More than four fifths of institutional investors expect to increase their sustainable allocations over the next two years, however anticipated growth from said investments is expected to be more measured, a new survey by Morgan Stanley has found.
According to the survey of asset owners and asset managers, which was published by Morgan Stanley’s Institute for Sustainable Investing, concerns around sustainable investing have eased since lastb year, with investors increasingly focused on climate adaptation, resilience and responsible use of AI.
Indeed, two thirds of investors cite portfolio risk reduction as a reason to invest more in sustainability, while a similar percentage include responsible AI in their sustainable investment strategies.
Increased investment
“Our annual global survey of institutional investors indicates that a majority expect to increase sustainable investment allocations in the coming years, recognising growth opportunities and the rising materiality of sustainability-related risks,” commented Jessica Alsford, chief sustainability officer and chair of the Institute for Sustainable Investing at Morgan Stanley.
The survey polled 900 institutional investors across North America, Europe and Asia Pacific between August and October 2026.
While over 80% of respondents expect to increase their allocations to sustainability strategies, just 2% of asset owners and 4% of asset managers anticipate growth of more than 10 percentage points. This compares to about a fifth last year.
Elsewhere, asset owners are also ‘seeking more control’ over how their sustainable investments are managed, with 41% of externally managed sustainable assets, on average, held in customised investment mandates or separately managed accounts. Some 86% expect that share to rise over the next two years.
More focused approach
The findings suggest that institutional investors remain committed to sustainable investment while taking a more focused approach to how sustainability factors are incorporated into portfolios, with 90% of asset owners and asset managers saying sustainable investing options are a ‘key differentiator in awarding or winning mandates’, according to Morgan Stanley.
“In 2026, a consistent picture has emerged across our Sustainable Signals series – with individuals, corporates and institutional investors all showing high levels of continued commitment to sustainability, yet at a more measured pace and with a sharper focus on managing risk,” Alsford added. Read more here.
