Has your family business changed to reflect the times?

The times are changing and ESG goals are not just a passing fad. They are a defining factor in how consumers view companies and merit a change in the family business as well. Many families are making the sometimes difficult decision to pivot from their core business models and transform them into purpose-driven ones. Leveraging your assets for the greater good isn’t just good business, it can bring a larger shared purpose to a family business.

There is an outdated model of doing business, as portrayed in the work of Milton Friedman, and exemplified by historic moguls such as John D. Rockefeller whereby the business of business is business and nothing else.  This meant focusing exclusively on profit maximization, regardless of whether that caused a directly negative harm on the environment or society or not. Some of these moguls, such as the Rockefellers, then set up philanthropic activities on the side.

But that mode of doing business is, luckily, slowly dying out. Your customers are going to expect more, and you will attract the wrong kind of attention if you attempt to sweep harmful social behaviors away by donating. The time of “greenwashing” has come to an end. Today’s leaders focus on doing less harm, impact investing, and sustainable development by embedding ESG principles within the core of their organizations, in addition to CSR or philanthropic activities. One great example of such a family business that is clearly leading the way is this year’s winner of the IMD Global Family Business Award: Grundfos – a Danish water technology company working hard to tackle some of the greatest issues on this planet.

This is a good time to sit down and evaluate where your family stands on the social issues related to your industry. Map out your shared goals and figure out how to incorporate them into your business as well as your family. This will help build not just a sustainable business model, but one that is more likely to flourish across generations.