Efrat Peled: Good Business

We define good as anything that creates a win-win solution for the corporation, but also for society and the environment. In our perspective, a company needs to have, most importantly, a vision that leads it. So the concept was to create a vision connected to “doing good is good business” and slowly transform, in a very responsible way, day-to-day decision making, taking this notion into consideration in our teams, in our forums, in the board, at any level.

We found that if you build good and positive impact into your day-to-day decisions, some very interesting solutions can come from the people who are on the ground. For example, in our infrastructure group — we operate in Guatemala — we’re doing several hydroelectric power facilities. The ability to do a project that incorporates better renewable energy technology and preserves the natural vegetation is what we’re talking about. We will do infrastructure. But we’re also looking intentionally to reduce the damage to the environment as much as we can.

It wasn’t easy, to be honest. We could not copy-and-paste any existing methodology, because when you deal with infrastructure, with banking, these are not industries that had a clear methodology.

We decided to engage the best force that we have, and that’s our employees. We understood that after we determined the scope of what we wanted to achieve, the ability to achieve it rested with the people who work in our organization, especially the mid-level management — the ones who are building from the bottom up the business and strategic plans. So we decided to create innovative forums. One was around sustainability. One was around financial freedom. One was around volunteering. One was around giving. One was around language and communication. We decided to have each organization send from their mid-level management the person who cared most about each issue.

Today, we have probably close to 100 people engaged in these forums from all of our subsidiaries. They’re responsible for taking the ideas and implementing them. Let’s say we have somebody from Bank Hapoalim in the sustainability forum, and they decide they want to initiate a specific activity around sustainability. That person is responsible to incorporate that idea into the bank’s strategic, annual planning, and then to adjust it to what the bank needs.

The concept is to engage internal talent and encourage employees’ knowledge and innovation. We say what we want to implement, but they decide how to implement it, and then take responsibility for doing it.

The last piece is the evaluation and compensation system, which is very, very critical to make sure that people feel encouraged and are being credited for the efforts and the activity that they put in.

It differs among the companies. For the bank, we have specific measurements for sustainability and environmental and social responsibility — and for our internal values (the value the bank embodies is financial freedom). We put very specific key performance indicators in place for the employees and for ourselves. For our water company, Miya, there may be different KPIs than those we have at the bank, but still, everything is being measured and quantified, and linked to each company’s main strategy.

It has a link to compensation but it’s more than compensation. We make sure that the people who are involved have the opportunity to present what they are doing to the board of management, board of directors, other employees. I think that presenting to and influencing others — the inspirational part of the work — is more important to people than even the monetary compensation. People want to do good. People want to show that they influence.

Of course. One of our basic guidelines is to work with suppliers and service providers that accord to the standards that we expect from a sustainability and ethical perspective. We engage the suppliers with these concepts, too, so that we can help them upgrade their own work.

The bank is very, very advanced on sustainability reporting. We work with companies who come to us and want to upgrade their own sustainability profile. So we look at ourselves as kind of a mentor in that area. The same goes with our infrastructure group, Shikun & Binui. If we work on a project, let’s say in Israel or in Germany, sustainability will be around green building. But if you work with a municipality in Africa, or if you work in Central America, you may want to focus more on education, or hygiene for children, or crossing the roadways that we build. This is sustainability in those places.

We engage governments and local people, and we work with them to create a sustainability plan that suits their own capacity, in their own environment –  what fits them.

Yes. I will give you an example. We established the vision of financial freedom, which says, “The bank and the customers together are responsible for the financial potential and growth of the customer.” We started with creating tools for budgets and many other tools. Last year, the bank opened the Israel forum for financial freedom. In that forum, we have regulators from the Bank of Israel, some of the pension funds, and some our other financial institutions come together and share ideas. It’s still new, but we do feel that collaboration with regulators and other players in the market will bring the best solution and help everybody do the work in a better way.

When we started implementing our vision eight years ago, we decided to focus on five major areas: infrastructure, real estate, water, renewable energy, and finance. We saw the middle class growing, and we decided to try to look for opportunities around food, agriculture and education because these are the basic needs of this population.

I think the most important issue to resolve today is the water issue: the fact that the world is not using water in efficient way. In urban areas, water is leaking from the pipes because the pipes have all been broken. Probably 30 percent to 40 percent of the best freshwater is leaking to the ground.

Our water company, Miya, deals with this. Miya enlists the top engineers, technologies and operational people to reduce water leakage in cities around the world. In Manila, Miya managed to reduce water leakage from 64 percent to around 39 percent. We’re doing now another project in the Bahamas, reducing water leakage from 50 percent to 25 percent.

The first thing you need is a long-term vision and commitment from the top. The fact that Shari Arison, the owner of Arison Investments, believes in and promotes these ideas and concepts is the first step.

The second thing would be to introduce the concept, not as a sealed and signed concept, but like, “These are the guidelines, this is the direction — now, mid-level management, what are your thoughts?” Top-level management will never be as good as mid-level management at figuring out the how.

The third thing would be, after you discuss the ideas with mid-level management, to have them and the people who work with them be responsible for the implementation. You let them be engaged, come up with the ideas, and then tell them, “It’s a great idea. But now, you are responsible to implement it to make it happen.”

And the last is measurement. You measure the success of implementation and you report on it, then you incorporate it into employee KPIs and compensation. You build it into the reporting system.

If you don’t do the right thing, if you damage somebody from a business perspective, it will come right back at you. It’s not an inspiring reason, but it’s there. It makes the discussion today a bit easier.

At a more inspirational level, most important is the fact that if you decide to talk about sustainability at the board level but you don’t engage employees and allow them to come up with ideas and solutions and measure them around these topics, the initiative will fail. You have to introduce the vision and allow people to have a discussion about it and give it the right scope in the organizational structure. Many management level executives and CEOs are creating divisions for social responsibility or for sustainability, but they don’t have a head of sustainability in every division; they don’t have work plans that rely on and put the responsibility at the top and middle levels. You have to make sure there is buy-in throughout the organization in order to be successful.

What do you gain? You gain great possibility.