A recent study from Universidad Carlos III de Madrid highlights that family businesses outpace non-family ones in environmental sustainability, leading to better financial outcomes and supporting global climate goals.
Family-owned businesses are leading the charge in environmental sustainability, according to a recent study from Universidad Carlos III de Madrid (UC3M), conducted in partnership with Arizona State University (ASU) and Universidad de Salamanca. The research, published in the Journal of Business Ethics, underscores the vital role that family enterprises play in advancing green practices and reducing greenhouse gas emissions.
The research defines a family business as one where the founder or family members hold at least 25% of the voting rights. It reveals that these businesses are more inclined to implement eco-friendly policies, especially when family members actively participate in the company’s governance through roles on the Board of Directors.
“We have also seen that when the founding generation continues at the helm of the company, the efforts of family businesses to be more environmentally sustainable are even more accentuated,” co-author María José Sánchez Bueno, a professor in the UC3M Department of Business Economics, said in a news release.
The study is comprehensive, incorporating data from 22 European countries, which makes the findings broadly applicable across Europe.
The researchers utilized emissions data from the European Emissions Trading System, a key element of the European Union’s climate change strategy, alongside financial indicators from the Amadeus database.
One of the most surprising findings is the link between environmental practices and improved financial performance.
“It may be surprising, but our study shows that the reduction of pollution, far from entailing a cost to society or an ‘economic price’ for companies, can improve both the social and financial benefits derived from actions linked to corporate social responsibility,” added Sánchez Bueno.
The implications of this research are significant, particularly in the context of global efforts to achieve the Sustainable Development Goals (SDGs). The study suggests that family businesses could be pivotal in pushing forward environmental policies that not only benefit the planet but also enhance financial returns.
Given the critical need for sustainable practices to combat climate change, these insights could drive policy changes and encourage more companies to follow the example set by family businesses. The combination of family values with business strategies appears to create a powerful incentive for environmentally responsible behavior, which could be a key factor in meeting international climate targets.
Source: Universidad Carlos III de Madrid