Climate change is considered to be one of the most complex problems society has ever faced, and organisations around the world are searching for innovative ways to help their business, customers and broader communities tackle this immense challenge.

The best and brightest minds around the globe are readjusting their thinking when it comes to sustainability initiatives, including the behavioural science unit at Australia’s largest bank, in partnership with Harvard Sustainability Transparency Accountability Research (STAR) Lab, in the US.

The American professor Richard Thaler, who helped to develop the behavioural science theory of nudges, said during an interview on the Freakonomics podcast that you can’t solve climate change with nudging alone, but you can’t solve climate change without nudging.

A scientific approach to behaviour

CommBank was an early adopter of behavioural science, establishing a team in 2016, but today hundreds of organisations around the world have behavioural units — including leading tech companies, major banks, retailers and governments. Increasingly, these units are looking at how they can better support their leaders, employees and customers to make more informed sustainability and climate-related choices.

The purpose of CommBank’s behavioural science team is to apply behavioural science interventions to the services and products offered by the bank in order to help customers improve their financial wellbeing by making more informed decisions. The intersection of science and business has proved successful, with the bank’s “BeSci” team delivering and working on many initiatives that have helped customers budget better, save more and choose better suited products.

Now the team is adding the challenge of climate change to its strategic initiatives, working closely with business units across the bank.

Partnership with Harvard STAR Lab

To assist in its efforts, the BeSci team will draw on insights from its highly valued and a long-standing partnership with the Harvard STAR Lab.

Since 2017, CommBank’s partnership with Harvard STAR Lab has provided access to global research to deliver a richer understanding of human financial behaviour. This has helped CommBank to design and deliver innovations such as Benefits finder, which has connected its customers to around $1.2bn in grants, rebates and concessions since 2019 (as of Jan 2024).

The recently expanded partnership is now looking at how the application of behavioural science via CommBank’s digital platforms can deliver more tailored, timely and effective information to customers to better equip and inform them about sustainable options and offers.

At CommBank’s recent sustainability conference Momentum: Accelerating Australia’s Transition, CommBank Chief Behavioural Scientist Will Mailer spoke with Harvard STAR Lab’s founding director, Professor Michael J. Hiscox, and senior research fellow Nurit Nobel about behavioural science as “one tool” that can help customers make better, more sustainable choices.

“Inherently we are set up as humans to conserve energy – we conserve physical energy, we conserve mental energy, we don’t like cognitive effort,” said Professor Hiscox. “That’s why we can avoid making decisions that require effort. We have trouble with attention, patience, and emotions can get in way of aligning our good intentions with actions.

“The question is what do we do? Everyone has great intentions. For example, I want to put solar panels up, I should think about heat pumps, but when do I think about it, how do I make the choice? These are classic behavioural challenges. We have good intentions but have trouble turning them into actions.”

Nudges to turn intentions into actions

Early insights from CommBank research show that while most Australians want to take action on climate change, fewer do so. Mr Mailer says as the research progresses, it will inform the bank’s thinking around initiatives that can help willing customers bridge this intention-action gap.

Simple interventions have already shown to have an impact. For example, providing localised information such as a customer’s suburb in tailored customer communications has led to greater engagement with the communications, noting that people are more likely to respond to localised information when it comes to preparing their homes for potential weather events.

Professor Hiscox says, “Of course we need coordinated action and change globally in our response to climate change, but we also need behavioural change to reduce our environmental footprint. These two things are complementary”.

Mr Mailer says that, through the partnership with Harvard STAR Lab, he hopes to help more customers and Australians make sustainable choices which can also have cost-benefits over the long-term. 

University challenge

Students from UTS, Harvard University, UNSW at CommBank's Climate Action Hackathon at Commonwealth Bank Place, Sydney. Photo courtesy of Dr. Andreas Ludwig, CommBank BeSci team Students from UTS, Harvard University, UNSW at CommBank's Climate Action Hackathon at Commonwealth Bank Place, Sydney. Photo courtesy of Dr. Andreas Ludwig, CommBank BeSci team

As part of the CommBank BeSci team’s ethos to bring together the best and brightest minds, last week Dr Andreas Ludwig, Executive Manager for Advisory and Experimentation in the Behavioural Science Centre of Excellence, welcomed young researchers to the fourth BeSci Experimentation Hackathon. The event was focused on climate change and hosted jointly with UTS, UNSW’s Institute for Climate Risk & Response, and Harvard’s STAR lab.

Eighteen Australian and US students were invited to pitch their ideas on helping more Australian homeowners achieve their environmental goals. Three $5,000 grants will be provided to student groups to fund their research, which will inform how CommBank can make sustainable choices easier for customers.

There were two teams that won equal-first place were for research projects:

  1. Testing how a solar calculator should best present its outputs to increase the likelihood of solar installation and a supporting loan.
  2. Comparing the effectiveness of financially or customer wellbeing focussed messages about climate impacts to the likelihood of taking action.

Students are set to share the outcomes of their research projects with CommBank’s BeSci team later this year.

As one of Australia’s largest retail banks, CommBank acknowledges the role it can play in helping customers and all Australians to better understand their footprint and help reduce emissions. Using approaches like the application of behavioural science interventions is just one way we are innovating to support Australia’s net zero by 2050 goals, and building a brighter, more sustainable future for all.

Banner image: (L-R) Will Mailer, Prof. Michael J. Hiscox and Dr. Nurit Nobel at CommBank’s Momentum conference. Photo courtesy of Dr. Andreas Ludwig, CommBank BeSci team.

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