A survey in 87 countries reflects the intention of family businesses on matters dealing with the Environment, Social Responsibility and Governance
In a challenging year, in which businesses have had to re-evaluate the way they meet the needs of society and the environment, family-owned businesses risk falling behind. This is one of the key findings of the latest PwC global survey, which involved 2,801 family business leaders and decision-makers across 87 territories.
The survey entitled “From trust to impact: Why family businesses need to act now to ensure their legacy tomorrow”, is the tenth PwC global survey on family businesses and notes their approach to key areas of the environment, social responsibility and corporate governance.
Sustainability and Social Responsibility
The survey shows that while more than half (55%) of respondents saw the potential for their business to lead on sustainability, only 37% have a defined strategy in place. The reluctance recorded in promoting sustainability contrasts with the high rates of family businesses recognizing their responsibility to society. According to the survey, over 80% engage in proactive social responsibility activity and 71% sought to retain as many staff as possible during the pandemic.
Additionally, the survey highlights the issue of an increasingly out-of-date conception of how businesses should respond to society, with 76% in the US and 60% in the UK placing greater emphasis on their direct contribution, often through philanthropic initiatives, rather than through a strategic approach to ESG matters. Furthermore, family businesses are also somewhat insulated from the investor pressure that is currently pushing public companies to put ESG at the heart of their long-term plans for commercial success.
The survey suggests family businesses have weathered the pandemic relatively well. Less than half (46%) expect sales to fall despite the pandemic and survey respondents felt optimistic about their business’ abilities to withstand and continue to grow in 2021 and 2022.
Even though 80% of family businesses have adapted to the challenges of the COVID-19 pandemic by enabling home working for employees, there are also concerns about their overall strength when it comes to digital transformation. 62% of respondents described their digital capabilities as ‘not strong,’ with a further 19% describing it as a work in progress.
The governance gap
While family businesses report good levels of trust, transparency and communication, the survey highlights the benefits of a professional governance structure. While 79% say they have some form of governance procedure or policy in place, the figures fall dramatically when it comes to important areas as just over a quarter state they have a family constitution or protocol, while only 15% have established conflict resolution mechanisms.