Family businesses further along than expected with regard to climate action

Equity financiers also need clear signals and incentives
Companies own measures: resource efficiency

14 November 2021, Munich. Family businesses show a high level of internal motivation when planning climate action measures. Often stemming from the shareholders or the wishes of their customers, they have already implemented many measures, particularly in energy generation and waste management. However, they also see risks to their competitiveness: with a view to the political guidelines of the future German government and the prospect of the European Union’s Green Deal. This is shown by the new “Annual Monitor” of the Foundation for Family Businesses, compiled by the ifo Institute in Munich.

Focus on the opportunities

This representative survey of around 1,700 German companies (1,300 of which are family businesses) always focuses on a current topic, this time climate and environmental policy. Although climate action measures entail costs, the majority of respondents are prepared and open-minded: 60 per cent see the upcoming efforts as an opportunity or neutral; only 30 per cent see them as a risk.

The companies’ own resource efficiency measures, from the procurement of climate-friendly products to a higher proportion of recycling, are astonishingly advanced: the combined responses for “implemented” and “planned” range from 60 to 80 per cent of respondents. Family businesses also appear to be somewhat more ambitious in their targets for carbon neutrality. “Companies are often further than politics thinks they are,” says Rainer Kirchdörfer, Member of the Executive Board of the Foundation for Family Businesses. “If you want them to invest their capital in new climate-friendly technologies, you should encourage them, not strangle them.”

Evaluation of current climate and environmental policies

No technology specifications

Government funding for research and investment is helpful from the perspective of family businesses. They tend not to agree with specifications on the use of certain technologies, energy efficiency or carbon reduction. Owners of family businesses in particular are also sceptical when incentives are provided via the capital market (such as more favourable financing conditions for green investments). They often reject stricter transparency obligations for environmental information. The ifo Institute concludes that policymakers must also send clear signals to equity financiers who are reluctant to publicise their activities and provide incentives to encourage them to take the path to climate neutrality.

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