

The simple message is that teens will be considerably more motivated by pleasure (eg how good it feels to accomplish something) than fear of negative consequences (eg failing an exam).

It is an interesting study which may fashion better (and more effective) communication with teens. For an accessible summary of the research see http://www.psychologytoday.com/blog/thinking-about-kids/201110/teens-respond-pleasure-not-pain-parent-accordingly