Sustainability has become a decisive competitive advantage. Family businesses can play a pioneering role in this area. Professor Marcel Hülsbeck from the Witten Institute for Family Enterprises WIFU shows how the transformation to sustainability champion succeeds.

Based on current research findings, WIFU has developed a model that enables family businesses to develop a holistic sustainability strategy based on 10 steps.

// 01. raise awareness of values in the entrepreneurial family and among the shareholders.

Entrepreneurial families act across generations anyway. This already lays the foundation for a sustainability strategy. Starting points can be found in the family's lived values and mindset. The first step should therefore be a discussion of these intangible values of the family. To ensure that the values do not remain abstract, but are also lived in practice, it is advisable to link the values with observable consequences and actions.

// 02. family strategy.

The development of a sustainable set of values cannot and must not be seen independently of, or even developed in parallel with, the overall governance of the family, in particular the development of a coherent family strategy. Rather, the development of a sustainability strategy should be an integral part of a family strategy process (see WIFU Practice Guide "Family Strategy Development in Entrepreneurial Families" ).

// 03. sustainability orientation.

The family should ask itself what sustainability issues are that arise naturally from the business and its environment. This orientation does not depend solely on the entrepreneurial will, but also on the environment, regulatory policy, industry, competition and stakeholders. Sustainability should be integrated into the company's own value creation.

// 04. sustainability at family level: commitment, control, continuity.

Current research shows that these three aspects are the most important. In each, strategic questions need to be answered that link concrete control impulses with long-term and irreversible investments

- Commitment: What is our commitment as a family to sustainability?

- Control: How do we measure this and how can we ensure that sustainability projects are implemented?

- Continuity: What measures are appropriate to carry the sustainability issues into future generations? How do we anchor these sustainability values and issues?

// 05. status quo analysis with top management.

This step is about determining the current situation in the company. Here, the entrepreneurial family works together with the internal and external top management to match the general thrust of the family strategy with the current entrepreneurial reality. The own family business can be located in terms of sustainability motivation and sustainability commitment.

// 06. internalise and communicate sustainability at the top management level.

Once the values and sustainability orientation of the entrepreneurial family have been clarified, the next decisive step is to pass them on to top management. And this must be done in such a way that they can understand, internalise and communicate the values. Here it can be helpful to work with external experts as sources of inspiration.

// 07. Sustainability at the corporate level: purpose, professionalisation and partnerships.

From the abstract idea, the ideal, the values, we move on to the deed, the concrete, practical implementation. 

- What is the purpose of our family business?

- How can we involve all stakeholders in such a way that they "embark on the journey of sustainability" with us?

- How can we promote professionalisation in the area of sustainability in our company?

// 08. define sustainability goals along the value chain.

Building on step three, the sustainability orientation, sustainability goals are now determined along the value chain. Concrete measures are derived and agreed on the basis of concrete starting points, made measurable, evaluated and communicated. In detail, it is a matter of outlining the necessity of the measures, the effort and the effect:

- Necessity: What makes this activity/measure necessary? Why should it be prioritised now? What other measures are directly dependent on this measure?

- Effort: What is the expected financial, organisational, technical, communication and time effort? What are the assumptions on which this effort estimate is based? What alternative scenarios are conceivable?

- Direct effect: What direct effects on the "triple bottom line" (ecological, social and economic) are intended or expected? Which stakeholder groups will be affected by these effects?

// 09. effects of the sustainability strategy.

The effects of the sustainability strategy must be defined on the three levels of the "triple bottom line" and linked to the individual sustainability measures. On the basis of a sustainability matrix, it can thus become clear very quickly which levels and elements of sustainability require special attention, where which measures are implemented and in which areas much has already been achieved. Such a "heat map" can be used in the operational management of the strategy.

// 10. reflection.

The last step is for reflection. Are the sustainability projects congruent with the family values? Have approaches for new strategies developed as a result of the interactions that have arisen? And how are these to be evaluated?

Conclusion: The model described provides orientation in the multitude of "Social Development Goals" in order to develop a focused sustainability strategy for one's own family business. A successful sustainability strategy addresses the challenges with a long-term perspective and together with partners, intensifies relations with stakeholders, increases the degree of innovation, generates competitive advantages, strengthens the company's reputation and image and improves financial performance.

Authors: 
Andrea Gerlitz
Professor Marcel Hülsbeck
Witten Institute for Family Business (WIFU)