ESG in Family Firms:A Review of Research, Regulations and Practice Guidance

Hughes, Mathew, Hu, Qilin, Simeonova, Boyka, Gee, Bingbing, Issah, Wunnam Basit ORCID: https://orcid.org/0000-0002-0942-8228, Jack, Sarah, Hughes, Paul and Dai, Siqi (2025) ESG in Family Firms:A Review of Research, Regulations and Practice Guidance. Family Business Research Foundation. ISBN 978-1-7392001-3-8

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Abstract

This report presents the findings from a review of the research, regulations, practices and existing guidance on environmental, social and governance (ESG) activity among family firms in the UK. Our study had three objectives: 1. To review the academic research evidence relating to ESG in family firms. 2. To identify and evaluate existing regulations, practice guidance and voluntary frameworks relating to ESG. 3. To conduct a small-scale inquiry into UK family businesses and advisers involved in ESG activity. We provide lessons, insights and recommendations that will interest family business owners and managers, their advisers, policymakers and academic researchers.   Research aims and methodology:  The study aimed to review existing ESG research within family firms, evaluate applicable ESG frameworks, and conduct inquiries with UK family businesses and their advisers. By employing a systematic review combined with targeted interviews, this study offers comprehensive insights into how ESG practices are implemented and perceived among UK family businesses.   ESG and its imperative in family businesses:  In an era marked by escalating ESG expectations, businesses of all sizes must demonstrate their sustainable practices. This report assesses the ESG landscape, focusing particularly on family firms in the UK. It assesses their current practices, regulatory pressures, and the broader impact of ESG on their operational and strategic frameworks. Recent developments, such as the UK’s adoption of the Task Force on Climate-related Financial Disclosures and the introduction of the International Sustainability Standards Board standards (likely to come into force in 2026), underscore the urgency of ESG compliance. Presently, ESG regulations apply to large businesses. However, this regulation’s inevitable trickling down to all businesses requires family firms, regardless of size or industry, to proactively commit to ESG and demonstrate their ESG credentials.   ESG and its implications for family businesses:  Family businesses are uniquely positioned to benefit from adopting ESG practices because they focus on legacy and continuity. However, challenges may arise when aligning these practices in situations where families prioritise their fuller degrees of control over the business. The findings suggest that while family businesses increasingly align and comply with ESG standards, this alignment may vary depending on the prevailing views of the controlling generation, whether different perspectives exist within the family through the involvement of the next generation, or the number of generations within the family business. Choices about governing the family business may also help or hinder new perspectives such as ESG taking hold in that business.   Regulatory environment and its implications:  With the UK taking large steps towards ESG regulation, family businesses in the UK face mandatory disclosures that are set to increase in stringency. The transition to the International Financial Reporting Standards (IFRS) Sustainability Disclosure Standards led by the International Sustainability Standards Board highlights the need for all businesses, regardless of size, to adapt to a rapidly evolving regulatory landscape.   Practices and frameworks: Why family businesses should develop their environmental, social and governance stories:  he practical aspect of ESG in family firms involves a complex interplay of compliance, strategic alignment and stakeholder engagement. Successful firms integrate ESG into their core strategies, enhancing their market reputation and operational longevity. The study reviews various frameworks that support these efforts, providing a pathway for family businesses to develop their ESG stories and narratives, and to communicate that to their stakeholders as a basis for a new competitive advantage.   Conclusions and actions for family businesses and future directions for research:  Family firms that effectively integrate ESG principles can enhance competitiveness and contribute to broader social goals. Those who can create economic and social value are best placed to succeed in the ESG landscape. To navigate the complex ESG landscape, family firms should focus on robust data collection, stakeholder engagement and strategic integration of ESG practices. Avoiding superficial ESG commitments is crucial, as these may risk perceptions of greenwashing. Instead, embedding genuinely sustainable practices into the fabric of operations will be important for regulatory compliance and long-term success.  This report underscores the necessity for ongoing research, particularly into how generational shifts and internal business cultures impact ESG adoption. Future research should also explore the real-world impacts of ESG practices beyond academic and regulatory spheres, focusing on creating meaningful change within local communities and industry

Item Type:	Book
Faculty \ School:	Faculty of Social Sciences > Norwich Business School
UEA Research Groups:	Faculty of Social Sciences > Research Groups > Strategy and Entrepreneurship
Related URLs:	https://www.fbrf.org.uk/reports/esg-in-f...
Depositing User:	LivePure Connector
Date Deposited:	16 Jan 2025 00:37
Last Modified:	20 Jan 2025 00:38
URI:	https://ueaeprints.uea.ac.uk/id/eprint/98208
DOI:

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