Sustainable Investment Report
Morgan Stanley releases a sustainable investment report, which aims to analyze individual investors’ views on sustainable investing and ESG investing, as well as the sustainable issues that the market is most concerned about.
This report is jointly released by the Morgan Stanley Institute for Sustainable Investing and Morgan Stanley Wealth Management and is the fifth edition of the Sustainable Signals.
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Methodology of Sustainable Investment Report
This survey is mainly conducted in the United States, Europe (UK, Germany, France, and Switzerland) and Japan, and the respondents are all individual investors. The age, gender, and geographic location of respondents are consistent with census records as much as possible to represent a broad investor base. All respondents have investable assets more than $100,000 and are identified as active investors.
The terminology of sustainable investing and ESG used in this survey remains consistent for respondents from different regions. Sustainable investing is about achieving market-level financial returns when investing while considering positive social and environmental impacts. ESG refers to considering environmental, social and governance factors when investing.
Investors’ Attitudes towards Sustainable Investing
More than three-quarters of investors are interested in sustainable investing, with more than half in Europe (85%), the United States (84%) and Japan (56%). In the past two years, 57% of investors have increased their interest in sustainable investing, which is mainly related to the global inflation environment (56%), climate research (53%) and sustainable investment performance (52%).
Despite investor interest in sustainable investing, current portfolio allocations to sustainable investments remain relatively low. 14% of investors have invested more than half of their funds in sustainable assets, and 8% have not made any sustainable investments. 54% of respondents expect to increase their sustainable investment allocations in the next year, creating opportunities for asset management companies.
Investors’ Attitudes towards ESG Investing
When it comes to implementing ESG investments, 90% of investors prioritize maximizing financial returns, 74% believe that ESG investments can provide positive environmental impacts, and 69% believe that ESG investments can provide positive social impacts. 77% of investors believe that ESG investing can balance financial returns while focusing on sustainability, and 73% believe that ESG investing can bring higher returns in the long term.
In terms of specific ESG issues, 79% of investors hope that ESG investments can reduce waste and pollution, 76% hope that ESG investments can provide product safety and supply chain management, and 74% hope that ESG investments can reduce greenhouse gas emissions. Investors paid relatively little attention to governance, with 63% hoping to address board independence issues, 61% hoping to embed diversity, equity, and inclusion into the business, and 58% hoping to maintain diversity on the board and senior management.
80% of investors say they will consider the company’s carbon footprint report and greenhouse gas emission reduction commitments when investing, and 60% of them are willing to pay a certain price to purchase carbon offsets. In terms of investment in traditional energy companies, 21% say they would not invest in these companies, and 51% say that if these energy companies have strong transition plans, they will include them in the investment scope.
Investors’ Concerns about Sustainable Investing
When asked about the biggest obstacles in sustainable investing, 63% of investors believe that there are problems with data transparency, 61% are concerned about greenwashing, and 61% have doubts about the investment performance of sustainable investing. In addition, how to measure sustainable impact (56%) and how to define sustainable investment (54%) are also matters of concern to investors.
52% of investors believe they have insufficient understanding of how to start investing sustainably, and 43% believe they lack the necessary financial advice. 58% of investors say they will choose a specific investment platform based on sustainable investment products, which means that financial advisory platforms focusing on sustainable products have greater development scope.
Reference:
Morgan Stanley Survey: High Investor Interest in Sustainability
