Sustainability Out, Governance In
 

A few weeks ago, we published the first part of our analysis of the second annual Institutional Investor Global Asset Management Survey. We found that geopolitical risk has overtaken technology as the dominant concern for family offices.

The survey revealed another interesting data point: Family offices are significantly more skeptical about sustainable investing than pensions, endowments and other institutions.

In fact, only 30 percent of family offices surveyed considered any ESG factors in their investment process, compared with 60 percent of total respondents. And just 26 percent of families integrate climate-risk analysis.

Family office respondents were polled on net zero commitments, the energy transition, and the environmental and social impact of investments. About half said these issues are not relevant to their investment decision-making at all.

Other allocators, in comparison, were about twice as likely to incorporate these themes into portfolios and investment strategies.

Reputational management, regulatory compliance, and investor demand mean that evaluating environmental issues has become necessary for some asset managers and big investors, especially in Europe.

As we have discussed in Officium in the past, family offices, on the other hand, by nature are not subject to those pressures. Family offices operate under a different set of incentives and retain the flexibility to define risk and return parameters. But a move away from sustainability should not be confused for a wider trend towards short-termism.

In fact, the reality is quite the opposite. Separate data suggests that family backed businesses are becoming more cautious in the current environment.

PwC’s Family Business Survey showed a slowdown in growth for family firms in the U.S. when compared to previous years. In 2023, as many as 81 percent of U.S. family businesses reported sales growth but by 2025 that figure had fallen to 52 percent, according to PwC.