Over seventy percent of active individual investors (71%) describe themselves as interested in sustainable investing, and nearly two in three (65%) believe sustainable investing will become more prevalent over the next five years, according to a new survey published today by the Morgan Stanley Institute for Sustainable Investing. The new Sustainable Signals report examines the attitudes and perceptions of individual investors towards sustainable investing and considers the broader implications for investors, corporations and governments.
“The trajectory for sustainable investing continues to point upward. What used to be a bifurcated decision – one between investing to make money and giving to do good – is increasingly becoming a blended conversation as investors look to harness the power of the capital markets as a force for positive impact,” said Audrey Choi, Managing Director and CEO of the Institute for Sustainable Investing at Morgan Stanley. “As sustainable business practices and investment options become more important to investors, the Morgan Stanley Institute for Sustainable Investing is working to drive scalable investment solutions that seek to achieve market-rate returns and help address global challenges.”
Millennials and Women Leading the Way
The survey finds Millennials and women at the front edge of sustainable investing and sustainability. Millennial investors, in particular, index the highest of any demographic on these topics. Related findings from the survey include:
- Millennials are the most open to the idea of sustainable investing (84%) as compared to Gen X (79%) and Baby Boomers (66%).
- Millennials are twice as likely to both invest in companies or funds that target specific social/environmental outcomes and divest because of objectionable corporate activity.
- Women are also leading the way, with 76% of surveyed investors showing interest in sustainable investing, compared to 62% of men.
- Female investors are nearly twice as likely as male investors to consider rate of return as well as the impact of their investment when making an investment decision (40% vs. 23%).
Charting a Path Towards Wider Adoption
Results from the survey point to how individual investors already factor sustainability into their investment decisions and show that there is still room to grow. Related findings include:
- Nearly three out of four active individual investors (72%) believe that companies with good Environmental, Social and Governance (ESG) practices can achieve higher profitability and are better long-term investments.
- Individual investors say that on average 46% of their total portfolio should be invested sustainably.
- At the same time, investors are divided over the perception of sustainability and financial gains as being a trade-off (54% yes vs. 46% no).
“The survey shows that the perception of trade-off between profitable and sustainable investments is still a major barrier to the growth of the field – we and others trying to advance sustainable investing at scale have a job to do, demonstrating that it is possible to achieve positive impact and market-rate returns,” said Choi. “Why does this matter? We believe that it is necessary to mobilize private capital at scale to address global challenges.”
The Morgan Stanley Institute for Sustainable Investing builds scalable finance solutions that seek to deliver competitive financial returns while driving positive environmental and social impact. We create 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.
Morgan Stanley (NYSE: MS) is a leading global financial services firm providing investment banking, securities, investment management and wealth management services. With offices in more than 43 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.