How family businesses are guiding the sustainability journey
In the New Global Report from KPMG Private Enterprise and the STEP Project Global Consortium, a spotlight is put on how family businesses have made sustainability an integral component within their business models.
Titled ‘A road well-traveled – How family businesses are guiding the sustainability journey’, the report brings together personal insights of family business leaders, combined with sustainability performance data gathered from 2,439 family businesses across 70 countries and territories.
With 43% of the survey respondents reporting high levels of performance on the sustainability index and a marked shift towards considering ESG measures an essential investment in the future, the report shares some of the key requirements to help businesses improve sustainability implementation.
Here, STEP Project Global Consortium academic director Andrea Calabro discusses the aims of the report and the future landscape of sustainability in business…
Can you talk about the aims of the STEP Project Global Consortium?
STEP Project Global Consortium is a not-for-profit organisation founded 17 years ago and now based in the Netherlands.
What we do is basically three things: achieving research excellence, empowering education on family business, and industry engagement. With our strategic partnership with KPMG Private Enterprise, our research and practice provides family business owners around the world with answers to their main questions. We have affiliates, which are mainly family business departments and centres at universities around the world, that are dedicated to research, teaching and outreach activities with family businesses in their countries.
This helps us to pose major research questions and then analyse the results in different cultural contexts. The beauty of the project is that it spans across cultures, institutions and generations.
One of the main things we would like to understand is the secret of successful multi-generational family businesses. In our opinion, the secret is in keeping alive an entrepreneurial spirit from one generation to the other. It's not just about wealth transference and governance, we would like to understand more about decodifying the entrepreneurial transfer experience.
What were you hoping to discover from the New Global Report and what were the report’s most eye-opening findings?
Our aim was to get a specific recipe for how family businesses can become more sustainable. What we discovered is that different types of family businesses follow different types of sustainability journeys – there is not a specific path towards their end goal.
In the report, it's really interesting to see how, when you change institutional context or culture, the sustainability questions or requirements differ. From a Western perspective, sustainability looks completely different than, for example, in India or Africa. I think this is just the first chapter of what we have been disentangling with this research. I hope that in the following months, we can add more findings, such as the points on which family businesses can leverage and unlock sustainability performances within their businesses and also in the environments in which they are embedded – for example, digitalisation and technology, which are considered as an enabler of sustainability practices in family business.
From the research and case studies we’ve heard, if you want to better understand the impact of your business activities on the environment, you need to start tracking in a more specific way.
We also found that it’s not enough to just promote gender diversity in some parts of family organisations. We have very strong findings that having at least 30% women seated on the board of directors enables family businesses to unlock more sustainability outcomes. We’ve also found this effect is amplified when there are more women in other parts of the organisation, including as owners, top management team members and employees. It's like a snowball effect and I think this adds more to the standard discussion about diversity and how promoting especially gender diversity in an organisation can unlock better sustainability outcomes.
How can families measure their sustainability impact?
In the questionnaire, we used some indicators and factors to exactly measure the impact that specific actions of family businesses can have on profit, people and planet.
For example, if we take the environmental – or ‘planet’ – piece, we asked ‘what are the effects of actions that the business is taking on the environment?’, specifically ‘how much does the family firm care about adopting practices that prevent pollution?
On the social – or ‘people’ – side of things, we were looking at actions in relationship to inclusion and diversity. For example, inclusion of women in different parts of the workplace.
Under ‘profit’, we asked ‘which goals they are prioritising that are non-economic?’ For example, do they like to invest in initiatives for the environment or for society via philanthropic actions? Or do they nurture next generation family members with training to make them more responsible owners?
What do you think the sustainable business landscape will look like in five years’ time?
If you look at the change from the last three to five years, the landscape has already altered a lot, especially in the Western world.
Just a few years ago, many family businesses were not looking at sustainability as a priority in their agenda, but they are now more and more aware of its importance across all aspects of doing good business.
I really believe that much of the work that is being done and still needs to be done is creating a change of mindset in people. It depends a lot on the institutional development in different countries, but I think that more and more people are looking to see if family businesses are sustainable organisations and asking what the impact is they’re making on the environment and the well-being of people in society.
I think a challenge for family business is for them to work better on their employer branding. Because they have survived and thrived for 100 years, doesn’t mean that they shouldn’t continue to adapt and evolve.
