Performing better on ESG
On average, family-owned companies tend to have slightly better ESG scores than non-family-owned, leading on “E” environmental and “S” social scores but lagging on “G“ governance as this chart shows.
Beginning to match European standards
Not surprsingly, European family-owned companies shine in this area, scoring the highest for ESG of any region. But data suggests that APAC (ex-Japan) family businesses are scoring better on ESG than their US counterparts and rapidly closing the gap with Europe.
Older companies score better on ESG than younger
This is another interesting revelation, which the report suggests is down to older family-run companies having more established processes that allow them to address issues not tied directly to the bottom line but still relevant for business sustainability. It is also likely that younger businesses striving to establish a foothold are pushing back on sustainability issues, from supply chain operations to labour practices, seeing compliance in these areas as costly near-term burdens.
Returns of family-owned vs. non-family-owned companies
COVID-19 impact on the sector
This year, the report also delved into the exceptional circumstances thrown up by the pandemic. Eyes are particularly looking at how different regions have managed disruptions, and what the economic and social shocks have done for ESG uptake as the new byword for business resilience. Reports on how well Asia has been integrating ESG into investment processes and company practices have been mixed.
Credit Suisse reckons that in spite of the pandemic putting more emphasis on social aspects, research found that family-owned companies trail their non-family-owned peers on a host of ESG measures, most noticeably on human rights and modern slavery-related policies. On average, they also have less diverse management boards. Fewer of them have support groups for the lesbian, gay, bisexual and trans (LGBT), black, and Asian and minority ethnic (BAME) communities, or have made any public statements related to United Nation principles.
Again, looking at how roughly 300 individual companies have ridden the COVID-19 crisis, the report found little difference in approaches. Even though both sets suffered revenue losses, family-owned companies were slightly less worried about their future than non-family owned. They were also less likely to furlough staff (46 per cent versus 55 per cent) and more likely to have put support programmes in place, more so than businesses in Europe or the US. Although this may be because the US and European governments have pumped in massive support packages.
As these schemes unwind, it raises the question of whether Asian companies, already less reliant on state intervention, are going to bounce back more vigorously than other markets.
Even though family-owned companies are known for "sticking to what they know," both groups said that operations are likely to change, with 60 per cent of non-family-owned and 48 per cent of family-owned companies believing that they will shift to a more flexible rather than a full-time workforce in a post-COVID world.