BNP Paribas Wealth Management’s 4th edition of the Global Entrepreneur Report demonstrates an increased commitment from Elite Entrepreneurs to generate positive impact
The 2018 Global Entrepreneur Report has revealed that 39% of Elite Entrepreneur respondents now consider ‘positive impact’ to be core to how they assess business performance, compared to 10% of respondents two years ago. This significant increase clearly demonstrates a shift in the entrepreneurs’ mindset, and this across all regions.
Over the past 12 months, the concept of positive impact, which consists in ensuring that their business, investments and personal practices make the world better, has moved up the agenda for entrepreneurs. The report which polled over 2,700 multimillionaire entrepreneurs in 22 countries, handling a total wealth of USD 36 billion, highlighted that:
- 55% have declared they committed a proportion of their wealth to achieving socially responsible outcomes.
- 80%believe that entrepreneurship is the best way to generate a global or local impact, in particular, relating to helping safeguard the environment (with 53% in China). In Europe, clean energy is the most popular cause (35%) while in the US and the Middle East, job creation ranks top of the impact agenda (36% and 40%).
- Elite Entrepreneurs anticipate significant increases in their future use of investment funds (34%), start-up financing (34%), private equity (32%), equity funding (32%) and impact investing (29%).
“There is a rapid change of mindset, impacting the ways Elite Entrepreneurs invest their wealth. We recently broke the bar of €10 billion invested in responsible investments, which has grown tenfold in the past 6 years. This clearly demonstrates the growing appetite of our clients for these types of strategies.” explains Sofia Merlo, Co-CEO at BNP Paribas Wealth Management.
“Their investments can amplify their ambitions to create a better environment for the next generation while reflecting their values. The ‘millennipreneurs’ hold great wealth potential and will lead the way: impressively, 64% of them are already actively engaged in impact investing, particularly in terms of job creation”, underlinesVincent Lecomte, Co-CEO at BNP Paribas Wealth Management.
The Global Entrepreneur Survey has also highlighted regional variations.
Motivations for ESG investments
Social impact priorities are interpreted differently by entrepreneurs across the world.
The overall priority is to safeguard the environment – this is particularly powerful motivation in Asia Pacific, in which almost half of business owners hope to galvanize change.
Responsible investors use both head and heart to make choices.
Elite Entrepreneurs are attracted to responsible investments because they see the opportunity to further the causes they care about, in line with their values. Take up of these vehicles is highest in Brazil, the Middle East, and APAC.
For China, 70% of respondents declared committing a portion of their wealth to responsible investments with the main areas being: equity funding (33%) sustainable and responsible investing (SRI) (31%) and social enterprise investing (30%). The top causes Chinese Elite Entrepreneurs aim to have an impact on are safeguarding the environment (53%), job creation (44%), and clean energy (38%).
- Equity funds have primacy as the most popular vehicles, where about a third of entrepreneurs use them as a route to market
- Nearly two-thirds of business owners based in China treat their social achievements as a signal-point of their success
- Around one in five entrepreneurs prioritize making a difference in their local communities
- China is one of the markets that attract more responsible investments than any other countries – both from local and international investors. The Chinese market additionally acts as a hub for flows from other countries in the surrounding region, particularly from Hong Kong, Taiwan and also from the UAE
For Hong Kong, 48% of respondents declared committing a portion of their wealth to responsible investments with the main areas being: social enterprise investing (28%), equity funding (23%) and impact investing (21%). The top cause Hong Kong Elite Entrepreneurs aim to have an impact on are safeguarding the environment (49%), job creation (34%), and clean energy (31%).
- More than a quarter of entrepreneurs in Hong Kong prefer to invest in social enterprises
For Taiwan, 57% of respondents declared committing a portion of their wealth to responsible investments with the main areas being: environmental investing (26%), sustainable and responsible investing (SRI) (23%) and social enterprise investing (22%). The top causes Taiwanese Elite Entrepreneurs aim to have an impact on are job creation (53%), safeguarding the environment (50%), and advancing education developments (44%).
- More than one in four entrepreneurs has taken out environmental investments
- Business owners are most acutely aware of their broader responsibilities and treat social achievements as a signal-point of their success
- One in five entrepreneurs now believes contributing to employment growth is a top reason to be an entrepreneur
The 5 global profiles of Impact Entrepreneurs:
ULTRAPRENEURS – an entrepreneur with a net investable wealth in excess of USD25 million.
- 67% of Ultrapreneurs are Responsible Investors, with environmental and social business investments their most frequently used vehicles. They invest in this way to create jobs (41%), safeguard the environment (38%) and support the transition to clean energy (32%).
SERIALPRENEURS – an entrepreneur who owns or has established four or more operating companies.
- They are more focused on using their wealth strategically to support other high-potential businesses: they allocate 15% of their portfolio to angel investments and private equity to fund new companies.
MILLENNIPRENEURS – an entrepreneur aged 35 or under
- 46% say they define their business success in terms of social impact, compared to 39% of all entrepreneurs. Despite this, a majority do not feel satisfied with their achievements in this area to date and identify social impact as a future business priority.
- Women Entrepreneurs continue to outperform their male peers with a higher average net worth. They are more motivated than their male counterparts to hold ESG (Environmental, social & corporate governance) investments to ensure a positive impact, at 37% vs 33% for male.
BOOMERPRENEURS- Baby Boomer aged 55 or over.
- Boomerpreneurs take their social responsibilities seriously and are more assured than their younger peers that they have made a social impact during the 19 years on average since they first founded their business. 45% have an exposure to social and environmental investments with equity funds and environmental investments as favored routes.