The Rising Tide of Sustainable Investing Amongst Millennipreneurs
After a year marked by the coronavirus and one of the deepest economic recessions in history, governments across the world are turning toward recovery plans focused on investing in a sustainable transition. Both the European Union and the incoming Biden administration in the US have pledged to base the economic recovery on a greener and more sustainable economy.
However, governments’ policies and policy-driven investments cannot do everything by themselves. There is a need for private investors to play a key role in that transition. Entrepreneurs are already ready to jump on the opportunity to play their part in that transition, leveraging their drive and spirit of innovation to address global challenges in new ways.
The BNP Paribas Global Entrepreneur Report 2020 Part III released by BNP Paribas Wealth Management illustrated this trend quite vividly. The level of engagement in sustainable and impact investing in the entrepreneur population is already quite high and fast increasing. Indeed, 70% of entrepreneurs globally indicated they are more willing to invest sustainably than 18 month ago, and impact-seekers are ready to quadruple their financial commitments to sustainability over time.
Just for next year, the total percentage of assets of entrepreneurs expected to be invested in sustainable and impact investment amounts to c. 16% of portfolios.
Beyond these significant evolutions, the impetus behind this change comes also in part from the next generation of entrepreneurs and family drivers. The recent BNP Paribas Wealth Management report focusing on the “NextGen”, the millennials entrepreneurs in Asia, unveiled the increasing deep commitment to sustainability within this demographic.
The next generation is committed to making their own businesses more sustainable and impactful. And they see this commitment as not unduly affecting their bottom line. In fact, 75% of Millennipreneurs are now more interested in sustainable investments than at the start of 2018.(See the Global Entrepreneur Report Part I). Almost half (46%) of the global audience has invested some of their wealth sustainably. Millennials go further than their earlier generations and anticipate nearly a fifth (19%) of their wealth will be invested sustainably by 2021. (See the Global Entrepreneur Report Part III).
Such a trend does not come without obstacles. Entrepreneurs recently highlighted the fact that they felt there were barriers to their widespread adoption of sustainable investing such as the availability or lack of sustainable investments and the complexity of some products.
Indeed, impact-seekers want the financial industry to play its part and proactively inform and advise them and provide them with relevant opportunities. The onus is on the private banks they work with to step up and facilitate the deployment of capital to sustainable investments.
Such feedback has been behind the drive at BNP Paribas Wealth Management to launch a series of initiatives aiming at easing the adoption of sustainable investment solutions for our clients. Our unique digital tool myImpact helps our clients determine their impact profile which allows private bankers to offer more relevant opportunities suited to their profile. Our recently released proprietary new game-changing sustainability “clover” rating methodology spanning all asset classes provides a single scale overview of the sustainability level of any investments we propose to our clients.
The appetite for sustainable investing is there: entrepreneurs and Millennipreneurs have clearly expressed their ambition to play a key role in the world’s transition. Private banks are here to help them in delivering this impact in full alignment with their values.