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How UHNW families can successfully manage sustainability-related risks and enjoy the opportunities they bring.

Dr Herb Castillo
Dr Herb Castillo

Associate Partner, Practice Leader - Sustainability

Itriom has developed proprietary tools that enable UHNW families to realise the tangible opportunities that sustainability-based strategies offer.

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.

What are the real risks UHNW families face from today’s global challenges?

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 good news: vast opportunities are already out there

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.

Good business sustains us all

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.

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