The Need for Family Businesses to Embrace Sustainability: Navigating the Challenges of an Evolving Landscape with Transparency, Capital Flows and Reporting

Alex Friedman highlighted the need for family businesses to embrace sustainability and inclusive prosperity. He noted that many of these businesses have been around for generations, with some luxury goods companies spanning up to 10 generations. However, the younger generation is pushing for transparency and actionable change, which presents a challenge for these businesses.

To address this challenge, Friedman discussed three levers for change: government action, religion, and capital flows. He emphasized that ESG (Environmental, Social, and Governance) focus is becoming increasingly important to investors, lenders, and customers. As a result, capital will flow towards businesses that prioritize ESG principles and report on their performance in these areas.

Tools have been developed to help businesses understand their environmental impact and implement improvement programs to satisfy stakeholders. Private equity investors, bank lending, and listed customers will face pressure to be transparent on climate, environment, human rights, and social inclusion. By embracing sustainability measures and adapting to changing market demands, family businesses can ensure their long-term success in an evolving landscape.