Morgan Stanley (MS, Financial) has released a new "Sustainable Signals" report through its Institute for Sustainable Investing, revealing that most institutional investors expect assets in sustainable funds to grow over the next two years. The survey, conducted in July and August 2024, involved over 900 institutional investors from North America, Europe, and Asia Pacific, and explored attitudes towards sustainable investing and emerging trends. The report was published in December 2024.
Positive Aspects
- 78% of asset managers and 80% of asset owners expect an increase in assets under management (AUM) in sustainable funds.
- More than three-quarters of asset owners agree that sustainable investing offerings influence mandate decisions.
- Close to two-thirds of asset owners and managers have set net-zero targets, with plans to achieve them.
Negative Aspects
- Data availability is a major challenge for 71% of investors in sustainable investing.
- Fluctuating regulatory guidance and greenwashing are concerns for 69% and 68% of investors, respectively.
- APAC investors face higher challenges, particularly with disclosure requirements.
Financial Analyst Perspective
From a financial analyst's viewpoint, Morgan Stanley's report underscores a significant shift towards sustainable investing, driven by client and stakeholder demands. The anticipated growth in AUM for sustainable funds suggests a robust market opportunity. However, the challenges of data availability and regulatory fluctuations could impact the pace of this growth. Investors and asset managers need to address these issues to fully capitalize on the potential of sustainable investments.
Market Research Analyst Perspective
As a market research analyst, the report highlights a growing trend in sustainable investing, with healthcare and financial inclusion being top priorities. The regional differences in investment themes, such as Europe's focus on nature and biodiversity, indicate diverse market opportunities. The mixed views on carbon offsets suggest a need for clearer guidelines and strategies to enhance investor confidence in sustainable practices.
Frequently Asked Questions
What is the main finding of Morgan Stanley's "Sustainable Signals" report?
The report finds that most institutional investors expect growth in assets allocated to sustainable funds over the next two years.
What are the main challenges in sustainable investing according to the report?
Data availability, fluctuating regulatory guidance, and greenwashing are the top challenges identified by investors.
What investment themes are prioritized by institutional investors globally?
Healthcare and financial inclusion are the top investment themes prioritized by institutional investors.
Read the original press release here.
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