Bang, N. P., & Ramachandran, K. (2025).
Inaction is not an option: ESG and family firms.
Vikalpa: The Journal for Decision Makers, 50(1), 1-16.
Link:doi: [10.1177/02560909241309521]
Executive Summary / 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.
KEYWORDS: Family Firms, ESG, Sustainability, Performance, Industry, Policymakers.