["Corporate Social Responsibility and Environmental Management, EarlyView. ", "\nABSTRACT\nGrounded in agency theory, this article examines the relationship between family ownership concentration and environmental, social, and governance (ESG) performance, and analyzes the moderating role of sustainable governance mechanisms. Specifically, it assesses whether sustainability committees and ESG‐linked executive compensation moderate the relationship between family ownership concentration and ESG performance. The empirical setting comprises 150 publicly listed European family firms observed over the period 2010–2021. Using panel data regressions with multiple fixed effects to control for unobserved heterogeneity, the results show that higher levels of family ownership are negatively associated with ESG performance. However, this effect is significantly weakened in firms that adopt sustainability committees and ESG‐linked executive compensation schemes. These findings indicate that the impact of family ownership on sustainability is contingent upon the governance architecture that shapes the exercise of ownership power. From a theoretical perspective, the results contribute to agency theory by demonstrating that monitoring and incentive alignment mechanisms can mitigate Type II agency tensions between controlling families and minority shareholders in ESG‐related domains. From a practical standpoint, the findings suggest that in contexts of highly concentrated family ownership, the introduction of formal ESG‐oriented monitoring and incentive mechanisms can reduce discretionary decision‐making in ESG‐related domains and foster greater alignment between family objectives and broader stakeholder expectations, thereby supporting a more balanced and long‐term sustainability orientation.\n"]