How can family businesses champion responsible capitalism?

Devin DeCiantis and Sam Bonsey discuss the role of responsible capitalism in the family business

Although this enticing duality capitalizing on current opportunities while heading off future systematic risks appears to be good for business and for society in the long run, the shift toward more responsible capitalism in the shorter term remains elusive at scale.

Regardless of industry, geography or scale, all businesses have an impact on the environments within which they operate. Enterprising families can certainly have a strong influence on these ecosystems, though no single institution public or private can ever have absolute control. This presents a challenge for collective action and a strategic dilemma for family leaders. Do we need to compromise on short-term profitability in service of longer term organizational health? How much good can we possibly achieve on our own, even if we were motivated to do so? Purely from a risk management perspective, isn’t it better to be a fast follower than a front-runner in these efforts?

Cultivating awareness about how an enterprise interacts with its environment across time and using that knowledge to inform strategic decision making is Responsible Capitalism in action. It is also good business in the most pragmatic sense building resilient ecosystems within which sustained entrepreneurial activity can take place.

Although this enticing duality capitalizing on current opportunities while heading off future systematic risks appears to be good for business and for society in the long run, the shift toward more responsible capitalism in the shorter term remains elusive at scale.

It takes a profound level of commitment and patience from owners and leaders despite many competing strategic agendas. Enterprising families can understandably be forgiven for their ambivalence about how to proceed. However, the realities of the external environment whether around climate change, social and economic justice, or changing consumer tastes and preferences highlight the urgency for decisive action.

In this episode of LGA Lighthouse, Sam Bonsey, Executive Director of The ImPact, a family-driven organization committed to aligning assets with values, and Devin DeCiantis, managing partner at LGA, discuss:

  • How capitalism has evolved over the past two centuries: particularly the shifting primacy of shareholders vs. stakeholders and back again. The foundations of modern capitalism espoused by Adam Smith and more recently by Milton Friedman may be anchored in self-interest, but Sam and Devin remind us that the moral foundations that once accompanied Smith’s theories have moved from the foreground to the background over time.

    How a group of enterprising families created the concept of impact investing to transform traditional philanthropy, leading to the emergence of new business models, new investment funds, new research agendas and new networks.
  • How to resolve the tension that can emerge in family enterprises between generations with fundamentally different world views.
  • How families can use difficult conversations about wealth, purpose, and social impact as an opportunity for engagement rather than conflict
  • How families can draw on the wisdom of their past to inform their present, while developing a better rubric for future strategic decision-making.
  • How enterprising families can mobilize the dynamism and scale of the capital markets to achieve Both economic system goals and address urgent social and environmental risks.

Capitalism is the best (and perhaps the only) vehicle currently available to address the world’s most complex and systematic challenges any one of which presents an existential threat to family enterprises. Consequently, family leaders and owners need to be intentional about the ways they use all the resources at their disposal financial, physical, human, and social both to accelerate their own entrepreneurial success and to support the long-term health of the ecosystems that sustain us all.

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