Across the globe, communities, businesses and individuals are beset by an array of challenges. These include climate change, decreasing biodiversity, growing economic, health and educational disparities.
These challenges, and the responses to them by governments and stakeholders, present operational, reputational, regulatory and financial risks to Ultra High Net Worth (UHNW) families.
However, these challenges also bring opportunities for such families, who are uniquely well positioned to finance and support the development of new solutions to solve them.
Those families who adopt and embed a strategic approach to sustainability, can simultaneously create positive impact while realising the wider associated benefits such impact offers.
The risks to UHNW families from climate change and other sustainability challenges are multiple, far reaching and often interrelated.
Operational risks can come from potential disruption to family businesses’ supply chains. For example, if countries where the businesses’ raw materials are sourced are adversely impacted by climate change such that they’re no longer able to reliably supply materials.
Reputational risks can arise if stakeholders and local communities view the family or its businesses to be operating in a way that adversely impacts the environment, society or economy. A diminished reputation can, in turn, lead to operational disruption if the family loses its ‘social licence to operate’ and are subject to protests and/ or legal action from affected communities.
To address the global sustainability challenges, governments in many countries are introducing regulations that will require organisations to manage and report their sustainability impacts. Many new and varied regulations have appeared over the past two years in the United States, United Kingdom and Europe. If unprepared for these new regulations, families may quickly find themselves facing regulatory reprimands and fines, and possibly prohibited from doing business in those countries.
All of these risks combine to present real and tangible financial challenges to families. Disruption to a family’s investments or business operations either due to supply-chain issues, local community protests or regulatory action, will inevitably have direct and. significant impact.
Finally, if a family suffers reputational damage due to unsustainable practices, that can result in financial losses as many buyers and investment houses now have policies stipulating that they can only engage with ‘sustainable’ businesses.
The shift towards a sustainable global economy not only brings risks. It also brings opportunities.
In particular, there are opportunities for UHNW families to make a tangible positive impact, improve the resilience of their businesses and investments, enhance their reputation and community relations while achieving a financial return.
UHNW families can make a positive and lasting impact on the world by taking focussed action to minimise climate change, alleviate poverty and improve access to quality education.
Creating visible positive impact will, in turn, enhance UHNW families’ reputation with regulators and other stakeholders, including local communities who increasingly expect business owners and investors to support environmental, social and economic development. This will have the knock-on effect of improving community relations and enhancing the family’s ‘social licence to operate’ in those localities.
Adoption of a sustainable approach will also have direct positive impacts. By reducing carbon emissions for example, the family will also reduce energy costs. By contributing to sustainable communities and boosting health and well-being in the localities where they operate, the family will ensure that it has a healthy, productive and reliable workforce.
UHNW families can also boost financial returns through a sustainable approach. Current global challenges require the development and financing of appropriate solutions.
The opportunity is vast. The UN, for example, estimates that investments of US$5 – 7 trillion are needed to achieve the Sustainable Development Goals.
UHNW families are uniquely positioned to finance these solutions. This means that UHNW families can not only contribute to solving the world’s most pressing challenges. They can do so while also producing a financial return.
Itriom are here to support you in realising these opportunities.
Our next generation services are your first step to making Leadership & Resilience, Sustainability and Geostrategy central to your family’s future investments, businesses, achievements and legacy. Positioning you to manage related risks while realising vast opportunities.
© 2023 Itriom Limited. All rights reserved. Republication or redistribution of Itriom’s content, including by framing or similar means, is prohibited without the prior written consent of Itriom Limited. This material is provided for informational purposes only.
Alizah is an ESG Consultant and researcher. She supports Itriom developing sustainability related products and services, helping our clients identify potential opportunities for creating positive environmental, social and sustainable impact.
Georgie is an ESG Analyst and researcher. She researches trends, develops insights and reports, and writes insight articles on sustainability and ESG related topics to ensure Itriom’s clients are up to date on the latest policy, progress and initiatives to inform the platform and help our clients maximise their positive impact.
Practice Leader – Leadership & Resilience
Renowned family office thought leader, Tim works with UHNW families to ensure they are fully equipped to deliver their legacies inter-generationally and effectively.
Practice Leader – Sustainability
Dr. Herb creates methodologies and frameworks for managing, measuring and assessing sustainability performance. His work identifies where maximum impact can be made.
Practice Leader – Geostrategy
Simon harnesses research, liaison and networks globally to identify opportunities for Itriom, building the knowledge needed to deliver intergeneration legacies for UHNW families.
Practice Leader – Strategy