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Corporate Sustainability Strategies Continue Globally, But Progress Slows

May 11, 2026

Global corporates continue to execute their sustainability strategies, as macroeconomic uncertainty, regulation, investor expectations and climate risk shape the agenda.

Key Takeaways

  • Over 90% of sustainability leaders report ongoing progress on their company's sustainability strategy, although 47% now see room for improvement on execution, up more than ten points from 2025.
  • Nearly half (49%) cite regulatory compliance among their top three motivations for pursuing sustainability strategies, while 42% point to investor expectations—about double 2025. Macroeconomic uncertainty is now much more commonly cited as a barrier, at 36%, also roughly double last year.
  • More than three-quarters see physical climate risks as very or somewhat likely to affect operations in the next five years; 63% say increased operational costs are very likely.
  • Sustainability is more embedded in governance, as 63% say key business decisions include sustainability criteria; 62% report Board-level responsibility.

Corporate sustainability strategies are still moving forward in 2026, but momentum is slowing as companies face rising barriers, according to the Morgan Stanley Institute for Sustainable Investing’s 2026 “Sustainable Signals: Corporates” report. Based on a survey of 300 sustainability decision-makers at corporates globally, over 90% report ongoing progress, but nearly half (47%) now see room for improvement on execution, up more than ten points from 2025. Macroeconomic uncertainty, regulatory compliance, investor expectations and climate risk are driving a more complex operating environment.

 

Source: Morgan Stanley Institute for Sustainable Investing, May 2026. Data as of April 13, 2026.

 

Progress continues, although the pace has slowed

Most sustainability leaders report ongoing progress on their company’s strategy. But the share of companies exceeding expectations has fallen from 19% in 2024 to 14% in 2025 to 5% in 2026.

 

Commercial conviction remains intact. In 2026, 88% of respondents say sustainability has commercial value to their firm, and 87% think it is a risk mitigation exercise critical to success. Eighty-four percent say sustainability is primarily or partly a value creation opportunity for their long-term strategy. But the balance of how the decision-makers surveyed frame sustainability is shifting: fewer now see it as primarily a value creation opportunity (22% in 2026, down from 53% in 2025), and more view it as a combination of value creation and risk management (62% in 2026, up from 35% in 2025).

 

“Our Sustainable Signals survey shows that corporates around the world continue to see the value of sustainability, but their motivations and concerns have shifted amid a complex operating environment,” said Jessica Alsford, Chief Sustainability Officer and Chair of the Institute for Sustainable Investing at Morgan Stanley. “Sustainability is becoming more integrated into core business strategies as macroeconomic uncertainty, rising costs, and regulatory and investor expectations increasingly shape decision-making.”

 

Source: Morgan Stanley Institute for Sustainable Investing, May 2026. Data as of April 13, 2026. Long-term is defined as 5+ years.
* Not material had zero responses in 2025.

 

Regulation and investor expectations drive strategy

Regulatory compliance and investor expectations are increasingly powerful motivators for corporate sustainability strategies. Nearly half (49%) of respondents cite regulatory compliance among their top three reasons for pursuing sustainability, up from 23% in 2025. While regulatory momentum has slowed in some regions, companies with global operations remain exposed to rising requirements elsewhere. Investor expectations are also rising in importance, with 42% placing them among their top three motivations, about double the rate from last year.

 

Source: Morgan Stanley Institute for Sustainable Investing, May 2026. Data as of April 13, 2026.

 

Investment needs and macroeconomic uncertainty are top barriers

The need for high levels of investment remains the most commonly cited barrier, with 39% placing it in their top three, up from 24% in 2025. Macroeconomic uncertainty is now the second most cited barrier at 36%, more than double from last year. Lack of data, regulatory uncertainty and difficulty translating strategy into action are all around 30%, up from mid-teens in 2025. Notably, no respondents said they face no barriers in 2026, down from 7% in 2025.

 

Source: Morgan Stanley Institute for Sustainable Investing, May 2026. Data as of April 13, 2026.

 

Climate-related risks are seen as increasingly likely to impact operations 

Corporate leaders report heightened expectations that climate risks will affect operations within five years. On average, 78% rate negative impacts from physical climate risks such as extreme weather, wildfires or flooding as very or somewhat likely, up from 65% in 2025. Nearly two-thirds (63%) say increased operational costs are very likely. For climate transition risks, 81% view them as likely to impact operations, on average, up from 71% last year.

 

Sustainability is moving into the core of corporate governance

Sustainability is increasingly embedded in corporate governance. Almost two-thirds (63%) say key business decisions—including capex, R&D budgeting and M&A—are subject to sustainability criteria, up from 51% in 2025. A similar proportion (62%) report Board-level responsibility for sustainability, up from 42% last year. Leadership expectations are a growing motivator alongside this governance shift: around a quarter of companies now place Board or senior management expectations in their top three reasons for pursuing their sustainability strategy.

 

The survey also found that sustainability decision-makers often hold broader mandates. Just 10% of respondents are in dedicated sustainability roles, with the remainder working across functions such as strategy, risk management or finance. A smaller group contributes to AI governance: 15% say they make or contribute to AI governance decisions, rising to 20% in North America.

Read the 2026 "Sustainable Signals: Corporates" Report

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