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#SRI — 26.02.2018

Responsible Investing Is On The Rise Among Entrepreneurs

Today's successful entrepreneurs increasingly see making a positive impact on the world as a sign of success in business.

Entrepreneurs are now, more than ever, concerned with the effects of their business activities on the environment and society, and the community’s response to its practices. They want to grow their wealth, but not by compromising external stakeholders. The 2018 BNP Paribas Global Entrepreneur Report revealed a notable shift in mind-set among Elite Entrepreneurs. The report sampled 2706 Elite Entrepreneurs from 22 different countries, who lead multi-million-dollar companies and possess an equally substantial personal wealth. Out of this sample, more than half [1] were categorized to be actively engaged in socially responsible investing. This article explains this phenomenon and highlights some of the most interesting data points regarding entrepreneurship and sustainable investment trends.

Millennipreneurs Leading the Way

On average, 55% of the sampled Elite Entrepreneurs engage in sustainable investing, meaning at least a portion of their investment holdings are appointed to harness responsible outcomes. When categorizing them by age, there are notable differences in responsible investment practices between age groups. 

Among Boomerpreneurs, aged 55 and over, this number is only 45% . Boomerpreneurs are more skeptical towards the profitability of investing to make an impact. More than a quarter mention a lack of interest in pursuing responsible investments to back up their decision not to engage in social investments. They cite a lack of hard evidence to measure the amount of positive impact one’s investments can generate as a reason for not engaging in responsible or impact investing.

This issue does not seem to be much of an obstacle for Millennipreneurs, aged 35 and under, who are especially active in socially responsible investing. An applaudable excess of 80% of Millennipreneurs hold sustainable investments. They are found to be much more likely to experiment with responsible investing than their older peers. Only 5% of Millennipreneurs state having no interest in pursuing responsible investments as a reason not to engage in these type of investments, compared to 27% of Boomerpreneurs.

Source: 2018 BNP Paribas Global Entrepreneur Report

The Rise of Impact Investing

Impact investing is a form of sustainable investing with the primary objective of leaving a positive and lasting impact on the environment and society. It is a more proactive method than other forms of sustainable investing. Rather than focusing on competitive financial returns, the primary interest of impact investments is to leave a mark for the better.

Younger entrepreneurs were found to show more interest in social impact investing compared to Elite Entrepreneurs over the age of 55. Within Millennipreneurs, 22% appointed impact investments as one of their top 5 responsible investment vehicles. This is significantly more than Boomerpreneurs, of which only 5% engages in impact investing. We have seen a rise in impact investing over the last few years and expect to see increased priority allocated to impact investing as a form of socially responsible investments in the years to come.

Motives Driving the Increase

Business motives, investment beliefs and personal values are no longer separate. This is a major reason for entrepreneurs of all ages to engage in socially responsible investing. Today’s leading entrepreneurs want to align their investment portfolio with their values. 37% of Elite Entrepreneurs explain they want their investments to reflect their personal values and beliefs. Another 35% have specific environmental or societal issues, such as unemployment rates, that they wish to progress. 18% changed the composition of their investment portfolio to include more sustainable investments for the prospect of attractive financial returns.

Source: 2018 BNP Paribas Global Entrepreneur Report

Among responsible investors, the most popular areas to create an impact on are protection of the environment (38%), creating employment opportunities (38%) and promoting green energy (36%), with differences among specific regions. In Asia-Pacific, around 40% of entrepreneurs are looking to safeguard the environment, compared to only 25% American entrepreneurs. Animal welfare, on the other hand, seems to be a lower priority in the APAC region, as only 18% of sustainable investment efforts are directed towards this cause, compared to 33% of Brazilians. We can see that Elite Entrepreneurs prioritize different items on their SRI agenda, which are influenced and predicted by social values and circumstances in their country of residence.

Socially responsible investing among Elite Entrepreneurs continues to rise, following trends discovered in our previous Global Entrepreneur Reports. Millennipreneurs outperform Elite Entrepreneurs in other age groups as they are most actively engaged in sustainable investment practices, due to a strong set of motivators and sense of responsibility towards external stakeholders that overpowers the need for financial returns.

With the growing number of millennial Elite Entrepreneurs and increased innovations in measuring concrete investment impacts, we expect to see a continued rise in responsible investment efforts in next year’s BNP Paribas Global Entrepreneur report. BNP Paribas Wealth Management will continue to look out for investment trends among entrepreneurs and share updates around our findings.  

For more insights around entrepreneur behavior, refer to the full 2018 BNP Paribas Global Entrepreneur Report or download it by clicking on the link below.

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