A global survey of 2 801 family-business owners by advisory multinational PwC found that 55% of respondents saw the potential for their business to lead on sustainability, but only 37% have a defined environmental, social and governance (ESG) strategy in place.

Furthermore, European and American businesses are lagging their Asian counterparts in their commitment to prioritising sustainability in their strategy.

Of respondents, 79% in mainland China and 78% in Japan reported placing sustainability at the heart of everything they do compared with 23% of US respondents and 39% of UK respondents.

However, larger businesses and those owned by later generations buck this trend with a greater focus on sustainability, says PwC global family business leader Peter Englisch.

"This reluctance to embrace sustainability comes despite the fact family-owned businesses are highly likely to see a responsibility to society. More than 80% engage in proactive social responsibility activity, and 71% sought to retain as many staff as possible during the pandemic. Nor is it a function of economic pessimism, with 46% expecting sales to fall despite the pandemic, and survey respondents felt optimistic about their business' abilities to withstand these pressures and continue to grow in 2021 and 2022," he says.

"Instead, the issue is an increasingly out-of-date conception of how businesses should respond to society, with 76% in the US and 60% in the UK placing greater emphasis on their direct contribution, often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. 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."

It is clear that family businesses globally have a strong commitment to a wider social purpose. However, there is growing pressure on them from customers, lenders, shareholders and even employees to demonstrate a meaningful impact around sustainability and wider ESG issues, says Englisch.

Many listed companies have started to respond, but this survey indicates that family businesses have a more traditional approach to social contribution, he notes.

"Family businesses must adapt to changing expectations and, by failing to do so, are creating a potential business risk. This is not just about stating a commitment to doing good, but setting meaningful targets and reporting that demonstrates a clear sense of their values and purpose when it comes to helping economies and societies build back better."

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: just over a quarter state they have a family constitution or protocol, while only 15% have established conflict resolution mechanisms, says Englisch.