Sustainable Investing

Overview
Leadership
Capabilities
Insights
Resources

Our Philosophy

MSIM's sustainable investing philosophy is anchored on the belief that there is a spectrum of approaches to utilize material environmental, social and governance (ESG) information and criteria to deliver strong returns for clients.

We are committed to ESG-informed investment decision making and we seek to leverage our influence to drive better investment performance alongside improved sustainability practices and outcomes through thoughtful, value-added investee engagement. MSIM offers a variety of sustainable investing options, from funds that integrate ESG factors as an intrinsic part of the investment process, to thematic Sustainable Funds that seek to achieve attractive financial returns alongside positive impact.

SUSTAINABILITY FOCUS AREAS

MSIM has identified five focus areas that are of strategic importance to our thematic research and company engagement/asset stewardship work that are both potentially material to our investment goals and vitally important from a systemic perspective. These themes touch all our investment teams to varying degrees depending on asset class, geography, and investment style and strategy.

DECARBONIZATION & CLIMATE RISK

Supporting the transition to a low carbon economy in line with Paris Agreement goals

CIRCULAR ECONOMY & WASTE REDUCTION

Supporting business models that reduce impact on natural resources and that reduce waste generation

DIVERSE & INCLUSIVE BUSINESS

Supporting business practices that create a more just and inclusive society

DECENT WORK & RESILIENT JOBS

Supporting decent work across the entire value chain and helping to create resilient workforces in the face of innovation and change

Natural Capital & Biodiversity

Supporting business models that reduce negative impact on biodiversity in line with the Post 2020 Biodiversity Framework

MSIM Sustainable Investing Approach Overview

As active managers and long-term investors, we believe we have both a duty and an opportunity to steward the capital we manage. Our investment teams embrace this opportunity by engaging directly with their portfolio companies and by effectively exercising our proxy voting and other rights as shareholders.

Our sustainable investing expertise is delivered through flexible solutions designed to help clients achieve their sustainable investing and impact goals. Please refer to our capabilities section below.

Leadership in Sustainability

MSIM ESG COMMITTEE

Co-chaired by the Co-Head and Chief Investment Officer of the Solutions & Multi-Asset Group and the Global Head of Risk & Analysis, MSIM’s ESG Committee is composed of senior representatives from the division’s Sustainability team, the Chief Operating Officer’s Office and other stakeholders who oversee and support MSIM’s sustainable investment strategies. Its responsibilities include overseeing MSIM’s ESG goals and strategy, product development and launches, ESG-related engagement program, trainings as well as technology and data initiatives.

Investment Management Sustainability Team

The Sustainability Team is responsible for developing MSIM's ESG investment integration standards, helping to launch thematic Sustainable Funds, advising clients on sustainability matters, and producing sustainability data, tools and research in support of our investment teams. The Sustainability Team also comprises the Global Stewardship function, which coordinates our stewardship and investee engagement agenda.

Sustainable Investing Team Leads

Our portfolio management teams are ultimately responsible for evaluating the ESG risks and opportunities of each investment decision or asset, and the portfolio as a whole. In doing so, they leverage ESG information and insights in a way that is aligned with their existing investment philosophy and strategy. Our largest teams or asset class platforms have appointed at least one dedicated ESG research specialist to lead this work for the relevant group.

Morgan Stanley Institute¹ for Sustainable Investing

The Institute is dedicated to accelerating the adoption of sustainable investing by partnering across the firm to foster innovation, help develop the next generation of sustainable investing leaders and generate insights that inform and empower investors.

Capabilities

MSIM offers a range of customized and dedicated sustainable investing capabilities spanning multi-asset and private markets. For example, within customized multi-asset portfolios, we may customize a basket of securities or funds according to the particular sustainability preferences of the client. On the private markets side, we offer thematic impact investing opportunities across a range of focus areas, including climate and social impact.

Insights

View all Sustainable Insights

Resources

^** PRI Assessment Report for Morgan Stanley Investment Management, 2020. Signatories report on their responsible investment activities by responding to asset-specificmodules in the Reporting Framework. Each module houses a variety of indicators that address specific topics of responsible investment. Signatories’ answers are then assessed andresults are compiled into an Assessment Report. The Assessment Report includes: indicator scores – summarizing the individual scores achieved and comparing them to the median;section scores – grouping similar indicator scores together into categories (e.g. policy, assurance, governance) and comparing them to the median; module scores – aggregating all the indicator scores within a module to assign one of six performance bands (from E to A+). More information is available on PRI website at https://www.unpri.org/signatories/aboutpri-assessment/3066.article. *"Top scoring brackets" refers to scoring brackets (A+ or A) which are above the scores obtained by a majority of peers. The study measured performance using Morningstar’s 'total return' measure, which accounts for the expense ratio, management, administrative, 12b-1 fees and other costs that are taken out of assets. The PRI scorecard refers to Legacy MSIM only. ‘Legacy MSIM’ means Morgan Stanley Investment Management, excluding those businesses that were wholly owned by Eaton Vance Corp. prior to the acquisition of Eaton Vance Corp. by Morgan Stanley on March 1, 2021.

¹ Morgan Stanley is the parent company of Morgan Stanley Investment Management Inc. and its affiliates. References to "Morgan Stanley" in this document refer to the parent company, not to Morgan Stanley Investment Management Inc. In some instances, Morgan Stanley Investment Management Inc. may leverage or be a part of Morgan Stanley's processes and/or initiatives related to sustainable investing.

Eaton Vance and Calvert are part of Morgan Stanley Investment Management. Morgan Stanley Investment Management is the asset management division of Morgan Stanley.