The latest survey conducted by the Morgan Stanley Institute for Sustainable Investing and Morgan Stanley Wealth Management reveals a significant trend among individual investors worldwide.
The “Sustainable Signals” report shows a robust and growing interest in sustainable investing. As per the findings, a substantial 77% of investors are keen on sustainable investing, with 54% planning to increase their sustainable investments in the forthcoming year.
Recent developments, including new climate science and financial performance reports, have further spurred this interest. A notable 77% of surveyed individuals believe that companies should actively address environmental and social issues. Furthermore, 51% are open to investing in traditional energy companies, provided they have solid plans for transitioning towards sustainability.
Jessica Alsford, Morgan Stanley’s Chief Sustainability Officer and CEO of the Institute for Sustainable Investing, highlights the positive outlook of individual investors. “Nearly 80% of individual investors believe that it is possible to balance market rate financial returns with a focus on sustainability. A majority of individual investors also express a desire for their investments to advance positive environmental and social impact, creating opportunities for finance professionals to meet these needs.”
The survey underscores the widespread interest in sustainable investments, with more than three quarters of global individual investors showing a preference for companies or funds that offer market-rate financial returns while also positively impacting social and environmental aspects. This interest has seen an uptick in the past two years, with over half of the investors planning to increase their sustainable investment allocations in the upcoming year.
The report also sheds light on specific investment themes. Climate action emerges as a top investment issue, with 15% of investors prioritising it. This is closely followed by interests in healthcare, water solutions, and the circular economy. Interestingly, traditional energy companies are not entirely off the investment radar, as 51% of investors would consider investing in them if they have robust emission reduction and climate change strategies.
However, the survey also points out certain apprehensions that restrain investors. A significant 63% express concerns about the transparency and trustworthiness of sustainability reporting, and 61% are wary of potential greenwashing. The desire to invest in social themes is evident, but there’s uncertainty about where to start.
The findings suggest a substantial market for asset managers and investment platforms to guide investors towards their sustainability goals. A considerable portion of investors acknowledges limited knowledge about initiating sustainable investments and a perceived scarcity of financial products catering to this demand. This represents an untapped opportunity, as 58% of global investors are inclined to choose a financial advisor or investment platform based on sustainable investment offerings.
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