Inaction is not an Option: ESG and Family Firms
By Nupur Bang, Kavil Ramachandran
Vikalpa: The Journal for Decision Makers | February 2025
DOI
doi.org/10.1177/02560909241309521 (journals.sagepub.com/home/vik)
Citation
Bang, Nupur., Ramachandran, Kavil. (2024). Inaction is not an Option: ESG and Family Firms Vikalpa: The Journal for Decision Makers doi.org/10.1177/02560909241309521 (journals.sagepub.com/home/vik).
Copyright
Vikalpa: The Journal for Decision Makers, 2024
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Abstract
The article investigates the adoption of ESG (Environmental, Social and Governance) practices among family and non-family firms in India, emphasizing the unique dynamics within family firms. Employing CRISIL’s proprietary ESG scores for 225 of India’s largest listed companies, the study reveals that non-family firms outperform family firms overall, particularly in environmental (E) parameter. Among family firms, family business group-affiliated firms demonstrate superior social performance compared to standalone family firms (SFFs), attributed to their resource availability, public scrutiny and legacy-driven motivations. The research also identifies foreign institutional investor (FII) ownership as a significant factor positively influencing ESG adoption across all firms. This suggests that FII presence encourages sustainable practices, aligning corporate behaviour with global governance standards. Despite their long-term orientation and stewardship values, family firms lag behind non-family counterparts, primarily due to a lack of awareness and structured approaches to ESG integration. The findings underscore the need for tailored policy interventions to promote ESG adoption, especially among SFFs, by addressing resource and knowledge gaps. The article calls for standardized ESG reporting frameworks to ensure transparency and comparability, enhancing investor confidence and driving corporate responsibility. It highlights family firms’ potential as ESG leaders, given their societal embeddedness and multi-generational perspective, urging immediate action to align their practices with global sustainability goals.‘To create a better future we need to harness collective agreement to focus on net zero commitments. Our purpose is unequivocal in protecting both society and future generations from the consequences of climate change…This is inclusive capitalism in action—inaction is not an option.’ Michelle Scrimgeour, Chief Executive Officer, Legal and General Investment Management, Co-chair, COP26 Business Leaders Group. (COP26, 2021)

Kavil Ramachandran is a Professor of Entrepreneurship (Practice) at the Indian School of Business (ISB). A founding faculty member, Professor Ramachandran established the Wadhwani Centre for Entrepreneurship Development at the Indian School of Business in 2001. He later served as the Associate Dean (Academic Programmes), before becoming the Thomas Schmidheiny Chair Professor of Family Business and Wealth Management, and subsequently the Executive Director of the Thomas Schmidheiny Centre for Family Enterprise at ISB.

He specialises in family business, entrepreneurship, and strategy, with 36 years of combined academic experience at the Indian Institute of Management, Ahmedabad, and the Indian School of Business.
Professor Ramachandran holds a PhD from Cranfield University, UK. His research focuses on family business, entrepreneurship, and strategy. He has authored and edited seven books and published extensively in reputed Indian and international journals.

His consulting experience includes areas such as family business governance, professionalisation, succession planning, strategic planning, identification of new opportunities for growth, corporate entrepreneurship and turnaround strategies in family and non-family business environments. His special expertise lies in managing the challenges at the interface of governance, professionalisation, and strategy, particularly in rapidly growing mid-size, multi-generational family businesses.

Professor Ramachandran has demonstrated special interest in mentoring young members of business families. He spearheaded the initiative in ISB offering a new MBA-level programme for the next generation of family business leaders (PGP MFAB), and was adjudged the “Faculty of the Year” by students in both 2018 and 2019. He has consistently been listed among the top 100 global influencers (academics) in the field of Family Business by the Family Capital magazine.

He has authored several case studies, worked with several well-known family business leaders and global experts, and consulted on transformation of family businesses. A frequent speaker at family business forums in India and abroad, he also contributes regularly to popular media. He has conducted numerous training programmes for family businesses on governance, professionalisation, strategic management, and entrepreneurship.

Professor Ramachandran has served on various advisory committees for the Government of India, the World Bank, and the Securities and Exchange Board of India (SEBI). His book, The 10 Commandments for Family Business, is widely regarded as a leading publication in the field.

He is recognised as a pioneer academic entrepreneur, dedicated to advancing the cause of strengthening family businesses in India and internationally. In 2022, he was conferred with the Bharat Asmita Acharya Shreshta Award for Best Teacher in Management by MIT World Peace University, Pune (MIT-WPU)

Kavil Ramachandran
Kavil Ramachandran