The Next Generation bringing sustainability to the forefront of Family Office transitions

Matthew Millard-Beer
Matthew Millard-Beer

Managing Partner

Recent figures indicate that family offices are placing a greater emphasis on sustainability while succession planning.

A recent market research report highlighted that family offices are placing a greater emphasis on succession planning than ever before. Accelerated by the COVID-19 pandemic, the transition is seeing younger generations acquiring more responsibility in their family businesses; over the next 10 years, 44% of family offices are preparing for an inter-generational wealth transfer. This wealth transfer is estimated to see $84 trillion transferred to the next generation and will see a generation increasingly interested in sustainability and philanthropy take leadership positions in their family office.

The Next Generation Transition

Aeon Investments published a study that involved interviewing 100 senior investment managers working for family offices with a total of US$98.4 billion assets under management as of November 2022. The study found that the next generation are placing more consideration on investment planning and thinking ahead, with 39% of interviewees ‘strongly agreeing’ that younger family members are driving sustainable future planning. This figure rises when including the 58% of respondents who answered, ‘slightly agree’.

The findings of the study align with Knight Frank’s 2020 ‘Wealth Report’, which found that 80% of UHNW investors want to see more ESG-compliant assets, the main motivation being future-proofing their portfolios. Additionally, the report found that those with inherited wealth now have a much greater interest in philanthropy and sustainability. 

The next generation are already influencing the family business and family investments. 88% of respondents from the study suggesting that family offices are increasingly diversifying their portfolios into a wider range of assets to meet these new investment demands.

Sustainability driving asset allocation

Sustainability is set to play an essential role in alternative asset allocation. While generating financial returns is still one of the main priorities for family offices and businesses, the pandemic highlighted that ESG – environmental, social, and governance – factors cannot be ignored. According to the Financial Times, millennials are “leading the change for impact investments as well as those that meet ESG criteria’s” – with 64% of the next generation likely to make investment decisions based on societal problems that are important to them.

The challenge is to balance these factors with strong financial returns, something that the next generation is embracing. UBS’s Global Family Office report showed that (of the 121) family offices surveyed, almost two-thirds regarded sustainable investing as a necessary factor not only in their financial planning but moreover in their legacy and purpose.

The challenges facing Family Offices

While the drive and determination are clear – leading families want to pursue sustainability investment opportunities to future-proof their portfolios and leave a lasting legacy – the question remains how to engage the next generation to do so. Forbes recognise some of the key challenges awaiting family offices, including “supporting the formulation of policies and strategies, negotiating and monitoring development interventions, and the mobilization and allocation of funds and embracing environmental, social and governance applications in private investments” to drive opportunities and create long-term value for society throughout the investment value chain.

The future landscape

However, these challenges also bring opportunities. Leading families are uniquely positioned to both fund global ESG issues – contributing to the enormous wealth gap that is needed to meet the Sustainable Development Goals by 2030 – as well as leave a positive family legacy enhancing both a family’s reputation on the global stage while generating a financial return. 

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About the author:

Matthew Millard-Beer is CEO & Founder, based in Itriom’s London Office.

About Itriom

Itriom is the global impact platform helping leading families shape a better world. Itriom’s platform enables families to refresh and redesign their values, aligns them with the right UN Sustainable Development Goals, combining them in an agreed purpose and a Family Impact Charter. Itriom’s platform supports the development of impact initiatives and whilst providing discrete and secure spaces for peer-to-peer messaging and collaboration. Itriom’s core practices in leadership, geostrategy, and sustainability benefit clients by developing strategies to engage and support the next generation in building a lasting legacy of which families can be proud. 

About Itriom's Leadership Practice

Itriom’s leadership and resilience practice instils all-encompassing leadership in support of principals of leading families and the next generation preparing for family succession, transition and evolution.

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Alizah Beg

ESG Consultant

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.

Georgina Murrin

ESG Analyst

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.

Tim Boughton

Senior Partner
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.

Dr. Herb Castillo

Associate Partner
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.

Simon Hulland-Lucas

Senior Partner
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.

Matthew Millard-Beer

Managing Partner
Practice Leader – Strategy

Matthew is Founder & CEO of Itriom, providing solutions and a global platform for Ultra High Net Worth Principals and their families to engage in unifying purpose, enduring legacy, and sustainable impact.