In Pursuit of Impact: Choosing Zebras Over Unicorns
For centuries, family businesses have been interconnected through friendships and partnerships. Over three decades ago, a small group of family businesses established a more enduring structure to connect and exchange insights. This structure, the Family Business Network (FBN), was founded in 1989 and now comprises over 4,000 business families with 17,000 individual members across 65 countries.
FBN’s mission is to provide business families with a safe space to learn, share, and inspire one another. The organization facilitates family involvement in businesses, fosters relationships within families, and raises awareness of best practices. To achieve its mission, FBN conducts activities such as Global and Next Generation summits, community gatherings, and family business visits. It also organizes programs like Next Generation, Entrepreneur, and Family Office activities.
FBN aims to help family businesses thrive in challenging environments. A recent PwC Global Family Business Survey revealed that 84% of family businesses do not take a public stance on significant issues, 59% do not communicate their purpose externally, only 21% have a commitment to advancing DE&I, and a mere 15% have a clear ESG strategy. According to FBN member Andrew Bryson, 59% of FBN members do not publicly share their story in a structured format like an annual report, and only 8% of those who do adhere to standards such as the B Impact Assessment. This lack of communication may be partly responsible for the decline in trust in family businesses from 72% to 66% between 2013 and 2023, as found by the 2023 Edelman Trust Barometer, even as trust in businesses, in general, grew from 52% to 60%.
Despite the decline in public perceptions of family businesses, many FBN members are eager to improve their practices. In 2015, FBN established Polaris, a community for business families, to help more families enhance their environmental, social, and governance (ESG) practices. Polaris organizes activities for members to learn from one another, share experiences, and inspire others. It also supports businesses in delivering inclusive growth, better managing risk, fostering resilience, and creating positive impact. Over the past eight years, Polaris has facilitated learning and innovation that empowers family businesses to expand their ESG impact.
Polaris’s journey was strengthened by a 2019 Business Roundtable (BR) statement of purpose for corporations that rejected Milton Friedman’s long-standing theory that the sole purpose of a corporation is to make profits for its shareholders. BR embraced practices such as investing in employees, fostering diversity and inclusion, and dealing fairly and ethically with suppliers. The Business Roundtable stated that corporations must commit to all their stakeholders, including customers, workers, suppliers, communities, and shareholders. Polaris assists business families in adopting the practices embodied in the BR statement.
Polaris asserts that its initiatives to redefine capitalism can help its members tap into a $12 trillion business opportunity by providing impactful market solutions in key economic sectors aligned with the United Nations Sustainable Development Goals.
Polaris’s core framework includes a Polaris Impact Assessment (PIA) and a five-stage process for change.
Polaris developed the PIA, based on B Lab’s Impact Assessment and customized for family businesses, to enable family businesses to measure their sustainability. The PIA offers families insights into their impact and guides them in improving their businesses.
After conducting the assessment, Polaris members can use the results to implement a five-stage “Polaris Journey”:
Polaris committee member Andrew Bryson said that every member who has taken the PIA has gained powerful insights on where they are already creating impact and where there is room for improvement. Polaris also emphasizes communication and the importance of family businesses sharing their stories. Bryson explained that while being quiet and humble may have been a good approach to running a company a generation ago, the public now assumes a business is hiding something if it is not willing to discuss its work.
Polaris also offers case studies, a roadmap, an Impact Forum, and learning circles to provide family businesses with additional ways to incorporate sustainability and impact into their activities.
Several examples demonstrate how families have utilized Polaris to enhance their businesses. Biofilter, a second-generation Hungary-based family business that converts organic waste into bioenergy, used the PIA to develop an action plan to improve governance and community by focusing on “mission lock,” creating a supplier code of conduct, and enhancing worker and environmental practices. RedStar, a 60-year-old family business in the Netherlands that grows and sells tomatoes year-round, employed the PIA as the basis for improving governance by initiating the creation of a constitution and a family council to foster family interconnection, preserve family relations, and align the family and the business. Singbee, a second-generation lighting business in China, leveraged its participation in a Polaris Peer Group to identify the installation of solar panels on its headquarters as a potential improvement, resulting in positive financial and environmental impacts.
Although family businesses can be a force for good in society, many continue long-standing practices that minimize communication and hinder their potential to achieve ESG enhancements desired by the public and an increasing number of family members. By providing tools and processes, as well as enabling learning and sharing, Polaris offers a way for family businesses to overcome their constraints and maximize their positive impact.
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