An annual report from KPMG Private Enterprise and the STEP Project Global Consortium was released this week, highlighting how family businesses have made sustainability an integral component of their business model.

Family businesses around the world say that sustainability is a major priority for their operations, according to a new report from KPMG Private Enterprise and the STEP Project Global Consortium. It said 43 per cent of survey respondents reported high levels of performance on the sustainability index.

The index is based on eight factors, including highly-structured governance, active non-family member involvement, dispersed family ownership, increased number of female board members, digitalisation as a sustainability enabler, charismatic or transformational leadership, strong entrepreneurial mindset and forward-looking orientation.

The report, A road well-traveled – How family businesses are guiding the sustainability journey, gathers insights from the sustainability experiences of family businesses combined with sustainability performance data gathered from 2,439 family businesses across 70 countries and territories.

It uses both qualitative and quantitative research, citing a multi-generational commitment to create value for all stakeholders as one of the underlying reasons why family businesses excel as sustainability leaders. “It reflects an important shift in mindset away from considering sustainability measures [as] an additional cost of business, but an essential investment in the future,” the firm said. 

Sustainability conversations are high on the agenda across the world. Many of the discussions at the 2023 annual meeting of the World Economic Forum in Davos, for example, reflected a sense of urgency to accelerate sustainability progress across industries and geographies.

The study also chimes with a regular diet of commentary in and outside wealth management about the value of "sustainability" – a term that not only captures concerns about the human impact on the environment but also a wider range of issues, including durability of a business, for example.

Getting familiar
The report positions sustainability as a familiar concept within business families and an important part of the family legacy, a claim supported with analysis across jurisdictions and sectors that reveal just how embedded sustainability practices have become in family values and business models. Investing in sustainability and operating in a sustainable way is not only viewed as the right thing to do, but it’s also becoming an essential engine and catalyst for company growth, the firm said.

“Until recently, many family businesses have had a relatively informal approach to sustainability with a focus on doing what’s right for their employees, customers and communities. But now there’s greater recognition that their sustainability actions are actually potential differentiators with the power to create measurable competitive advantages,” Alan Barr National KPMG Private Enterprise leader partner, KPMG in South Africa, said.

Andrea Calabrò, STEP Project Global Consortium academic director, added: “Companies that are able to anticipate and meet rising environmental and societal expectations are also more likely to improve their reputations, attract and retain top talent and generate new business opportunities. Sustainability is now a business imperative, as much as it is a stewardship one, and the companies that fail to adapt may struggle to compete in a new, low-carbon world.”

Tom McGinness, global leader, family business, KPMG Private Enterprise, KPMG International, said: “I truly believe that family businesses that successfully engage with all their stakeholders on this sustainability journey will not only survive but prosper.” 

“Those that don't step up are likely to be left behind and the choice for companies may be that binary. Family businesses have prospered based on core sustainability principles across several generations, and there are many lessons that everyone can take away from their experiences,” he added.

The report concludes that no-one can solve the world’s biggest environmental and societal issues alone. It considers the time to be appropriate for companies to tap into the experiences and know-how of business families, and to do what’s right for future generations by making sustainability strategies at the core of their ‘business as usual’ agenda.

The STEP Project Global Consortium is a research initiative that explores family and business practices within business families and generates solutions that can be used immediately. 

KPMG Private Enterprise coordinates with KPMG firms worldwide that advise family-owned companies.