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Morgan Stanley Sustainable Signals: New Survey Shows Value Creation Drives Corporate Sustainability Strategies Globally

  • Majority of surveyed companies globally (85%) see sustainability as a value creation opportunity

  • High investment needs cited as top barrier to sustainability efforts, making access to capital a key enabler

  • Nearly 25% believe climate change is impacting their business today, on par with risks like technological change and geopolitical conflict

NEW YORK, May 21, 2024--(BUSINESS WIRE)--Corporates worldwide see sustainability primarily as a value creation opportunity according to a new "Sustainable Signals" report by the Morgan Stanley Institute for Sustainable Investing. The survey polled over 300 private and public companies across North America, Europe and APAC to understand how sustainability factors into their businesses and where their organizations see the greatest opportunities and challenges.

"Sustainability strategies and core business strategies are converging, with companies increasingly seeing sustainability factors as integral to the company’s long-term value creation," says Jessica Alsford, Chief Sustainability Officer at Morgan Stanley and CEO of the Institute for Sustainable Investing. "There may yet be challenges in developing expertise and financing models, but corporate leaders view sustainable business practices as fueling the creation of value as well as the mitigation of risk."

A majority of survey respondents (85%) see sustainability as a value creation opportunity for their long-term corporate strategy, and half of companies say it is a "very significant" reason for pursuing a sustainability strategy. Other top motivations are regulatory compliance and a company’s moral responsibilities. Expectations from external stakeholders such as lenders and wider civil society saw much lower response rates.

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The top barrier deemed "very significant" to delivering on sustainability efforts is the high level of required investment (31%), followed by conflicts with the financial goals of the company (28%) and macroeconomic uncertainty (25%). Overall, investment needs ranked 1.5 times higher compared to other barriers, such as lack of corporate leadership or employee skills.

Key survey findings include:

  • Financing Sustainability Strategies: Respondents indicate that access to capital is vital, with 84% saying support from investors is important to deliver their sustainability strategies. 76% believe that sustainability measures could drive a lower cost of equity and/or debt for their company over the next five years. Only 42% say they are meeting or exceeding expectations around aligning corporate financing with their sustainability strategy.

  • Integration of Sustainability into Business Decisions: A majority of companies (55%) say their key business functions – including capital expenditures, research and development, new products and mergers and acquisitions – are subject to sustainability criteria. However, just over one third agreed that their company’s board has sustainability expertise. The most commonly cited shortfall in board expertise is around sustainability-related regulations (57%).

  • Impact of Climate Change on Business: Nearly all respondents (92%) expect climate change to impact their business model by 2050, with 23% noting that it already has made an impact. This puts climate on par with more traditional business risks including technological change, competitor actions, geopolitical conflict and supply chain instability.

The Sustainable Signals series was launched in 2015 and measures the views of individual investors, institutional investors and business on sustainable investing. The first survey of corporates in the series, the new report is being released in conjunction with Morgan Stanley’s 2024 Sustainable Finance Summit (May 21-22, New York), an annual conference that brings together leaders across sectors to discuss the latest trends in 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.

Disclosures:

This material was published in May 2024 and has been prepared for informational purposes only and is not a solicitation of any offer to buy or sell any security or other financial instrument or to participate in any trading strategy. This material was not prepared by the Morgan Stanley Research Department and is not a Research Report as defined under FINRA regulations. This material does not provide individually tailored investment advice. It has been prepared without regard to the individual financial circumstances and objectives of persons who receive it.

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View source version on businesswire.com: https://www.businesswire.com/news/home/20240520307646/en/

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Media Relations:
Carrie Hall
Carrie.Hall@morganstanley.com