HSBC Private Bank recently issued the following announcement.

The ongoing Covid-19 pandemic has sparked an unprecedented health crisis and upended financial markets around the world. The suddenness and scale has awakened many of us to a growing wave of urgency when it comes to the topic of sustainability.

Shaping a sustainable post-Covid-19 world

Something that is often overlooked is that sustainability isn’t just about caring for the environment. It’s also about taking care of people and protecting our future. While the present focus is to help clients tide through this difficult period, HSBC Private Banking does not lose sight of the long-term commitment to grow, manage and preserve their clients’ wealth in a manner that safeguards the future of generations to come.

“I think what has been happening in the world has triggered a deep reflection about how we can change the way we live for a better world. This has resonated with clients in our conversations. We want to support our clients by inspiring and helping them to make positive changes,” said Philip Kunz, Head of Global Private Banking for Southeast Asia at HSBC.

Unlocking the potential of family businesses

Like with many around the world, the challenges posed by the global pandemic have presented family businesses an opportunity to prioritise what is important for their cross-generational aspirations. It also underscores why family businesses cannot leave their succession planning to chance.

When Mr Jack Ma delivered his farewell speech to over 60,000 Alibaba employees, he reiterated his vision for Alibaba “to last for 102 years, stretching three centuries”, as reported by qz.com. Mr Ma decided not to simply pass the company on to the next generation or hand it off to professional managers but instead took upon a third path to nurture its own team, ensuring that the succession process is smooth with the help of system and culture. “That is why, I have been preparing for 10 years for today,” he said.

That Mr Ma had planned his departure from and passing on of Alibaba for a decade, with such a keen focus on generational succession, accentuates the need to discuss candidly the legacy of any family business.

No family business is the same, but all want to avoid the commonly cited curse of shirtsleeves to shirtsleeves in three generations. Turbulence can become a catalyst for family members to focus on discussions about the future. “We’ve had several meaningful conversations with our clients to address what is close to their hearts. Good communication is essential to successfully navigate the storm and protect the wealth and sustainability of family businesses,” said Mr Kunz.

Turning the spotlight on impact investing

Covid-19 has sparked market volatility comparable with the global financial crisis 12 years ago. However, some investments have fared better than others. Research has shown that actively managed ESG (environmental, social and governance) funds have outperformed during the Covid-19 fallout – a sign that concentrating on long-term goals reaps long-term sustainable gains.

The ongoing battle with Covid-19 has shifted the global mindset towards concerns about public health and the environment. It puts into perspective that investors have a crucial role to play, by maximising the impact of their portfolios, to mitigate the challenges of the current climate and beyond. This makes investing with an eye towards ESG credentials an interesting proposition. “In conversations with clients, they are indeed widening their scope when considering what type of investments they could undertake during this period,” says Mr Kunz.

The pandemic has also highlighted how companies that are synonymous with ESG have shown to be agile enough to adapt. The key is having a strong governance structure in place – one that will establish a sustainable and resilient business model. This includes ensuring clear business continuity and succession plans are in place, in the event of unforeseen circumstances.

Additionally, companies that improve their sustainability standards over time often have higher or improving valuations. This correlation shows it makes good business sense for both companies and investors to start adopting sustainability standards into their strategy and portfolios.

Rising above a crisis

Sustainability is the silver – or green – lining of this crisis. When the threat of the Covid-19 reduces, questions will emerge over how resilient businesses and the economy really are to future shocks.

Covid-19 has extracted a devastating price, but it has also bought us another chance to pause and consider our options. One clear way to honour the extraordinary sacrifice of those who have put the common good ahead of their own interests, is to deliver a healthier, more resilient, and more sustainable future.

When asked about the role HSBC Private Banking plays in this endeavour, Mr Kunz was resolute, “We have the privilege to work with clients who have the influence and the means to make a positive change in the world. It is our role to harness our global connections and capabilities to illuminate opportunities for our clients – by presenting innovative ways that finance can play in shaping the transition to a sustainable future.”

This article was published in The Business Times Who’s Who in Private Banking supplement on 27 May 2020.

Original source: https://www.hsbcprivatebank.com/en/discover/news-room/2020/shaping-sustainable-post-covid19-world?pid=HBUK:GDC:NA:GEN:XAW:ART:0520:001:PostCov