Punch above their weight
To explain why family businesses can play such a large role in advancing ESG goals, it is helpful to consider the broader ESG landscape. The move to embrace sustainability has been an earthquake for businesses, fueled by high expectations from stakeholders, ambitious commitments from governments and a wave of capital investments. The ESG Foundation, for example, attracted a record 51 billion dollars the amount of new net money from investors in 2020, more than double from the previous year. Large public corporations and governments, through both sticks (regulation) and carrots (targeted subsidies) are reshaping the way business is done. And in fact, many corporations are stepping up: they are making commitments to reducing carbon emissions and providing electricity from renewable resources; they are making their board more diverse and publishing sustainability reports.
But today, such actions are just a bet. To build trust and secure their future, businesses must go further and build ESG in all aspects their business: their report, strategy and transformation plan. And home businesses are uniquely positioned and encouraged to do so for a number of key reasons. First, they are trusted more than any other field. About 67% of respondents in Edelman Trust Barometer 2020 Report said they trust family businesses, compared with just 58% who trust public companies — making family businesses the most trusted type of business. (The government and the media arrived last.)
Second, their deep values and shared commitment to contribute to society is hard to come by. For example, caring about their workforce and community has long been part of their DNA, long before formal ESG commitments became a global trend.
But ESG’s internals will make a big difference. And we’re starting to see that especially in Asia. In our latest family business survey, more than 75% of businesses in China, Japan and Taiwan said they put sustainability at the core of everything they do, compared with just 23% in USA and 28% in Canada (see chart below). Businesses in Western economies, and especially in North America, prioritize giving back to the community — an abbreviation often used to describe more traditional philanthropy.