Family firms risk falling behind on sustainability - claim

Family businesses risk falling behind other countries in their commitment to prioritising sustainability in their strategies, according to a new survey.

PwC 's latest Global Family Business Survey says that while 53 per cent of UK family businesses surveyed believe they have a responsibility to fight climate change and its related consequences, only 33 per cent have developed and communicated a sustainability strategy compared to the global average of 37 per cent.

The survey reveals 79 per cent of respondents in mainland China, 78 per cent in Japan and 49 per cent globally report 'putting sustainability at the heart of everything we do ' compared to 39 per cent in the UK.

Neil Philpott (pictured), PwC Midlands Family Business leader, said: “A commitment to a wider social purpose has always gone hand in hand with family business in the UK, but there is growing societal pressure from employees and business stakeholders to demonstrate more meaningful action around sustainability and wider ESG issues.

“Listed companies have started to respond, but our survey shows that UK family businesses have a more traditional approach to social contribution such as contributing to the local community or philanthropy.

“At a recent roundtable with Midlands family businesses, there was a clear message coming back from business leaders, that while most recognised the strategic importance to them, there was a real breadth in how developed their planning was, ranging from some with an integrated plan in place for their business, to others with a blank sheet of paper in front of them, challenged by where they should start. ”

With business still feeling the effects of the Covid-19 pandemic, expectations for growth within family businesses is split right down the middle.

Out of the UK respondents, only 53 per cent expect to see growth in 2021.

However, the outlook for next year is much more positive with 86 per cent expecting to see growth.

Family businesses are known to be agile and embrace change, which is reflected in their key priorities for the next two years.

Top of the list is improving digital capabilities (60 per cent), followed by introducing new products and services (53 per cent) and increasing use of new technologies (47 per cent).

Over the past year, UK family businesses went further in comparison to the global average when it came to providing support for staff during the Covid-19 pandemic and the sacrifices family shareholders made.

Eighty-six per cent of respondents retained as many staff as possible and 72 per cent provided emotional/mental health support for staff compared to the global average of 76 per cent (retained staff) and 45 per cent (provided emotional/mental health support) respectively. More than half (54 per cent) of family shareholders took a reduction of dividends, 44 per cent reduced their bonus and 40 per cent reduced their salary.

The majority of first-generation UK family businesses expect that the next generation will become the majority shareholders within five years ' time.

Just over a quarter (26 per cent) say they have a robust, documented and communicated succession plan in place.