Rui De Figueiredo

Co-Head and CIO of the Solutions & Multi-Asset Group

24 years industry experience

Ted Eliopoulos

Vice Chairman and Head of Strategic Partnerships

24 years industry experience

John Streur

President and Chief Executive Officer for Calvert Research and Management

34 years industry experience

Navindu Katugampola

Managing Director

16 years industry experience

Emily Chew

Chief Responsible Investment Officer, Calvert Research and Management

10 years industry experience

Jade Huang

Director of Applied Responsible Investment Solutions, Calvert Research and Management

16 years industry experience

Mona Benisi

Executive Director, Head of Sustainability for Global Real Assets

12 years industry experience

Drew Hambly

Executive Director

24 years industry experience

Sonali Siriwardena

Head of Sustainability Regulation and Policy

14 years industry experience

Barbara Calvi

Vice President

9 years industry experience

Sustainable Investing

Overview
Leadership
Product
Insights
Resources

Our Philosophy

MSIM's sustainable investing philosophy is anchored on the belief that there are a spectrum of approaches to utilizing 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 four 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 of our investment teams to greater and lesser degrees depending on asset class, geography, and investment style and strategy.

DECARBONIZATION &
CLIMATE RISK

Supporting the transition to a low carbon economy and net zero alignment

CIRCULAR ECONOMY &
WASTE REDUCTION

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

DIVERSE & INCLUSIVE
BUSINESS

Supporting businesses and business practices that create a more just, equitable 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

HIGHLIGHTS

Our PRI** Score

A+

in Strategy & Governance; Listed Equity Incorporation and Active Ownership; Corporate Fixed Income; and Securitized Fixed Income

A+

in Property, Infrastructure, and Sovereign Fixed Income

GRESB Score

Green Star recognition for Core and Value-add/Opportunistic Real Estate funds

2020 Proxy Voting Stats

5,919

meetings voted

23%

votes against say on pay proposals

votes against management

61%

support for climate-related proposals overall

Engagement

700+

sustainability-related engagements with company management or boards in 2020

OUR SUSTAINABLE INVESTING FRAMEWORK

ESG Strategies that incorporate impact investing and/or Environmental, Social and Governance (ESG) factors could result in relative investment performance deviating from other strategies or broad market benchmarks, depending on whether such sectors or investments are in or out of favor in the market. As a result, there is no assurance ESG strategies could result in more favorable investment performance.

Leadership in Sustainability

Investment Management Sustainability Council

MSIM's Sustainability Council comprises senior, cross-functional business leaders and investment leaders who oversee and guide MSIM's support for the sustainable investment strategies of each business, including: promoting definitions and frameworks for Sustainable Investing; supporting the continued innovation of ESG products and solutions; championing Sustainable Investing across MSIM's staff and culture; and ensuring business readiness for evolving client/regulator demands.

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 of 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, for 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

Questions & Answers

WHAT IS THE DIFFERENCE BETWEEN ESG, SRI AND SUSTAINABLE INVESTING?

ESG (environmental, social and governance), SRI (socially responsible investing) and sustainable investing are all different terms used to describe the general concept of the use of sustainability factors or information to either define or inform investment decision making. Historically ‘SRI’ has been used to describe a values and ethics based approach to investing, typically focused on exclusionary screens. The acronym ‘ESG’ later emerged around the same time as the launch of the Principles for Responsible Investment, as a shorthand way to refer to the universe of environmental, social and corporate governance issues faced by companies that are not easily captured in traditional financial statements. As the field has grown, and more financially oriented ways of using sustainability information in investing have developed along with the proliferation of ESG data, we find that these terms are often used interchangeably. MSIM prefers the term sustainable investing as we believe this is emerging as a catch-all term for the range of approaches deployed across the investment industry today. The graphic above, ‘Our Sustainable Investing Framework’, best describes how we view and implement the spectrum of approaches across our investment vehicles or products.

HOW DO RETURNS COMPARE WHEN INVESTING IN SUSTAINABLE FUNDS?

