A new report by Morgan Stanley has found that the majority of global asset managers and asset owners expect allocations to sustainable investments to increase, as climate adaptation and resilience grows in prominence.
Morgan Stanley’s 2025 Sustainable Signals survey found that 84% of institutional investors expect the proportion of sustainable assets under management in their portfolios to rise over the next two years.
This includes 79% of asset managers, a one-percentage-point increase, year-on-year and 86% of asset owners, a six-percentage-point rise.
Increased investment
“In our latest global survey of institutional investors, the majority expect to increase their proportion of assets in sustainable funds – with financial performance and a maturing track record driving these allocations,” commented Jessica Alsford, chief sustainability officer and chair of the Institute for Sustainable Investing at Morgan Stanley.
“Similar to individual investors and corporates surveyed in this year’s Sustainable Signals series, asset owners and asset managers anticipate growing impacts from climate risk in the coming years and are aligning their priorities to mitigate these challenges.”
The survey polled more than 900 institutional investors around the world during August and September 2025, all of which either currently or plan to undertake sustainable investments.
On a regional basis, over 90% of the asset owners surveyed in North America said that they expected to increase the proportion of their assets in sustainable strategies over the next two years, compared to 82% in Europe and 85% in Asia-Pacific.
‘Strong performance’
When asked why they see asset allocations in sustainable investments increasing, 22% cited the ‘strong performance of sustainable investments or ESG strategies’, 18% noted that sustainable investment is becoming ‘more mature as a strategy, with an established track record’, and 14% answered that ‘sustainable themes offer exposure to a variety of growth opportunities’.
Elsewhere, 13% answered that regulatory or policy developments are ‘encouraging sustainable capital flows’, and a similar percentage (13%) said that their organisations boasted leadership that was ‘committed’ to sustainability.
Respondents also identified a number of potential challenges to sustainable investment, with close to two fifths (38%) flagging a range of concerns as ‘very significant’, such as data availability, fluctuating regulatory guidance and an uncertain political environment. This compares to 25% last year.
Despite these concerns, more than 80% of respondents continue to view sustainability as a central component of risk management.
“Similar to individual investors and corporates surveyed in this year’s Sustainable Signals series, asset owners and asset managers anticipate growing impacts from climate risk in the coming years and are aligning their priorities to mitigate these challenges,” Alsford added. Read more here.
