Interest in sustainable investment is particularly strong among younger investors, with 99% of Gen Z and 97% of Millennial investors stating they are ‘very interested’ in said investments, a new study by Morgan Stanley has found.
Morgan Stanley‘s Sustainable Signals report, which measures sustainability perceptions among individual investors, found that overall, 88% of investors are interested in sustainable investing.
Motivations for sustainable investment vary by region, with 45% of North American and APAC investors emphasising real-world impact, while 40% of European investors focus more on financial returns.
Increased investment
Another finding from the study is that more than half of all investors plan to increase their sustainable investment allocations in the coming year – citing comparable or better returns – while just 3% globally expect to reduce their allocations.
Around a third plan to maintain their allocation at a similar level to last year, largely because their portfolios are diversified between sustainable and traditional investments.
While younger investors – particularly Gen Z and Millennials – allocate more of their portfolio to sustainable business options, they also perceive higher obstacles to investing, including limited products, lack of knowledge, and inadequate guidance. As a result, 90% of this cohort say that they would choose a financial advisor or investment platform based on its sustainability capabilities.
Doing more
Elsewhere, four fifths (80%) of investors believe companies should do more to address environmental issues, while more than two thirds expect them to tackle social issues.
‘Positive sentiment around environmental responsibility has grown in both the US and Europe since 2023,’ the report notes. ‘When making investment decisions, investors consider a wide spectrum of corporate behaviours, from transparency, anticorruption and emissions reduction to employee treatment, human rights and supply chain ethics.’
Finally, in terms of sustainable investment priorities, renewable energy and energy efficiency are the dominant sectors of interest. Most investors say they would only support traditional energy companies that have climate transition strategies in place, while most also agree that climate objectives should outweigh energy security concerns. Read more here.
