HKUST Business School Magazine

Conclusion: The Importance of Education Another challenge to the widespread adoption of sustainability in Asian family businesses may be the lack of awareness and education about sustainable finance in Asia. Many family businesses might not be aware of the benefits of sustainable finance or how to integrate ESG factors into their investment decision-making processes. To address this challenge, there have been efforts to raise awareness and provide education about sustainable finance in Asia. In Hong Kong, the government is encouraging collaboration between all stakeholders to increase sustainability initiatives and firmly position Hong Kong as a leading Sustainable Finance Center. At HKUST, sustainability is a core strategy across disciplines, from research with our Theme Based Research project on Green Finance, to undergraduate education with our BSc in Sustainable and Green Finance, executive education with our HKUST X HKGFA Certificate in Sustainable and Green Finance and to on-campus initiatives such as the Life Cycle Assessment Lab and Sustainable and Green Campus as a Living Lab through our Sustainable and Net Zero Office. Family businesses in Asia are increasingly recognizing the importance of sustainable finance. Sustainable finance provides a framework for family businesses to align their financial activities with their values and contribute to sustainable development. While there are still significant challenges to overcome, there are also opportunities for family businesses to lead the way in sustainable finance in Asia. By integrating ESG factors into their investment decision-making processes and measuring the impact of their investments on ESG outcomes, family businesses can contribute to a more sustainable and prosperous future for the region. According to PwC Survey 2022, 42% of NextGens said their families had a family office, and 43% of those with a family office have a sustainability strategy, compared with 37% of those with no family office. They are also more likely to have a written constitution and a succession plan in place. Furthermore, recent research is showing that a focus on sustainable and green finance can combine profitability and growth objectives with sustainability values, making sustainable funds an increasingly attractive option for family offices. Morgan Stanley Institute’s recent research shows a marked outperformance of sustainable funds over traditional funds. Biz@HKUST 47 Source: Morgan Stanley Institute for Sustainable Investing analysis of Morningstar data. * "Other" includes multi-asset, property, commodities, and alternative fund types. Sustainable Funds Beat Traditional Funds in First Half of 2023 As sustainability became more important to investors in the past decade, the market capitalization of family businesses began to trail that of nonfamily businesses. Businesses that have better ESG risk scores also have higher market values Note: Family Capital rated the top 100 family businesses and the top 100 non-family businesses using an ESG risk profiler. The index value is set at 100 on 1 Jan 2012. Source: David Bain, Family businesses fall behind non-family companies on ESG and lose their trust premium,’ Family Capital , 16 Sep 2021