In 1993, John Elkington coined the term ‘triple bottom line’.
At the time, the notion of ‘creating shared value’ was a radical new way for companies to think about their business objectives and performance. The expectation was companies would serve society as a whole — not only their owners and shareholders.
Thirty years on, sustainability is top-of-mind and the need for urgent action recognised.
For many businesses, progress is slow but a global survey by KPMG Private Enterprise and STEP Global Project Consortium concludes family businesses have a once-in-a-lifetime opportunity to lead the way. There is a widely adopted view of sustainability as ‘meeting the needs of the present without compromising the ability of future generations to meet their own needs’.
Robyn Langsford, KPMG’s Global Family Business lead and Partner in Charge, Family Business & Private Clients in Australia, asks, “Can any business survive without being ‘sustainable’? Certainly not family businesses whose underlying objectives implicitly seek to meet the needs of both the current generation and those in the future.”
Family business is ideally placed because of its emphasis on long-term goals where fostering the success of future generations is the only way of ensuring the longevity of the business. This places family businesses as a first mover with the opportunity to influence their customers and suppliers.
“We see a strong connection between effective governance and the businesses’ long-term sustainability agenda,” says Daniel Trimarchi, KPMG’s Director, Family Business and Private Clients. “A strong governance mindset resulting in clear structures and inclusive decision making is resulting in better outcomes in defining, implementing and measuring sustainability strategies. There is a real need for families to review their governance arrangements taking deliberate steps to embed sustainability into the core of their long-term strategy.”
There are eight key indicators that show a business has high levels of sustainability…
However, keeping it all in the family may not be the best way to achieve a sustainable business. The survey found companies with highly concentrated family ownership (between 76 per cent and 100 per cent) quite often had lower ratings on certain sustainability measures.
Whereas KPMG’s previous research showed that having both family and non-family members directly involved in the business make a positive contribution to the sustainability of the business by providing diverse external views on business trends.
And the benefits are more than just a feeling of ‘doing the right thing’.
“Being able to demonstrate their sustainability, in a viable and measurable way will position family businesses as market leaders, increase stakeholder value and provide an array of other benefits including natural’ competitive advantage, improved customer loyalty and increased access to capital,” says Robyn Langsford.
For more information contact Robyn Langsford, Global Lead, KPMG Private Enterprise Family Business.