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Finding purpose in family business: a specialist report

25 June 2021

Ola Adeosun, Partner and Senior Wealth Planner, and Phoebe Stone, Partner and Head of Sustainable Investing

A watershed moment

The world is facing major environmental, societal, political and technical challenges that make our social and corporate responsibility more important than ever before. The COVID-19 pandemic has acted as a turning point. It has given us all the chance to pause, take stock and to address the untenable and unsustainable nature of our daily lives.

This watershed moment has prompted many of our entrepreneurial family clients to address various key objectives in relation to family values, wealth accumulation and wealth preservation, whilst also making a positive impact on the world around them. LGT Vestra enables entrepreneurial families to manage wealth built up outside the family business, in a way that complements the structure and values of their family enterprise.

In our specialist report we focus specifically on the increasing importance of Environmental, Social and Governance (ESG) factors. ESG covers a wide range of issues from climate change and natural resources (Environmental), to human rights, and privacy and data security (Social), to diversity and inclusion, and transparency and corporate governance (Governance). Before, embracing ESG within business practices was treated as an aspiration rather than a reality. Increasingly however, it is becoming an imperative for businesses that wish to remain competitive, as customers, shareholders, employees, governments and society at large put pressure on businesses to strengthen their ESG practices. A recent survey by PwC[1] indicates that family owned businesses have been slower at embracing ESG practices within their businesses. However, engagement in social responsibility is in the DNA of family businesses with over 82% of respondents in the survey indicating they engage in activities of social responsibility, and 42% are actively involved in philanthropy. As entrepreneurial families recover from the global pandemic and look to improve the robustness of their family enterprises against future challenges, diversification of family wealth from the main business whilst looking at sustainable investment solutions provides a unique opportunity to address varying objectives. Sustainable investing can provide entrepreneurial families with a multitude of benefits to grow, preserve and transition family wealth in accordance with the family's values and vision of itself.

People are becoming increasingly conscious of the impact they have on the world, and are embracing sustainability as an essential cornerstone of good business and economic growth. This trend was made apparent in the US SIF (The Forum for Sustainable and Responsible Investment) Trends Report for 2020, which disclosed that the amount of professionally managed investor assets which consider ESG criteria grew to $17 trillion. This represents a 42% increase from 2018.[2]

Read the full report here.

[1] PwC Family Business Survey 2021

[2] USSIF Report on US Sustainable and Impact Investing Trends 2020

 

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