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What does it mean to “go green”?

Without a doubt humanity started having a strong, defining impact on its natural environment with the industrial revolution in 19th century Europe; it not only led to resource-heavy production but also supported the start of technology-driven mass consumer behaviour. Coupled with the global growth of the human population, this impact has exponentially grown ever since. Early environmental initiatives were mainly conservation-focused and concentrated on setting up natural reserves or protecting endangered species. However, over the past decades, “going green” has broadly been used as referring to an overall realisation that certain resources are scarce and that in order to sustain life for future generations there has to be a new way of using resources, minimising the human footprint on nature and reducing wasteful behaviour.

International organisations such as the UN have bodies dedicated to regulating and studying the impact of human behaviour on the natural environment, and governments often have individual ministries looking after national environmental priorities. However, there remains much scepticism, debate and misunderstanding regarding the impact of human civilisation on nature. In fact, “going green” includes several axes of complexity:

• Humanity is affected in different ways: The effects of environmental challenges such as water shortages, scarcity of natural resources, pollution and more affect individuals, communities, and countries as much as private corporations, albeit to different degrees and in different ways.

• There is disagreement as to the focus areas: determining the most important and most urgent challenges to tackle always depends on the priorities of affected communities and individuals.

• There is no recipe: Environmental initiatives and policy-making ranges from simple improvements in waste management to multi-million dollar R&D investments to develop new, environmentally friendly technologies.

Why are family businesses good at “going green”?

Many times family-owned companies have been compared to non-family or public companies and their characteristics have been researched and studied extensively. These characteristics include elements like long-term visions, a clear commitment to and interaction with their immediate social environment, and the challenge of taking business decisions whilst dealing with the emotional bonds of a family. Interestingly, several of those peculiar characteristics make family-owned companies potential leaders in the field of environmental sustainability:

Family-owned corporations are often forward thinking and future-oriented organisations, due to their aim to sustain the business for generations to come. In order to ensure sustainability and continuity they start taking into account the strain on global natural resources, and their long-term strategies now often include how to innovate on the usage of primary resources.

Family businesses are deeply embedded in their communities, often linked through history and synergic relationships. Through their strong and regular interaction with their social and natural environment, family business leaders have direct understanding of their community‘s challenges and witness the transformation of their natural environment.

Family businesses as businesses also tend to have strong relationships with their stakeholders, most importantly their customers, and have long realised the marketing potential of environmental engagement.

Many leaders have realised that in certain industries environmentally friendly practices offer a distinct competitive advantage and that areas like renewable energy can be interesting investment opportunities.

The unique combination of motivating factors that exist within family businesses creates the basis for them to develop into innovative and active players in the green sector.

Green Strategies of International Family Businesses
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Green initiatives in family firms

History shows that even a century or so ago it was the founders of successful family businesses that laid down principles of respectful interaction with the environment and the careful use of resources – be it out of real concern for nature or out of economical thinking. Hence, ever since the rise of industrialised nations, several of the leading family businesses have successfully embarked on green strategies. Be it by increasing efficiency in their production lines, by installing solar panels on their headquarters or through involving their stakeholders by launching “green” products – innovation, it seems, has never been a problem. So, when family businesses “go green”, they often do so either:

• through integrating environmental policies in their businesses or using “green” business models as an investment opportunity;

• through CSR activities or charitable donations to their own foundations or other organizations;

• by participating in governmental schemes to tackle challenges facing their communities.

Many families, who have environmentally challenging industries as core businesses, such as the automobile, the oil and mining sector and other heavy industries, often recognise these issues early on and have taken the lead in addressing them. For example, family-controlled Italian car giant Fiat: Next to investing in new technologies to reduce carbon emissions, the company has developed applications that allows drivers to monitor their driving behaviour and reduce their fuel use. Family-owned American car manufacturer Ford, on the other hand, declares its dedication to climate stabilisation and focuses a lot on the development of efficient hybrid cars, to reduce overall carbon emissions. A specialised senior executive committee, which includes the vice president and executive stakeholders of the company guides the strategic product development in line with the company‘s climate change goals.

Family-controlled industrial multinational Siemens has gone a step further and has integrated environmental technologies in its business portfolio: It tackles environmental challenges by developing new energy supply systems and through innovation in their products. The German technology giant has invested important resources to spearhead new technologies and to provide their customers with more resource efficient solutions. Their goal is to generate at least 40 billion Euros from their environmental portfolio in the year 2014. As a community program, Siemens has also launched the “green city index”, which rates the environmental performance of cities worldwide.

The A.P. Moller – Maersk Group, the Danish family-controlled conglomerate, one of the world’s largest sea and land transporters, is also a leading drilling and oil producing company. The Marsk Group has appointed a sustainability council that directly reports to the executive board of the group. The main focus areas of the group are reducing CO2 emissions, fighting pollution, protecting biodiversity, and managing equipment lifecycles. They monitor their progress in a yearly sustainability report..

The Tata Consultancy Services, a subsidiary of Indian family conglomerate Tata Group, was ranked number seven on the Newsweek’s “green rankings” in 2011. The company puts a lot of emphasis on environmental sustainability, considering climate change to be the “greatest threat affecting economic stability, vulnerable communities and the society at large.” Their approach is two-pronged: on the one hand supporting their clients to improve their sustainability through their products and solutions, and on the other hand continuously increasing the company‘s own environmental performance following detailed action plans.

Whatever the reason for their commitments (a deep-rooted belief that environmental challenges have to be addressed or strategic business considerations), it is clear that the world’s large family-owned conglomerates have stepped up to the challenge and openly address the issues at hand.

Green as a business opportunity

The many examples of green strategies by family businesses give a good insight into the diversity of the topic: From philosphical conviction to downright business opportunities, the awareness that our environment is fragile may be a challenge, but certainly also bears many opportunities. Families, as drivers and often as innovators of regional economies can take the lead and set standards that benefit their businesses, their stakeholders, and have a positive impact on the environment, which, in the end, nurtures and enables all human ambitions.

Tharawat Magazine, Issue 13, 2012