Ultra-wealthy entrepreneurs in the U.S. and around the world are exhibiting an appetite for impact through their businesses and their investments, according to a new report by BNP Paribas and Bank of the West.
Thirty-nine percent of global entrepreneurs consider positive impact core to how they assess business performance, up from 10% two years ago. In the U.S., 51% of entrepreneurs consider themselves to be responsible investors.
Recent research showed that sustainable investing is rising across the globe.
The BNP Paribas study involved 2,650 elite entrepreneurs in 21 markets across the U.S., Europe, Asia and the Middle East with a total net worth of $40 billion. It defined “elite entrepreneurs” as highly successful business owners managing companies with multimillion-dollar annual turnovers and similarly substantial personal fortunes.
Some 300 U.S. entrepreneurs participated in the survey. Their companies generated $17 million in annual revenue, on average, and had more than 200 employees.
Thirty-six percent of U.S. entrepreneurs in the study were primarily focused on job creation, another 36% on clean energy and 31% on providing clean water to communities in need.
Forty-two percent of the American contingent said their chief motivation for socially responsible investing was to have peace of mind that their investments were not causing any harm.
Thirty-six percent said they wanted to invest in a way that reflected their values, and 34% wanted to ensure that they had a positive impact for a specific set of good causes.
The American entrepreneurs reported that the socially and environmentally focused investment vehicles that most interested them were equity funding, social business investing and social impact bonds.
The survey found that wealthy U.S. entrepreneurs had very diverse portfolios: On average, they allocated 19% to their own business, 15% to stock, 13% to cash, 12% to fixed income and 11% to real estate.
Thirty-seven percent of the American respondents said they most often used private equity to invest in other businesses, 34% used investment funds and 27% equity funding.
Eighty percent of millennials reported that they had committed a portion of their wealth to achieving socially responsible outcomes.
A recent report said that a fifth of millennials in the U.S. identify as activists.
“Over the last decade, entrepreneurial success has been redefined along two parallel tracks of financial profit and social impact,” Pierre Ramadier, group head of wealth management for Bank of the West, said in a statement.
Ramadier said younger generations of entrepreneurs were in the vanguard of that trend, which is now fully entering the mainstream. “Today, the social good — including sustainable job creation, environmental impact and overall community responsibility — of one’s enterprise is as important as its own financial success.”
Among the global elite entrepreneurs, the survey found that 55% had committed a portion of their wealth to attaining socially responsible goals.
Eighty percent of the larger survey sample said entrepreneurship was the best way to generate a global or local effect. In the U.S. and the Middle East, job creation ranked at the top of the impact agenda, in Europe clean energy and in China safeguarding the environment.
“Entrepreneurs — both in the U.S. and around the world — have always been a key driver for economic growth, job and wealth creation,” said Kristin Nelson, head of sales strategy at Bank of the West Wealth Management, said in the statement.
“However, we are now seeing a clear evolution in the mentality and behavior of elite entrepreneurs, in which they are beginning to also see themselves as creators and champions of safeguarding the environment, supporting job growth, expanding clean energy, combating poverty and eradicating famine. These entrepreneurs have set their bar high, but are dedicated to using their positions to make an impact on the careers, lives and communities of the people they employ.”
— Check out Global Investors Flock to ESG on ThinkAdvisor.