Taking the long view: Embracing Sustainability

Sustainability is an understandably fast growing area of interest for businesses and investors alike. Making money whilst making a positive difference seems like an obvious win-win, especially for the younger generations who want to invest in their future by supporting initiatives with long-term, worthwhile benefits.

Although not officially defined, sustainability is often at the core of family businesses surviving and indeed thriving through multiple generations. At a point when many businesses are transitioning the next generation to take the helm, sustainability is taking on a renewed importance.

Investing to your values

More attention is being placed on investments that are made with a purpose. This is certainly true in the US, where sustainable, responsible and impact investing (SRI) assets grew 76% between 2012 and 2014 according to a survey by the Forum for Sustainable and Responsible Investment (US SIF). It seems that as public and media interest increases, so does the importance of having ‘green’ objectives and investing as part of a businesses’ long-term strategy. Companies find that they should not only be ethically and socially aware themselves, but that their suppliers and third parties are also vetted and reflect these values of sustainability.

Jose Rasco, Chief Investment Strategist for the Americas at HSBC Private Bank explained how with “sustainable investing… you are investing to get a financial return but also investing with a purpose. The chosen cause may be environmental, governance led or a societal issue, but it will be linked with a purpose that supports and rewards companies pursuing sustainable business practices.” This long-term view focusing beyond financial gain is evidently gathering popularity and flag bearers amongst the next generation of business leaders.

Giving the Right Way

Intrinsically linked with sustainable investment is the idea of sustainable philanthropy. Giving has been an important part of wealthy family foundations for quite some time as many see it as part of their ongoing commitment to society. It is also a useful tool for engaging and involving all members within diverse or convoluted families, often encouraging better communication and agreement.

At a recent Next Generation programme held by HSBC Private Bank in Macau, Nicolas Fu, Board Member and Member of the Grants Committee for Fu Tak Iam Foundation, commented that “social responsibility and philanthropy had to be on the agenda”, becoming increasingly important ‘to finance companies and projects alike’.

Echoing the trends seen in investment, Cynthia D’Anjou-Brown, Head of Philanthropy Advisory for North Asia and Family Governance Advisor at HSBC Private Bank commented “(Family businesses) are looking for lasting impact and doing the most good with their money”. There has been a shift in the charity model towards more strategic giving, leading to higher engagement, more emphasis on measurement and seeking sustainable outcomes.

Philanthropy grants opportunities to discuss both familial and corporate values in a softer way and paves the way for collective decision making “and this is important because the family enterprise is bigger than the family business”. This concept is paramount for successful families to understand when looking at key decision moments such as generational transfer.

Growing to last

In addition, sustainable practices within business models are evolving as more questions arise from investors and communities alike. Those stepping up to lead family businesses have a large share of responsibility regarding sustainability, as they are more aware of the issues through knowledge and exposure to the environmental damage of certain industries, carbon footprints, renewable energy, waste management and supporting diversity in the workforce, either related by the media or peers. These individuals should now be ensuring that these measures are embedded into their family businesses to safeguard the company for their own children.

There is more to this approach than just ‘doing the right thing ’. As Matthew Robinson, Sustainability Engagement Head at HSBC suggests, by fully integrating the sustainability concept into a business’s fabric you can “build a better company with a better brand, better reputation and revenue enhancement.”

Future proofing

The HSBC Private Bank Next Generation Programme witnessed first-hand the growing concerns of future generations and perhaps unsurprisingly, passions and priorities differed from those experienced by wealthy entrepreneurs 50 years ago. By embracing sustainability, and the different points at which it touches the family enterprise, it can serve to cross generational boundaries and engages all family members constructively.

Investing or operating in a sustainable manner should therefore build and enhance already established values while growing wealth and brand, and by defining next steps and working together, family businesses will be able to thrive for the next generation and beyond.

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