Doing good seems to be an even stronger motivation for high net worth and ultra HNW entrepreneurs today than even a few years ago, with certain regional issues coming to the fore.
More “elite entrepreneurs” around the world consider making a positive impact on the world a central feature of what they do in business, sometimes almost as important as breaking even, particularly when Millennials are concerned, a global survey of high- and ultra-high net worth entrepreneurs by BNP Paribas Wealth Management has found.
The French bank’s Global Enterprise Report, released yesterday, sheds light on how views about investing with a desire to change the world for the better can have different motivations depending on the region in which the individual lives, their age group and gender.
Overall, a desire to make positive change via business and investment is increasing, BNP Paribas’ report said. Some 39 per cent of “elite entrepreneurs” – high net worth - consider positive impact to be at the centre of what they do, compared to 10 per cent taking such a view just two years ago.
The findings of this 83-page report chime with other studies, as well as discussions from events hosted by the publisher of this news service, showing that wealth management practitioners realize that offerings to clients around impact investing, environmental, social and governance methodologies, and related approaches, are no longer “nice-to-have” ideas, but essential. With inter-generational wealth transfer a major trend, and firms looking to recruit Millennial clients, these valued-driven approaches to business and asset allocation are seen as revenue drivers.
Bank of the West, the US subsidiary of BNP Paribas, has made waves in this area of impact investing and advice around philanthropy. See here for a recent article by one of its senior figures.
“There is a rapid change of mind-set, impacting the way elite entrepreneurs invest their wealth,” Sofia Merlot, co-chief executive at BNP Paribas Wealth Management, said.
The report’s authors polled more than 2,700 multi-millionaire businessmen and women in 22 countries, collectively handling wealth of $36 billion. It found that 55 per cent of them have declared they committed a portion of their wealth to achieving socially responsible outcomes; some 80 per cent said entrepreneurship is the best way to generate a global or local impact. In Europe, clean energy is the most popular cause (35 per cent), while in the US and Middle East, job creation comes top of the impact agenda, at 36 per cent and 40 per cent, respectively.
Impact investing – putting money to work to achieve non-financial returns – is gaining traction in the wealth and investment world, with firms such as UBS, Goldman Sachs and Bank of America, among others, seeking to tap a desire by people to do good and do well at the same time. There remains debate on whether a desire for non-financial outcomes, such as reducing poverty, illiteracy, pollution or proliferation of weapons comes at the expense of returns, or is congruent with it. The field is still relatively young and not yet tested by a major market reverse.
The BNP Paribas report was produced by Scorpio Partnership, the wealth management consultancy.
Among the respondents, 40 per cent were women; some 40 per of respondents were Millennials, with 16 per cent from the Baby Boomer cohort; 19 per cent were entrepreneurs with at least $25 billion and 21 per cent were counted as serial entrepreneurs.
Perhaps unsurprisingly, given coverage of their attitudes, Millennial entrepreneurs were described as the keenest in baking social impact into their business lives. Some 46 per cent of this group said they defined business success in terms of social impact, higher than an average of 39 per cent across the board.
Client interest in clean energy and the environment is driven by how, for example, news stories about climate change and pollution grab viewers’ and readers’ attention, according to Elénore Bedel, head of responsible investments at BNP Paribas Wealth Management. “Environmental causes and clean energy are actually among some of the best represented across various financial instruments, from mutual funds and private equity, to structured products and single lines,” she said.
The report examines different views across a number of jurisdictions. In Singapore, for example, 38 per cent of respondents are classified as “responsible investors”, with a desire to invest in ways that reflect their values being the biggest motivator. In Hong Kong, 48 per cent of respondents take the designation of “responsible investor”. In China, the share is 70 per cent, in the US, 51 per cent, Germany, 38 per cent, and Middle East (Qatar and UAE), 62 per cent.