- Institutional investor survey shows 70%
of investors have already implemented ESG strategies; 84% of asset
owners are pursuing or actively considering ESG integration in
their investment process
- Lack of data and perception of
financial trade-off are identified as main hurdles to
implementation
A majority of individual asset owners are now pursuing
sustainable investing to manage risk and drive returns, according
to a new survey published today by the Morgan Stanley Institute for
Sustainable Investing and Morgan Stanley Investment Management. The
new survey polled 118 public and corporate pensions, endowments,
foundations, sovereign wealth entities, insurance companies and
other large asset owners worldwide, 60% of which had total assets
over $10 billion. The survey gathered insights about trends,
motivations, challenges and implementation approaches in
sustainable investing. By rounding out the sustainable investing
landscape with the views of asset owners, this work builds on
Morgan Stanley’s previous Sustainable Signals studies focused on
individual investors and asset managers.
“As interest in sustainable investing continues to rise, we see
investors pursuing a range of approaches with their assets,” said
Rui de Figueiredo, Co-Head and CIO of the Solutions and Multi-Asset
business at Morgan Stanley Investment Management and Head of the
Division’s Sustainability Council. “The growing sophistication
among asset owners about when and how to integrate ESG into the
investment process creates opportunities to tailor strategies and
provide customized portfolio solutions that help investors meet
their financial and impact goals.”
Asset owners cite risk management and potential for returns as
top drivers of interest in sustainable investing. But despite the
recognition of these opportunities, asset owners still highlighted
the need for better data and investment information as a challenge
to greater uptake.
“The survey results identify a strong commitment to
incorporating ESG criteria into investment strategies among asset
owners. However, there is still a gap between interest and
implementation – with investors citing access to quality ESG data
as a top concern,” said Hilary Irby, Co-Head of Global Sustainable
Finance at Morgan Stanley. “With this growing momentum in
sustainable investing, third-party managers have an opportunity to
increase implementation by improving reporting tools and education,
and developing capabilities to align portfolios with owners’ unique
objectives.”
Results from the survey identify sustainable investing trends
reflecting the increasing growth in the impact investing sector as
a whole. Key findings include:
- Momentum is high in sustainable
investing
- 84% of asset owners are pursuing or
actively considering pursuing ESG integration in their investment
process
- Of those, 60% began implementing ESG
strategies in the last four years and 37% within the last two
years
- 70% of asset owners have already
implemented ESG strategies; 49% of those have implemented ESG
across their entire portfolio and 21% have implemented them in a
portion of their portfolio
- Increased sophistication and adoption
of multiple approaches
- 78% said risk management was an
important factor driving sustainable investing at their
organizations, and 77% said return potential was important
- Asset owners are pursuing multiple
approaches to sustainable investing, led by ESG integration
- 78% seek to align their investments
with the U.N. Sustainable Development goals or are considering
doing so
- Still room to grow
- 77% of respondents agree they have a
responsibility to address sustainability through their investments,
yet;
- Proof of market-rate financial
performance remains the top challenge
- Lack of tools and data is a barrier –
only 42% feel they have adequate tools to assess
For more information, please see Sustainable Signals: Asset
Owners Embrace Sustainability and report.
The Morgan Stanley Institute for Sustainable Investing
The Morgan Stanley Institute for Sustainable Investing builds
scalable finance solutions that seek to deliver competitive
financial returns while driving positive environmental and social
impact. The Institute creates innovative financial products,
thoughtful insights and capacity building programs that help
maximize capital to create a more sustainable future. For more
information about the Morgan Stanley Institute for Sustainable
Investing, visit www.morganstanley.com/sustainableinvesting.
Morgan Stanley Investment Management
Morgan Stanley Investment Management, together with its
investment advisory affiliates, has more than 581 investment
professionals around the world and $469 billion in assets under
management or supervision as of March 31, 2018. Morgan Stanley
Investment Management strives to provide outstanding long-term
investment performance, service and a comprehensive suite of
investment management solutions to a diverse client base, which
includes governments, institutions, corporations and individuals
worldwide. For further information about Morgan Stanley Investment
Management, please visit www.morganstanley.com/im
Morgan Stanley
Morgan Stanley (NYSE: MS) is a leading global financial services
firm providing investment banking, securities, wealth management
and investment management services. With offices in more than 41
countries, the Firm's employees serve clients worldwide including
corporations, governments, institutions and individuals. For more
information about Morgan Stanley, please visit
www.morganstanley.com.
1Poll commissioned by Morgan Stanley but independently conducted
by Greenwald & Associates, November 3 – December 19, 2017
Disclosure:
This material was published on June 11, 2018. All information in
this material has been prepared by Morgan Stanley Investment
Management and the Morgan Stanley Institute for Sustainable
Investing for informational purposes only and is not a solicitation
of any offer to buy or sell any security or other financial
instrument or to participate in any trading strategy. This material
was not prepared by the Morgan Stanley Research Department and is
not a Research Report as defined under FINRA regulations. This
material does not provide individually tailored investment advice.
It has been prepared without regard to the individual financial
circumstances and objectives of persons who receive it. Morgan
Stanley Smith Barney LLC and Morgan Stanley & Co. LLC
(collectively, "Morgan Stanley"), Members SIPC, recommend that
recipients should determine, in consultation with their own
investment, legal, tax, regulatory and accounting advisors, the
economic risks and merits, as well as the legal, tax, regulatory
and accounting characteristics and consequences, of any transaction
or strategy referenced in any materials. The appropriateness of a
particular investment or strategy will depend on an investor's
individual circumstances and objectives.
This material contains forward-looking statements and there can
be no guarantee that they will come to pass. Past performance is
not a guarantee of future performance. Information contained herein
is based on data from multiple sources and Morgan Stanley makes no
representation as to the accuracy or completeness of data from
sources outside of Morgan Stanley. References to third parties
contained herein should not be considered a solicitation on behalf
of or an endorsement of those entities by Morgan Stanley.
Morgan Stanley is not responsible for the information contained
on any third party website or your use or inability to use such
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The returns on a portfolio consisting primarily of
Environmental, Social and Governance (“ESG”) aware investments may
be lower or higher than a portfolio that is more diversified or
where decisions are based solely on investment considerations.
Because ESG criteria exclude some investments, investors may not be
able to take advantage of the same opportunities or market trends
as investors that do not use such criteria.
Morgan Stanley, its affiliates and Morgan Stanley Financial
Advisors do not provide tax, accounting or legal advice.
Individuals should consult their tax advisor for matters involving
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legal matters.
© 2018 Morgan Stanley & Co. LLC. Member SIPC. All rights
reserved.
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