We believe that material ESG factors are an important driver of long-term financial returns from both an opportunity and risk mitigation perspective and have developed an internal framework to implement sustainable investing. In 2019, Morgan Stanley’s Institute for Sustainable Investing conducted a study of the performance of nearly 11,000 mutual funds between 2004 and 2018 and found that there was no financial trade-off in the returns of sustainable funds compared to traditional funds and that sustainable funds demonstrate lower downside risk. In 2020, the Institute released an update to this study, which found that sustainable equity and taxable bond funds outperformed traditional peers during the 2019 market boom and weathered the unprecedented global shock triggered by the COVID-19 pandemic in the first half of 2020 better than traditional funds. Specifically, U.S.-based sustainable equity funds outperformed their traditional peers by a median of 2.8% in 2019 and 3.9% in the first half of 2020. Sustainable taxable bond funds outperformed traditional peers by a median of 0.8% in 2019 and 2.3% in the first half of 2020.

The performance is provided for illustrative purposes only and is not meant to depict the performance of a specific investment. Past performance is no guarantee of future results.

AS A GLOBAL FIRM DO YOU APPLY GLOBAL ESG STANDARDS TO THE FIRMS IN WHICH YOU INVEST?

We believe that macro sustainability trends, such as climate change, pollution and waste and human capital development, pose a growing set of risks and opportunities to all investors and that leveraging ESG information can assist to better identify the materiality of those risks and opportunities. While the macro trends are universal and often science-based, their implementation in investing needs to be done thoughtfully as the materiality of these factors will depend on asset class, investment strategy, geography, industry and time horizon. Accordingly, our investors adopt a bottom-up approach to ESG integration, actively seeking to identify the most material sustainability risks and opportunities relevant to their investment universe, and incorporating those considerations into buy/sell decisions, portoflio construction, and ongoing investment monitoring.

WHAT KIND OF POSITIVE IMPACT IS AVAILABLE THROUGH MSIM FUNDS?

As described in our Sustainable Investing Framework above, MSIM’s Sustainable Objective and Impact funds seek to achieve positive social and/or environmental objectives alongside a market-rate financial return. Currently our Sustainable Objective and Impact solutions are managed by MSIM’s Alternative Investment Partner’s (AIP) Impact platform, which offers impact investing solutions focused on high impact geographies, populations and themes like climate solutions.

In addition to dedicated impact investing solutions many of our Sustainable Core funds have adopted or are moving towards adoption of net zero emissions targets in line with the 1.5°C goal of economic decarbonization by 2050. By investing in net zero aligned funds, investors have the opportunity to contribute to positive impact by supporting the transition to a low carbon economy.

Have another question for us? Please email msim_sustainability@morganstanley.com

Resources

Our Partnerships

^** 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.

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.

Headline Title

Right Click Edit

Product Name

Asset Class

Product Category

Description

Global Balanced Sustainable Fund

Multi-Asset

Sustainable Objective & Impact

Invests in a diversified mix of equities, bonds and cash, subject to a target volatility range of 4-10%. It benefits from multiple dimensions of sustainable investing, including restriction screening, ESG integration (or ‘best in class’), impact-aligned investments (5-30% of assets) and engagement. The fund’s core equity exposures are managed in line with a 1.5°C-compatible decarbonisation trajectory.

Global Sustain Fund

Equity

Sustainable Core

A global equity portfolio that is strong on engagement, light on carbon and built on quality. The strategy invests in high-quality companies at reasonable valuations that can sustain long-term high returns on operating capital. It has a low carbon footprint, an ESG-integrated process, and several exclusions, including tobacco and fossil fuels. Engagement is also a critical part of the process.

Sustainable Asia Equity Fund

Emerging Markets Equity

Sustainable Objective & Impact

The Sustainable Asia Equity fund is a diversified, core portfolio seeking to identify growing countries and the quality companies that could potentially benefit. In our integrated process, we translate macro and thematic research and fundamental bottom-up analysis into a growth-oriented portfolio. We take a thematic approach to help identify longer term trends not fully appreciated by the market and construct a diversified portfolio of 60 - 80 stocks we believe are positioned to benefit. The fund engages with management on ESG and sustainability during both the investment process to limit exposure to ESG risks when seeking out sustainable investment opportunities. The Fund strives to align with the objectives of the Paris Agreement on climate change and seeks a lower carbon footprint than the MSCI Asia ex Japan Net Index.