Elite Entrepreneurs: investing for impact and returns

Elite Entrepreneurs are increasingly determined to deploy their wealth to help achieve the United Nations’ 17 Sustainable Development Goals, with today’s business owners especially focused on protecting the environment.

These are some of the key findings in the third instalment of the BNP Paribas Global Entrepreneur Report 2020, which surveyed 1,132 successful entrepreneurs from around the world.

These elite company founders possess a combined wealth of $18.2 billion and have a growing acceptance of sustainable investments as an asset class, the report finds. Worries persist about lower returns, but investors nonetheless want to ensure their money has a positive impact on the causes that matter most to them.

Nearly half of company founders already include sustainable investments in their portfolios, with a further 35% keen to know more about such opportunities.

Entrepreneurs’ interest in sustainable investments is expanding rapidly, with 70% more willing to allocate wealth to this asset class than they were just 18 months ago. That reflects broader investment trends - in the two years to 2018, sustainable investments worldwide expanded 34% to $30.7 trillion.

The United Nations’ 17 Sustainable Development Goals (SDGs) detail how society can deliver a more sustainable future for us all, setting specific targets to achieve by 2030.

As part of the BNP Paribas study, high-net-worth individuals were asked to choose their five most important SDGs; one-in-three named climate change.

SEEKING SHARED VALUES

“Climate change is top-of-mind for everybody right now,” says Kristin Nelson, Head of Sales, Strategy and Business Development in the wealth management arm of Bank of the West, part of the BNP Paribas group, noting this goes beyond entrepreneurs’ investment strategy. “Companies are looking to network and do business with other firms that have similar interests and values.”

Among the other 16 SDGs, decent work and economic growth, affordable and clean energy, and good health and well-being were also cited as key issues by more than 30% of respondents.

Whatever the personal cause of each entrepreneur, a determination to do good through their investments transcends age and geography, while women are more likely to be impact seekers, which the report defines as those planning to expand their allocations to sustainable investments. Irrespective of gender, impact seekers on average plan to quadruple the relative weight of sustainable investments in their portfolio from the current level of 4% of assets to 16%.

Among Elite Entrepreneurs who hold sustainable investments or are keen to do so, 29% cite personal or family values as their main motivation, while 20% say it’s a topic they’re passionate about.

“Values are reflected in the themes entrepreneurs are interested in,” says Tine Bourgeois, Head of Business Development and Philanthropy for BNP Paribas Fortis in Belgium.

“Those personal values already determine how they do business, consume and live, and they don’t want only to make more money with their money. Entrepreneurs are on a search for doing good while doing business, and as investors that translates to finding a combination of investment returns and positive impact.”

Entrepreneurs with sustainable investments are also thinking big. Around half put money in assets with global scale, while a similar number invest at a national level. Such a philosophy reflects entrepreneurss’ understanding that responding to complex issues like climate change or marine conservation require coordination that goes beyond borders or regions.