FUND BOUTIQUES & PRIVATE LABEL FUNDS: “Ownership Approach”, ESG and Sustainability in Family Businesses (Interview – Florian Riedel, Krebs & Riedel Schleifscheibenfabrik)

“What we do today decides what the world will look like tomorrow.” (Marie von Ebner-Eschenbach) In an interview with Markus Hill, family entrepreneur Florian Riedel, Krebs & Riedel Schleifscheibenfabrik, talks about impact investing, sustainability, and the multigenerational approach. The similarities between the real economy and the financial sector are also described from the perspective of the family entrepreneur.

Hill: Sustainability is currently often equated with “impact investing” in the financial industry. How does a family entrepreneur see it?

Riedel: Impact investing can set important accents, but will not save our world on its own. This is because impact investing can only address a small part of the assets that emit CO2. A small brickyard in India or a coal-fired power plant owned by the Chinese government cannot be reached with capital market instruments. I believe that only ownership encourages a caring approach to the environment, to resources, to everything. “Ownership approach” and “skin in the game” are buzzwords that may come to mind. The studied economist, which we both are, would speak of the “internalization of external effects”. In the end, it’s always about the same thing: Act as if it were your property. And if, in addition to “skin,” your genes are also involved, for example in the form of your offspring, it becomes truly sustainable.

Hill: What is special about family business?

Riedel: The name says it all. It’s the family and multi-generational approach. Several studies show that family businesses invest very generously in expanding the business and in research and development, precisely because the investment horizon doesn’t just extend to retirement age. The entrepreneur who sets up his business in such a way that the next generation can continue to run it and sees this as the core of his corporate responsibility is acting sustainably. In addition, he must be innovative so that he has something to bequeath. In his case, it is not the stock options that are granted to the manager as an incentive so that he behaves like an entrepreneur rather than a civil servant, but the thought of his children.

Hill: Where do you see the overlaps and synergies between finance and the real economy?

Riedel: Many family entrepreneurs only know the financial sector through their house bank or as an investment of their private assets. Then there is the investor who sees the family business as a possible takeover target, perhaps works together with the entrepreneur in a minority position for another 5 years, and then makes an exit. For the family business, however, this exit pressure means that it is no longer a family business as soon as it is clear that a sale is imminent in the medium term. Active cooperation between the financial sector and the family business could be very fruitful, provided that the limitations of the desire for control on the part of the entrepreneurial family and the multigenerational aspect are sufficiently respected.

Hill: Thank you very much for talking to us.

Florian Riedl is Head of International Business, Sales, and Finance at Krebs & Riedel Schleifscheibenfabrik.

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