- Individual investors globally continue to be interested in sustainable investing (77%), with 54% planning to increase sustainable investments in the next year
- Developments over the last 12 months driving interest in sustainable investing, include new climate science and financial performance
- More than three quarters of surveyed individuals (77%) say that companies should address environmental and social issues
- 51% of those surveyed would consider investing in traditional energy companies with robust transition plans
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Individual investor interest in sustainable investing is high and rising, according to a new “Sustainable Signals” report by the Morgan Stanley Institute for Sustainable Investing and Morgan Stanley Wealth Management. The survey polled 2,820 active individual investors across the U.S., Europe and Japan to assess interest in sustainability and understand where investors see the most opportunity and potential risk.
“Nearly 80% of individual investors believe that it is possible to balance market rate financial returns with a focus on sustainability,” says Jessica Alsford, Morgan Stanley’s Chief Sustainability Officer and CEO of the Institute for Sustainable Investing. “A majority of individual investors also express a desire for their investments to advance positive environmental and social impact, creating opportunities for finance professionals to meet these needs.”
According to the survey, more than three quarters (77%) of individual investors globally are interested in investing in companies or funds that aim to achieve market-rate financial returns while considering positive social and/or environmental impact. In addition, more than half (57%) say their interest has increased in the last two years, while 54% say they anticipate boosting allocations to sustainable investments in the next year.
Other notable survey findings include:
- Climate Action as a Key Investment Issue – When asked to pick their top sustainable investing theme, 15% of investors selected climate action, followed by healthcare (13%), water solutions (11%) and circular economy (11%).
- Traditional Energy Companies Still an Investment Option – When making a new investment, nearly 80% of individual investors consider a company’s reporting on its carbon footprint and commitment to reduce greenhouse gas emissions. However, traditional energy companies are not out of scope. 51% would consider investing in traditional energy companies as long as robust plans to reduce emissions and address climate change are in place.
- Concerns Holding Investors Back – Survey respondents cite a lack of transparency and trust in sustainability reporting (63%) and the potential for greenwashing (61%) as concerns that prevent them from making sustainable investments. They also express an interest in investing in social themes but uncertainty around where to begin.
The report concludes that investors could benefit from the guidance of investment professionals. More than half (52%) of respondents self-report limited knowledge about how to start investing sustainably, with 47% saying there is a lack of financial products available. These findings indicate increased opportunity for asset managers and investment platforms to help investors meet their sustainability goals; 58% of global investors would be likely to select a financial advisor or investment platform based on sustainable investment offerings.
The Sustainable Signals series was launched in 2015 and measures the views of individual investors, institutional investors and corporates on sustainable investing.
View the full results of the Sustainable Signals survey here.
About Morgan Stanley
Morgan Stanley (NYSE: MS) is a leading global financial services firm providing a wide range of investment banking, securities, wealth management and investment management services. With offices in 42 countries, the Firm’s employees serve clients worldwide including corporations, governments, institutions and individuals. For further information about Morgan Stanley, please visit www.morganstanley.com.
About Morgan Stanley Institute for Sustainable Investing
The Morgan Stanley Institute for Sustainable Investing (The Institute) 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.
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