One of the many things to set family-owned businesses apart from other commercial enterprises is the question of legacy. However, in a wider sense, the concept of legacy runs deeper than simply the financial footprint a business leaves, and involves the degree to which it gives back to the wider community, either directly or indirectly.
While business success and social interaction may seem distinct, the fact is that they are often closely intertwined. A large part of establishing a trusted reputation may be based squarely on traditional business virtues such as competence and value, but the modern consumer demands much more of their most trusted businesses than simply delivering what it says on the tin.
Knowing What Is Important To Your Customers
Issues such as environment, social and governance (ESG) and diversity, equity and inclusion (DEI) are increasingly driving consumer choices, as highlighted by PR Week, which cited research showing that:
78% of people felt that companies have a responsibility to be good citizens
71% of people expect companies to launch ESG action
46% of people would be prepared to pay more for better ESG performance
46% of consumers said environmental concern was the most important ESG issue
28% of consumers said that social action was the most important issue
The growing demand for action on these issues is much more prevalent amongst consumers who are part of the Millennial and Gen Z generations (those aged between 12 and 43 years old) so any family business building for the future and with legacy in mind needs to focus on the kind of issues which consumers in this cohort regard as being vital to building trust.
An in-depth report published by the Enterprise Research Centre took the form of a wide ranging review of existing evidence on the social-economic contributions that family businesses make in the United Kingdom. Almost 3 in 5 family businesses in the UK state that their long term goal is to make a contribution to the community and leave a positive legacy; and many avoid short term strategies that might impact negatively on stakeholders, pursue business strategies which improve community relationships and build positive relationships with external stakeholders. The instinct to give something back is hard wired into the way they operate!
Engagement
Any family business wishing to give back to the wider community needs to carefully plan the various ways in which it engages, rather than simply relying on ethos and instinct to lead it in the right direction.
A good start is an audit of existing community engagement activities and any planned additional activities. Ask yourself whether the engagement with the community can be delivered via general business activities or needs a specific initiative, what resources will be required, and whether extra engagement value can be added to anything you’re already doing.
Then maximize the chances of delivering value and impact by:
identifying the communities or individuals you want to reach on the basis of factors such as geography or common interests. Alternatively, your target could be a community or group with a link to your employees; another business or an advocacy group that resonates with you.
identifying the prospective benefits you hope to gain from engagement. As well as increased sales driving higher profits thanks to the appeal of ESG, or the ability to attract the best new recruits, for many family businesses, the motivation behind engagement will involve wider legacy-based impacts such as enhancing the family’s reputation as an important cog in the local community and as people who give back to society. Actions designed to give something back will also help to embed the business’ values across the business and into the next generation.
planning your activities in detail on the basis of needs identified in the wider community and the ability of your business to meet those needs.
establishing a system of on-going monitoring to evaluate the impact of what you do against the resources needed
making the most of the marketing potential of your activities by reporting across a range of channels, from in-depth reporting to social media postings - within your business as well as externally, as this will help to ensure buy-in for your on-going efforts
ESG Regulations
The UK currently lacks a unified ESG law or regulation, relying instead on a mix of domestic and EU-derived laws, many of which are not explicitly focused on ESG.
The Companies Act serves as a principal regulation for ESG disclosures, mandating annual reports from large companies meeting specific criteria, such as having over 500 employees or exceeding £500 million in turnover.
However, recent updates to the Act now also require these companies to include sustainability details, such as energy use and carbon emissions, in their reports.
Certain sectors and large organisations face industry-specific standards, such as the optional Sustainability Reporting Standard in the housing sector, pointing towards a more specialised approach to ESG reporting.
The introduction of Sustainability Disclosure Requirements (SDRs) in 2023, marked a significant step towards more detailed ESG reporting in the UK, with mandatory disclosure anticipated by 2025.
Whilst mandatory ESG disclosures are predominantly only required of large companies, there is a trend towards expanding these obligations to include smaller firms. Some smaller companies are starting to report on ESG matters voluntarily, either to anticipate future regulatory requirements or in response to investor demands and to appeal to a more informed workforce.
This shift highlights a growing trend in the importance of ESG reporting across businesses of all sizes and sectors.
Should you require assistance or support in any aspect of your family business, the team at Buckles can offer impartial, experienced guidance on all aspects of ownership transferal. Contact us now to discuss the options available.
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