Thanks to their long-term focus and close ties with employees, customers and other stakeholders, family-run businesses are well placed to operate sustainably. However, sustainability – in environmental, social and economic terms – only becomes effective when it is strategically embedded in objectives, responsibilities and decision-making.
From the perspective of WIFU research, three guiding principles are crucial in this regard:
These three principles ensure that ESG and CSR activities do not remain limited to individual projects, but that sustainability becomes the cornerstone of business practice.
According to the WIFU’s understanding, sustainability in family businesses is a holistic approach. It brings together environmental, social and economic dimensions and translates them into specific objectives, measures and responsibilities for family businesses:
For family businesses, sustainability means integrating environmental, social and economic responsibility into corporate governance on a permanent basis – as a long-term, values-based approach rather than as a one-off project.
In family businesses, sustainability often follows a different logic to that in capital-market-oriented companies:
For many family businesses, three perspectives are intertwined:
Family businesses are particularly well represented amongst small and medium-sized enterprises. A sense of responsibility is often reflected in the way work is organised, in collaboration and in development. In practical terms, this relates to employee retention, fair and reliable relationships with suppliers and customers, and a strong connection to the region and the local community.
This commitment becomes effective when it is not tied to individual people, but is embedded within a shared framework of principles, responsibilities and procedures. In this way, CSR becomes part of the corporate culture – and remains sustainable even in the face of growth, changes in leadership or generational transitions.
‘Grandchild-proofing’ refers to the ability and willingness to ensure that a business and its family of owners are positioned for the future across generations – economically, culturally and in terms of ownership structure.
For sustainability within companies to be more than just a collection of individual projects, a clear strategic framework is required. For family businesses, this means aligning the values and vision of the entrepreneurial family with the requirements of the business model. Only then can binding governance, clear responsibilities and established routines emerge.
In practice, family businesses differ primarily in how consciously and systematically they manage sustainability. A quick self-assessment can help you gauge where you stand:
An effective sustainability strategy in a family business is based on three guiding principles: commitment, control and continuity.
Practical steps for implementation:
The Supply Chain Act increases the need for standards, documentation and monitoring throughout the entire value chain. For many family-run businesses, this is less a matter of mere compliance and more an opportunity to strategically professionalise their approach to sustainability – with clear responsibilities, measurable targets and a regular review cycle.
Sustainability rarely has a lasting impact if it is confined solely to „within the company“. This is particularly true during generational transitions and in the Business succession, when responsibilities, roles and decision-making powers are reorganised. In family businesses, it needs to be firmly rooted in the interplay between family, ownership and the business. It is only there that commitment, continuity and the ability to build on the past across generations can flourish.
Sustainability is most effective when it is understood on a sound scientific basis and translated into practical terms. The WIFU Foundation brings together insights and makes them accessible to entrepreneurial families – through studies, practical guides and forums for exchange.
Find out more in our publications (selection):
Study: Sustainability in family businesses
Practical article: Corporate Social Responsibility in Family Businesses
Practical article: Developing a sustainability strategy in business families
Sustainability in family businesses refers to a holistic approach comprising environmental, social and economic objectives. It is particularly effective when it is derived from the entrepreneurial family’s long-term guiding values and embedded in strategy and governance. This creates clear guidelines for investments, supplier decisions and internal priorities.
‘Grandchild-proofing’ describes the process of making decisions with a focus on long-term sustainability, with the aim of safeguarding the ability of family businesses and the entrepreneurial family to operate effectively for generations to come. It combines economic sustainability with a sense of responsibility towards the company’s culture, ownership and relationships.
ESG criteria can be implemented pragmatically if they are translated into a small number of clear objectives, responsibilities and key performance indicators. A regular review cycle ensures that measures are adapted and continuity is maintained. A step-by-step approach is successful: start with a few prioritised objectives and key performance indicators, and gradually build up professionalism.
The NextGen generation often brings fresh perspectives on purpose, impact and innovation. Governance structures help to manage differing expectations and investment decisions in such a way as to promote sustainability without exacerbating conflicts. In this way, new ideas from the NextGen generation can be translated into viable decisions and projects without differing expectations blocking the process.
Entrepreneurial families who view sustainability not merely as an individual project but as a strategic and governance issue will find points of contact at the WIFU Foundation for:
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