- 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
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.
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.
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