A new global report from KPMG Private Enterprise and the STEP Project Global Consortium (SPGC) highlights the progress family businesses have made in advancing sustainability and how those efforts are becoming structural components within their business models. The report, “A road well-traveled – How family businesses are guiding the sustainability journey”, explores the sustainability experiences of notable family business leaders and performance data from 2,439 family businesses across 70 countries and territories.
Even though many family businesses first address sustainability through their efforts to comply with regulatory standards aimed, they are now integrating sustainability objectives into long-term business strategies with a “business as usual” approach.
The report points to a multi-generational shift by family firms from focusing solely on shareholder profits to creating value for all stakeholders. This change in strategy is a key reason many family businesses are poised to not only excel but also to lead on sustainability. Of the survey’s respondents, 43 per cent performed well on the sustainability index.
Assuaging Present Concerns with Future Goals
The KPMG Private Enterprise and SPGC report acknowledges the concerns that many companies, especially smaller businesses, have when trying to reconcile the short-term economic costs of sustainability with future returns. But through the encouragement of a broad spectrum of stakeholders, many of these tentative firms are beginning to take their first steps toward sustainability.
Family business leaders who contributed to the report’s findings identified three interconnected goals critical to maintaining their firm’s sustainability strategy while simultaneously contributing to a more sustainable world:
- Maintaining the economic prosperity and long-term social, environmental and reputational sustainability of their businesses for the benefit of current and future generations
- Integrating responsible environmental and social practices in their businesses
- Taking a leadership role in supporting people and planet initiatives outside the business via philanthropic efforts such as charitable donations, grants distributed through family foundations and philanthropic investment through family offices
Making Sustainability the Standard
The report’s respondents stressed the importance of reframing sustainability from an additional cost of doing business to an investment in the future. Even though many family businesses first address sustainability through their efforts to comply with regulatory standards aimed, they are now integrating sustainability objectives into long-term business strategies with a “business as usual” approach.
Family business leaders participating in the study emphasised that sustainability isn’t just about creating economic, environmental, or social value; it’s also about creating family value for present and future generations.
Benefits and Competitive Advantages
Whether it’s attracting or retaining top-performing employees impressed with a company’s ethically focused culture or appealing to consumers and partners drawn to meaningful environmental action, family firms benefit from their approach to sustainability.
The report’s contributors identified the value to businesses that focus on sustainability:
- Financial capital benefits due to increased customer attraction and retention
- Social capital benefits by upholding a reputation for making the world a better place
- Human capital benefits from attracting and retaining the best employees
- Cost reductions from operating responsibly and using resources sustainably
- Access to limited sources of capital by being more attractive to future business partners, investors and bankers
- Risk mitigation through environmental and societal stewardship
Focusing on sustainability and strengthening the bottom line are no longer mutually exclusive. Sustainability initiatives are becoming competitive differentiators.
In their DNA
Despite the current push for sustainability in most of today’s businesses, family firms have historically operated in ways considerate of the environment, people, and communities. Family businesses are well positioned to lead on sustainability because of their traditional, values-driven sense of responsibility to the planet and future generations.
Increasingly, the same sustainability strategies unconsciously followed by many family enterprises are creating and winning new business opportunities. Focusing on sustainability and strengthening the bottom line are no longer mutually exclusive. Sustainability initiatives are becoming competitive differentiators.
Navigating with Multiple Perspectives
Even though family businesses are highly motivated to adopt the most ethical posture when confronting new circumstances, they may be unaware of major issues that exist counter to their operating philosophy at distant points along their supply chains. Because no business can completely control every environmental or social issue, multiple stakeholders working toward a common goal becomes essential.
Family firms can position themselves for greater sustainability success by helping everyone in the business understand its benefits. Businesses should also embrace the unique viewpoints of younger stakeholders and encourage diverse perspectives. Critically, family businesses should invite customers and partners to join them on their sustainability journey.
A focus on sustainability not only offers competitive advantages in the marketplace but also represents an important opportunity to maintain and build legacy.
The Power of Purpose
KPMG Private Enterprise and STEP Project Global Consortium’s report emphasises the need for collective efforts among the world’s businesses to combat negative environmental and social impacts. For many, a journey toward sustainability begins with a clear sense of purpose and a shared vision of the world they wish to leave for future generations.
No single group can adequately address the world’s environmental and societal issues, but making green strategies routine has led to success for family businesses and generated positive social and environmental outcomes. For family businesses, a focus on sustainability not only offers competitive advantages in the marketplace but also represents an important opportunity to maintain and build their legacies.