5 Reasons To Measure Your Family Business Impact
6th September 2017
When thinking about starting, or improving, the sustainability journey of your business, measuring the firm’s environmental and social impact is the first, key step.
Assessing your impact allows family business owners to gain a holistic view of sustainability performance, seeing at a glance where the firm is currently strong and where it can improve.
Acting on those findings can, in turn, improve your firm’s financial performance, consolidate its reputation, and increase competitive edge, customer and employee loyalty and next generation engagement.
1 - Access to finance
An ever growing number of investors today demand investment choices that do more than provide a simple rate of return. They want to put their money into companies that can demonstrate enhanced social and environmental performance and, increasingly so, their impact.
Criteria of social and environmental performance have become just as important as economic ones. One growing arm of investment today is impact investing, or making profits whilst also having a positive social and environmental impact. Data from late 2016 estimates the market value of global impact investing at $135 billion, with expectations for the field to grow to $307 billion by 2020. A wide range of actors, from niche investment funds to traditional finance institutions, are now taking seats at the table.
Therefore, measuring the social and environmental performance and impact of your family business is ever more relevant to access an increasingly sustainability-focused finance market.
2 - Attract and retain top talent
Younger generations are interested in companies that embed a sense of purpose in the way they work. About 80% of Millennials today are making environmental, social and governance considerations when deciding where to work. And considering that they will make 75% of the global workforce by 2025, it is fair to say that those firms lagging behind in sustainability will find it increasingly difficult to attract and retain talented young workers.
The good news is that many family firms are already at an advantage when it comes to attracting and retaining talent. Because of their embedded values and strong sense of purpose, we often see lengths of tenure up to twenty or thirty years, and high levels of customer trust.
Having a clear sustainability message, and demonstrating a company’s larger societal purpose, can therefore give family firms an unparalleled competitive edge.
3 - Access to new business opportunities
Consumers globally are looking for more responsible ways to spend their money. Whether you are a small service provider or a big product business, compliance to certain standards, based on concerns such as workers’ rights and the environment, is valued, and often required, by an increasing number of customers.
As the aspirations and lifestyles of people around the world are shifting towards more sustainable practices, with more attention to the food we eat, the ethics behind the products we buy and our environmental footprint, companies will increasingly be asked to make products and deliver services that meet these changing demands.
4 - Demystifying sustainability
As per 1987, being sustainable means “meeting the needs of the present without compromising the ability of future generations to meet their own needs”.
However, throughout the years the concept of sustainability has been interpreted and applied in so many different ways that often people today are not aware of what they can, and should, do in order to be sustainable. To many sustainability means just ‘being green’, but whilst an environmental focus is crucial to long-term business success, the environment is only one of the three pillars of sustainability, together with the social and economic ones.
Questions like ‘what business do I want to leave to my children?’ or ‘what can I do to pass on a business my future generations will be proud of?’ resonate very strongly with many family business owners, thanks to their inherent values and long-term outlook.
Many family firms are already applying sustainable practices in different ways, but they might not be fully aware of the extent to which they are doing it. This is why using a simple tool like an impact assessment can be a real eye-opener for owners to see what they are doing well and what they could do to improve their performance.
For example, after undergoing an impact assessment, Canadian hydrophone manufacturer Ocean Sonics was pleasantly surprised to find they were more sustainable than they thought. In fact, they had not previously considered their honest and genuine volunteer efforts to teach young kids about healthier oceans as community engagement, a key pillar of sustainability.
5 - Foster successful management
By measuring the impact of your family business on areas of governance, supply chain, workers and next generation engagement, communities and the environment, you can effectively improve the management of your family business in the short, medium and long term.
As reported by Forbes, knowing how sustainable your business is today, you ensure you are respecting your financial, environmental and human resources, you are aware of potential risks linked to your current performance - these can be, for example, financial risks related to sustainability regulations or brand reputation - and can find ways to minimise or mitigate them, and you are better prepared to plan for the long-term. This will help you ensure you are passing on to your next generation a stronger and more resilient business.
Shayla Meyer is Sustainability Consultant at Junxion Strategy
Junxion integrates strategy, branding and impact measurement and reporting for organisations committed to people, planet and shared prosperity. Their transformative approach blends business pragmatism with deep commitment to community and environment to build sustainable ventures, inspiring campaigns, and meaningful brands.
To find out more about measuring the impact of your family business and how we can support you in this process, contact firstname.lastname@example.org