Shaping the Future: Second- and Third-Generation Family Businesses Embrace Sustainable Investments
Younger business heirs in Asia are challenging traditional profit-focused models as they prioritize social and environmental impact.
Across Asia, a new generation of business heirs is carving a different path from their predecessors as they prioritize sustainable investments. From Malaysia to Singapore and the Philippines, second- and third-generation family businesses are embracing socially conscious “impact investing” and reshaping perceptions among business owners. While some millennial heirs face conflicts with their parents’ profit-focused models, others find common ground and drive bold changes. This article explores the journeys and experiences of these young business leaders, highlighting their efforts to align financial returns with social and environmental goals.
Challenging Tradition: The Clash of Ideals
Abe Lim, a Malaysian business heir, found herself at odds with her father’s profit-focused business model. Growing up in a more privileged environment, Lim aspired to prioritize social and environmental impact over monetary gains. However, her father’s traditional approach and skepticism towards climate change led to conflicts. Lim’s decision to leave her father’s company and establish her own ventures reflects the generational divide and the desire for more impactful business practices.
The Power of Purpose: Purpose Plastic and Environmental Entrepreneurship
Lim’s entrepreneurial journey led her to found Purpose Plastic, a company that recycles discarded plastic into various products. By prioritizing sustainability and profitability, Lim demonstrates that businesses can align their goals with environmental objectives. Lim’s hope for businesses to prioritize the environment over profit reflects a growing trend among younger business leaders who advocate for a shift towards sustainable practices.
Catalyst for Change: The Role of Younger Generations
Komal Sahu, a member of AVPN, Asia’s largest network of social investors, highlights the impact of younger generations in reshaping business perspectives. These heirs recognize the potential for their family’s wealth to drive positive transformation beyond government aid. By incorporating environmental, social, and governance factors into their investment decisions, they advocate for change while ensuring financial viability. However, Sahu emphasizes that conflicts between generations are not always the case, as some previous generations encourage innovation and bold thinking for ongoing success.
Leading by Example: The Lopez Family’s Commitment to Climate Change
Marianna Lopez Vargas, a member of the Lopez family in the Philippines, exemplifies the alignment of personal values with family businesses. The Lopez family, led by tycoon Oscar M Lopez, established the Oscar M Lopez Center to address the local impact of climate change. They made a bold decision in 2016 to divest from coal and pursue clean and renewable energy sources. While a complete transition to renewables is not yet realistic, the family remains committed to a just and equitable transition away from fossil fuels.
Bridging the Generational Gap: Effective Communication and Dialogue
Persuading older generations to adopt new ways of thinking requires effective communication and understanding of generational differences. Sahu emphasizes the importance of engaging in open, respectful dialogue to encourage elders to explore new ideas and embrace innovative approaches. Fernando Scodro, a Brazilian business leader based in Singapore, exemplifies this approach by teaching his family about socially conscious investing and translating educational materials to foster understanding and collaboration.
Conclusion:
The rise of second- and third-generation family business leaders prioritizing sustainable investments marks a significant shift in Asia’s business landscape. While conflicts may arise due to generational differences, many young heirs are successfully driving change by advocating for social and environmental impact. Through their ventures and engagement with older generations, these leaders are reshaping business practices and paving the way for a more sustainable future. As they continue to bridge the gap and communicate effectively, the potential for long-term change becomes increasingly promising.