Kuala Lumpur, Malaysia – From Malaysia to Singapore and the Philippines, second- and third-generation family businesses in Asia are charting a different path from their forebears in their pursuit of greener and more sustainable investments.
For some millennial business heirs, the path is simple. For others, the gap between their comfortable lives – which gave them the space to learn about socially conscious “impact investing” – and their parents’ experiences growing up in poverty has created conflict.
Malaysian Abe Lim, 27, grew up in circumstances far removed from those of her father, who left school as a teenager to work as a mechanic to support his family.
Lim’s father founded a business producing lubricants, soap and dishwashing liquid and recruited her into the company when she was young in the hope that she would one day take the reins.
But Lim’s youthful idealism soon clashed with his father’s traditional profit-focused business model.
“I wanted to do something more impactful. My father’s business was traditionally run with a focus on profit,” Lim told Al Jazeera.
“Instead of prioritizing monetary gains, I wanted to prioritize social and environmental impact. “This is something very new for the older generation.”
While working at his father’s company, Lim suggested setting up a research and development department to explore the possibility of converting plastic waste into biofuels.
His father agreed and invested some money in the idea.
“When it was scientifically proven to be feasible but economically not viable, it was stopped,” Lim said.
Lim also disagreed with his father on climate change, which he dismissed as “Western propaganda.”
Ultimately, Lim decided to leave his father’s company and venture out on his own.
His first company, funded by angel investors, was a used furniture marketplace that aimed to reduce waste by promoting recycling.
“But we couldn’t sustain ourselves because the market was not mature enough,” Lim said.
Lim also had to deal with superstitious beliefs about second-hand furniture that are prevalent in Asian culture.
“Some people think there are ‘ghosts’ associated with old furniture,” he said.
In 2021, Lim founded Purpose Plastic, which recycles discarded plastic into home decor, chess pieces, furniture, mahjong tiles and other products.
“We are profitable,” Lim said. “Our largest orders are always corporate gifts.”
Lim hopes that one day companies will prioritize the environment over profits.
“I would never want to say it’s impossible because I have hope that one day it will happen,” he said.
“For companies to be on board and participate in sustainable goals, it is necessary [be] a form of incentive. Maybe that will get the ball rolling.”
In August, the law graduate ran in local elections in the state of Selangor on a platform that emphasized policies to address climate change. While she was not successful, she is open to running again.
“For now, I want to focus on growing my foundation and expanding my environmental work. Being a politician is not just about getting elected, but about providing long-term solutions to support people’s daily lives,” said Lim, a member of the Malaysian United Democratic Alliance, a youth-oriented party.
Catalyst for change
Komal Sahu, a member of the Asian Venture Philanthropy Network, said younger generations are reshaping perceptions among business owners by emphasizing the need for businesses to create positive social impact.
“They recognize that their family’s wealth can serve as a catalyst for positive transformation, addressing social needs beyond what government aid covers,” Sahu told Al Jazeera.
Sahu said second- and third-generation business heirs are embracing socially conscious investing to demonstrate that it is possible to align financial returns with social and environmental goals.
“By incorporating environmental, social and governance factors into their investment decisions, they advocate driving positive changes while ensuring the financial viability of their businesses,” Sahu said.
Still, Sahu said, it should not be assumed that there is always a conflict between new and old ways of thinking about business.
“That’s not always the case. … In some cases, older generations are the ones encouraging bolder, more innovative ways of thinking to ensure the continued success of their businesses or philanthropic efforts,” he said.
The Filipino Marianna López Vargas, 32, is an example of this.
She is the partnerships manager of the Oscar M Lopez Center, a Manila-based climate change research foundation founded by her tycoon grandfather.
Oscar M López, who made his fortune in telecommunications, energy and real estate, opened the center in 2012 in response to an “alarming lack of funding” to understand the local impact of climate change and develop adaptation strategies, López Vargas told Al Jazeera.
López Vargas said she considers herself “very lucky” to be part of a family and organization that align with her personal values.
Due to concerns about climate change, the family’s companies made “a very bold decision” in 2016 to completely divest from coal and pursue an energy portfolio based on clean, renewable energy, he said.
Lopez Holdings Corporation currently has no existing or proposed coal-fired power projects. Its energy portfolio is made up of natural gas, hydropower and geothermal and solar energy, although company bosses have admitted that a complete transition to renewables is not yet realistic due to the intermittency of solar and wind energy.
“[It’s] quite ambitious at that time given a developing country like the Philippines that relied heavily on fossil fuels for its economic development,” López Vargas said.
López Vargas is confident that, over time, it will be possible to completely eliminate fossil fuels.
“It’s certainly a possible future with all the enabling factors and the right institutional incentives,” he said. “It is also a necessary transition, but done in a fair, equitable and inclusive manner.”
For millennial business leaders, persuading the older generation to adopt new ways of thinking requires effective communication and a deep understanding of generational differences and perspectives, Sahu said.
“Therefore, many second- and third-generation family businesses…encourage their elders to explore new ideas and adopt innovative approaches by engaging in open and respectful dialogue,” Sahu said.
Brazilian Fernando Scodro, 35 years old and resident in Singapore, illustrates this point. He is responsible for implementing the investment strategy of the Grupo Baoba family office in Rio de Janeiro.
Scodro taught his family about socially conscious investing after attending a course at the University of Zurich that expanded his knowledge of investment possibilities.
“I translated the entire course into Portuguese for my family. It took me three months. They learned with me,” Scodro told Al Jazeera.
A few years ago, Scodro’s father invested in CODNI, a startup in Brazil that helps other companies reduce their energy consumption, after seeing a good business opportunity in the profitable company.
“I loved the business model of an energy efficiency company. It resonated with me,” Scodro said. “I told my dad, ‘Hey, you’re making an impact investment. You just didn’t know.’”
