Aroad well-traveled Howfamilybusinessesareguidingthesustainabilityjourney April2023 kpmg.com/privateenterprise www.spgcfb.org veleowamn Tableof contents 01 Foreword 02 Executive Summary 03 Whythe 04 sustainabilityjourneyisa once-in-a-lifetimeopportunity Connectingthepast,presentandfuture 05 Navigatingalong andwindingroad 06 Goingdowntheroad 07 Eightkeysfor unlockingthesustainabilityofyourbusiness 08 Lessons fromtheroad 09 Whyfollow thefamilybusinessroutetosustainability? 10 Putting sustainabilityonthestrategicfasttrack 11 Acknowledgments andcontacts Foreword In1993,JohnElkingtoncoinedtheterm‘triplebottomline’.Hedescribeditasasystemchange,andonethatwouldleadtothetransformation ofcapitalism.Itencouragedcompaniestostopconcentratingsolelyontheirprofitsandtoincludegoalsintheirbusinessstrategiesforimprovingthelivesofpeopleandthehealthoftheplanet.Atthetime,thenotionof‘creatingsharedvalue’wasaradicalnewwayforcompaniestothinkabouttheirbusinessobjectivesandperformance. Italsomarkedthebeginningofthedeclineofshareholdercapitalismandtheriseofstakeholdercapitalism.Theexpectationwasthatcompanieswouldservesocietyasawhole—notonlytheirownersandshareholders. Fastforward30years. Stakeholdercapitalismhasgonemainstreamwiththeriseofthesustainabilityagenda.Itistop-of-mindacrossthebusinessworldineverysector.Theprinciplesofsharedvalueareatitscore,butthereisoneimportantdifferencethat’srisingquickly intoday’senvironment—andthat’stheneedforurgentaction. Thepandemicmadesustainabilityevenmorerelevant.Itincreasedtheneedforbusinessfamiliestoprotecttheirbusinessesbyexaminingtheefficiencyoftheiroperatingpracticesandbybuildingdeeperandstrongerrelationshipswiththeircommunitiesandtheiremployees.Inmanyways,sustainabilityisbecomingabasisforalicensetooperate. Organizationsofeverytypearebeingchallengedontheroletheyplayandtheimpactthey’rehavingontheworldaroundthem.Manygovernments arepushingcompaniestoproceedwithhaste,offeringincentivestoencourageactionsthatareclimate-smartandcontributetolong-termsocialequityandeconomicsustainability. Customersarealsodemandingit,andthey’re Butnoonecansolvetheworld’sbiggestenvironmentalandsocietalissuesalone.Itrequiresinnovativethinking,boldideasanduniqueexperiencesfrombusinessesandindustriesofeverytypeandsize. Fortunately,formanyfamilybusinesses,theroadtosustainabilityisalreadyonethatiswell-traveled.Thefundamentalsofsharedvaluearefamiliarterritory,andthey’rewoventhroughoutthefamilycapitalismbusinessmodel.Whilethey maybetakingavarietyofroutesandreachingnewmilestonesatdifferentstagesoftheirjourneys,theprogresstheyhavemadesofarshouldbeinstructiveandaninspirationfororganizationsofeverytype. Thisiswhywebelievethatthereisaonce-in-a-lifetimeopportunityforfamilybusinessestotakealeadershiproleinguidingothersontheirsustainabilityjourneys. Formanycompanies,theirsustainabilityactionsarealreadybeginningtohaveanimpactontheirbusinesses.ThosethathaveBCorporothertypesofcertificationfortheirsocialandenvironmentalprogressarewitnessinggreateraccesstocapitalandbetteremployeerecruitmentandretention. Foreword ExecutiveSummary Whythesustainabilityjourneyisa once-in-a-lifetimeopportunity Connectingthepast,presentandfuture Navigatingalongand windingroad Goingdowntheroad Eightkeysforunlockingthesustainabilityofyourbusiness Lessonsfromtheroad readytofollow(andbeloyalto)companiesthatare abletodemonstratethepositiveimpactthattheirbusinessesarehavingonpeopleandtheplanet. Whyfollowthefamilybusinessroutetosustainability? Puttingsustainabilityonthestrategicfasttrack Aroadwell-traveled—Howfamilybusinessesareguidingthesustainabilityjourney|3 Acknowledgments andcontacts Foreword Foreword Followingaprovenpath Toexplorethevariousroutestosustainabilitythatfamilybusinessesaretaking,KPMGPrivate EnterpriseandtheSTEPProjectGlobalConsortiumconductedpersonalinterviewsandledgroupdiscussionswithfamilybusinessleadersacrosstheworld.Theirstoriesareinsightfulandpracticalandaresupportedbyadetailedanalysisofthe sustainabilityperformancedatafromourpreviousglobalsurveyof2,439familybusinessleaders. Werecognizethattheroadtosustainabilityisrarelyastraightline.Thereareoftentwistsandturns,smalldetours—eventheoccasionalU-turns—alongtheway.Thismaybealongandwindingroad,butwebelievetheuniquecharacteristicsandexperiencesoffamilybusinessesofferaninvaluableandpracticalguideforotherleaderstofollowontheirownsustainabilityjourneys. ExecutiveSummary Whythesustainabilityjourneyisa once-in-a-lifetimeopportunity Connectingthepast,presentandfuture AndreaCalabrò STEPProjectGlobalConsortiumAcademicDirector Director,IPAGEntrepreneurship&FamilyBusinessCenter IPAGBusinessSchool TomMcGinnessGlobalLeaderFamilyBusiness KPMGPrivateEnterprise KPMGInternationalandPartner,KPMGintheUK Navigatingalongand windingroad Goingdowntheroad Eightkeysforunlockingthesustainabilityofyourbusiness Lessonsfromtheroad Whyfollowthefamilybusinessroutetosustainability? Puttingsustainabilityonthestrategicfasttrack Aroadwell-traveled—Howfamilybusinessesareguidingthesustainabilityjourney|4 Acknowledgments andcontacts