PR88072

LONDON, Feb. 16, 2021 /PRNewswire=KYODO JBN/--

In a year where business has had to transform the way it meets the needs of

society and the environment, family owned businesses risk falling behind,

according to a new global survey of 2,801 family business owners.

While more than half (55%) of respondents saw the potential for their business

to lead on sustainability, only 37% have a defined strategy in place. European

and American businesses are lagging their Asian counterparts in their

commitment to prioritising sustainability in their strategy. 79% of respondents

in mainland China and 78% in Japan reported 'putting sustainability at the

heart of everything we do' compared to 23% of US and 39% in the UK. Larger

businesses and those owned by later generations also buck the trend, with

greater focus on sustainability.

This reluctance to embrace sustainability comes despite the fact family owned

businesses are highly likely to see a responsibility to society. Over 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 - less than half (46%) expect sales to fall despite the pandemic and

survey respondents felt optimistic about their business' abilities to withstand

and continue to grow in 2021 and 2022.

Instead, the issue is an increasingly out-of-date conception of how businesses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.

Peter Englisch, global family business leader at PwC says,

"It is clear that family businesses globally have a strong commitment to a

wider social purpose. But there is a growing pressure from customers, lenders,

shareholders and even employees, to demonstrate a meaningful impact around

sustainability and wider ESG issues. Many listed companies have started to

respond but this survey indicates that family businesses have a more

traditional approach to social contribution.

"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

demonstrate a clear sense of their values and purpose when it comes to helping

economies and societies build back better."

Growth

The survey suggests family businesses have weathered the pandemic relatively

well. Less than half (46%) expect sales to fall despite the pandemic and survey

respondents felt optimistic about their business' abilities to withstand and

continue to grow in 2021 and 2022.

Family business lagging on digital transformation

Even though 80% of family businesses adapted to the challenges of the COVID-19

pandemic by enabling home working for employees, there are also concerns about

their overall strength when it comes to digital transformation.

62% of respondents described their digital capabilities as 'not strong,' with a

further 19% describing it as a work in progress.

Yet here there are clear generational differences: 41% of businesses that

describe themselves as digitally strong are 3rd or 4th generation, and Next

Gens have taken an increased role in 46% of digitally strong businesses.

Peter Englisch says,

"It is a concern that family businesses are lagging behind the curve. There is

clear evidence that having strong digital capabilities enables agility and

success and that they have a similar enthusiasm for sustainability

"Businesses should consider how they can engage the experience and fresh

insight of Next Gens when it comes to prioritising their digital journey."

The governance gap

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.

Peter Englisch says,

"Family harmony should never be taken for granted – it's something that must be

worked on and planned for, with the same focus and professionalism that's

applied to business strategy and operational decisions.

"There are growing concerns from regulators around the world about family

business succession, especially with a third of 1st, 2nd or 3rd generation

businesses expecting the next generation to become majority shareholders in the

next five years.

"It is therefore vitally important that businesses take a lead on ensuring they

have formal processes in place they can ensure stability and continuity in the

long run."

Notes to editors

1.        The Family Business Survey is available to read here:

https://www.pwc.com/familybusinesssurvey

2.        The report is based on 2,801 interviews conducted with family business

leaders and decision-makers across 87 territories between 05 October and 11

December 2020

About PwC

At PwC, our purpose is to build trust in society and solve important problems.

We're a network of firms in 155 countries with over 284,000 people who are

committed to delivering quality in assurance, advisory and tax services. Find

out more and tell us what matters to you by visiting us at www.pwc.com.

PwC refers to the PwC network and/or one or more of its member firms, each of

which is a separate legal entity. Please see www.pwc.com/structure for further

details.

(C) 2021 PwC. All rights reserved.

Contact: David Bowden

         Global Communications Manager | PwC

         m: +44 (0)7483365049

         e: david.bowden@pwc.com

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Source:  PwC