In the global discourse of responsible investing, the role of family businesses and social entrepreneurs is relatively understated. To reach more conclusive outcomes on climate change and other socio-economic matters, we need to ensure family businesses and social innovators get a front-row seat—if not the driver’s seat—at global sustainability and investment movements. Family and social enterprise is where wealth and changemakers rest, especially in the GCC region.
From the Millennium Development Goals (MDGs, 2000-2015) to the present era of the Decade of Action for the Sustainable Development Goals (SDGs, 2015-2030), most of the human endeavors we’ve witnessed over the past few decades have been missing a core component—the resolve and determination of those who matter most: family businesses and social enterprises.
The good news is that family businesses across the GCC are increasingly favoring the greater good as part of their wealth creation strategies. Supported by government policies and initiatives, the sheer size of the family business sector and its growing knack for responsible investment will bring significant improvements to the state of the region and the world, helping us tackle some of our most pressing socio-economic and environmental challenges.
According to the UAE Ministry of Economy, up to 90% of private companies in the UAE are family businesses, which account for about 40% of the nation's GDP. In Saudi Arabia, family enterprises represent about 63% of operating establishments, contributing $216 billion to the Kingdom’s GDP, according to the Riyadh Chamber. The reality is quite similar in other parts of the world. According to the US Census Bureau, family firms comprise 90% of all business enterprises in North America. Since most of the wealth lies in family offices, it has never been more important to create an environment where family businesses are encouraged to have a more vested interest in ESG investing.
I recently hosted a family office investment summit in Dubai in line with Sheikh Maktoum bin Mohammed Al Maktoum’s latest programme, Thabat Venture Builder, that aims to boost family businesses’ contribution to GDP to $320 billion by 2032.
Government-led programmes such as Thabat will not only propel the growth of family businesses and support the UAE’s overall economic trajectory, but it will also act as a catalyst for more family office contributions to address the multi-faceted issues facing our society and planet.
During the Summit, family offices in the UAE demonstrated a genuine interest in deepening their impact investing efforts as an integral part of their wealth-building strategies. In addition to highlighting a family vision for business growth, the Summit provided a platform to elevate the discourse on climate change, carbon regeneration, green bonds, female empowerment, water resources, among others.
Key player in the fight against climate change
Family offices in the UAE have a strong sense of responsibility to address climate change in support of future generations. Today, the world has a broad understanding of what needs to be done and we have the various tools at our disposal to limit global warming. What we need is to act fast and decisively to save the planet, and family businesses are at the heart of this endeavor. Protecting the environment does not have to come at the expense of profit. Both profit and purpose can go hand in hand. For instance, there are many commercially viable processes for the cultivation of micro algae for biofuels and related carbon credits that will make net-zero emissions goals a reality.
The mission to go beyond carbon neutral is backed in the UAE and the wider region by green bonds that support carbon regeneration. This represents one type of impact investing. Other opportunities are focused on water, air, energy and more.
Female empowerment to the fore
Female business leaders in the Gulf region share a vision for sustainability, a commitment to mentoring young women, and a passion for serving as positive role models. In the UAE and Saudi Arabia, the governments’ advocacy for female empowerment is unprecedented on the regional level. An area that still needs support is the level of funding from venture capitalists and other sources for female founders and entrepreneurs.
I’m a firm believer in the power of the family office to create a lasting impact on our people and planet. Hosting COP28 in 2023 underscores the UAE’s vision and global ambassadorship of sustainability, and family offices are the main engine propelling these efforts to achieve the net zero carbon target by 2050.
As a global ‘family of family offices’, we are committed to providing networking platforms bringing together family offices and thought leaders from all over the world to advance the sustainable development agenda.