Interview with Nour Abou Adal & Maissa Abou Adal
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This interview examines the unique dynamic between family generations within the family office, the importance of philanthropy and the rise of impact investing.
This interview was conducted by Alexander Koeberle-Schmid.
Your legacy family business is based in Lebanon. Can you describe the thought process that went into founding the family office?
Maissa: We have a different approach compared to other families. Back in 2010, we started by focusing first on the core operating business. We kicked off a 10-year transformation process, as this was our priority and the core of our social responsibility vis-à-vis our employees, our partners and our consumers in the region.
Why that focus?
Maissa: We were in an environment of major turmoil. Lebanon, Syria and all these countries in the region have been going through a rough time. So the first priority for us was business transformation and governance, which we kicked off in 2010. We were looking to lay the foundation for a comprehensive and sustainable transformation, to ensure that the company would be ready and fit to adapt to this volatile uncertain and complex world.
The family office is more recent. That process started in 2015 when the family came together not only around the core business but really around the Abou Adal family assets and legacy.
In 2015 we really started thinking: “So: for our generation, for the next generation—what kind of impact do we want to have? What strategy would be best to protect and develop our wealth? What are the means we can use to preserve, develop and transfer the family wealth and legacy between the generations, at least until our children take over?”
Nour: To build on what Maissa said, we don’t think of the family office in terms of an ‘office’. Up until 2015, it was a one man show handled by our father for over 40 years. Since working on our family governance, we decided to put some structure and processes around it to manage risks, uncertainty and ensure a proper succession.
What was the process for founding a family office?
Maissa: We had to start first with the corporate governance.
Our family business is 70 years old. We’re the third generation. The majority of the time was first spent on the family business, reaffirming our commitment to our employees and towards our community.
From there, we moved on to the family governance, which in turn meant exploring each of the spaces, asking questions and structuring things.
What we learned was this: do not overcomplicate the process. There are a lot of people and a lot of consultants that will try to intimidate you as a business, as a family. Keep it simple. Discipline is important. Commitment is important. But keep it simple. Because when you overcomplicate the process, you can miss the boat.
What motivated the family to push forward together on this?
Maissa: The motivation was the same core values that bring us together. Right now we are G3 (Generation 3) moving towards G4. So we have been focusing on our core values and their impact and really trying to show humility in passing on a legacy that we can be proud of to our children.
Nour: We also want to leave an impact on the community we work with and which has put its trust in us. The other motivation was to separate the family interests from the core business interests. That’s very important, because the business transformation showed us that while obviously the values are always the same, the family’s interests can look a little bit different when seen from a helicopter point of view.
How does philanthropy play into this?
Maissa: Right now the family is involved in both the business and the family office. I’m leading the effort on philanthropy, and that’s currently running through the business, where there is a proper CSR/SDG strategy and process. In the future, it will be separate, and our family foundation will see the light of day in 2019.
Philanthropy is already second nature to us. The things that need active attention are family governance on one hand and implementing everything that has been decided on the other. And then testing it and recalibrating it continuously, which is very important too.
Nour: And this where we feel the family office serves its function and draws on the cohesiveness of the family. Our idea of the family involves the spouses and the kids that are not shareholders today, including educating G4 to be responsible shareholders, responsible investors, responsible partners, etc.
So what does the philanthropy look like?
Maissa: Well, we’ve been active in philanthropy forever, now we’re just putting a little bit more process and structure around it. If you look in our annual report that the business publishes every year, there are 3 core pillars to our values, core to what our internal and external community needs. The first one focuses on basic needs, because you are in a region and in a country where we’ve suffered a lot, especially in the last years, beyond the ongoing war.
We’ve suffered a lot from poverty that has been increasing in relation to the refugee crisis. So for us basic needs are extremely important i.e. warmth, shelter, food, water. These are givens for Europeans, but for our region there are a lot of people who are really impacted by that.
The second one is around empowering our community through education. Education for children generally, but with a big focus on girls, because today you are in a country and a region where people tend to favor boys, especially in very underprivileged communities. Girls tend to just drop out of schools. And a girl who can continue through primary and secondary school will have a better chance of raising her own daughter who will actually succeed and add value to her community.
So education is another very important pillar for us. But we’re talking here about educating underprivileged children.
And the third one is the environment. As a company we have been recycling since 2009, despite the recent garbage crisis we’ve been going through in Lebanon. We’ve always been very careful about respecting our environment.
So these are the 3 pillars. And every year we report back on achievements vs. goals. For example, I just presented the 2018 CSR plan last week. The plan offers a very clear 12-month road map based on these 3 pillars.
Starting next year we will also be creating an internal funding program for our employees because we realized that they too are in need. It’s going to be focusing on ensuring that promising children can get a proper education, because the public schooling in Lebanon is very weak and it’s getting weaker every day with the refugee crisis. So everybody wants their kids in private schools. And their costs keep on increasing. As a parent, you want to ensure that you’re taking care of your kids’ health and education.
This is part of an external arm which will be working with the operating business to ensure that every single colleague who has kids with very high potential will be able to send them to a decent school, including the financial support to pursue that.
Nour: And this goes back to what we said before about the efforts from the philanthropic point of view. Our work is running through the business right now, but soon you will have two different entities. Within the family office our philosophy or focus is increasingly around impact investing. In fact responsible investment is a priority for us and I think it will be more and more the case for younger generations in family offices.
Of course it’s easier said than done. You look at your assets and all of a sudden you think: so many of our assets don’t really qualify as impact investing. This not to say we deal in unethical businesses. Far from it. Our values and integrity are at the core of every business and personal decision.
However, drawing the line on what is ethical and what is not is becoming increasingly blurry. The sectors of technology and AI alone raise a ton of questions on that front. How do we truly measure the impact of something still in its infancy?
The essence of what I’m trying to say however is that while family philanthropy is an important part of what we do and who we are, impact investing allows us to integrate philanthropy at the very core of our investments and businesses as opposed to something we do on the side. For instance we recently invested in renewable energy projects in remote areas throughout Asia that are off the main electricity grid. Such investments offer promising returns while at the same time catering to minorities with little access to electricity and also reducing impact on the environment.
Do these investments make good business sense?
Nour: As Maissa says, we work a lot with the competition, especially when it comes to creating a positive impact. One of the things about building proper structures and processes is that it really helps you understand: Where and how are we allocating resources? Who should I take on as a partner to better achieve my goals? A more collaborative approach is essential when forming philanthropic structures. It’s not about the formalities, obligations, or that “what looks good.” It’s pretty much your purpose.
I think our partners are positively surprised most of the time. I guess some of them are still not used to how we assess investment opportunities, because we do consider more than just financial returns. Instead we think: “It might be a nice sounding project, but it’s hardly creating value for the world.” And that matters to us.