Rising Confidence in Sustainable Investing
A new Morgan Stanley “Sustainable Signals” survey (2025) reveals that institutional investors worldwide are preparing to increase allocations to sustainable funds over the next two years, underscoring the resilience of ESG strategies despite political and regulatory challenges.
Key Findings
- 84% of institutional investors expect the share of sustainable assets under management to rise by 2027 ESG News ESG Today.
- Among asset owners, 86% anticipate growth, while 79% of asset managers foresee higher allocations InvestmentNews Seneca ESG.
- North America leads globally, with 90% of asset owners planning to boost sustainable strategies despite ongoing ESG backlash Net Zero Investor.
- Top investment priorities include renewable energy, energy efficiency, and energy storage, with climate adaptation climbing to third place as physical risks intensify Morgan Stanley ESG News.
Drivers of Growth
Institutional investors cite several factors behind their optimism:
- Strong financial performance and maturing track records of sustainable investments.
- Client demand, with existing mandates expanding and new mandates emerging.
- Risk management benefits, as more than 80% of respondents view sustainability as essential to mitigating long‑term investment risks ESG News esg-investing.com.
Challenges Ahead
Despite the positive outlook, investors flagged persistent obstacles:
- Data reliability and inconsistent ESG metrics.
- Policy uncertainty and shifting regulatory frameworks.
- Political volatility, particularly in markets where ESG has become contentious ESG News esg-investing.com.
Strategic Implications
The survey highlights a global trend: sustainable investing is no longer a niche but a mainstream strategy shaping institutional portfolios. With climate adaptation and resilience gaining prominence, investors are positioning themselves to navigate both financial opportunities and systemic risks.
Outlook
Morgan Stanley’s findings suggest that sustainable allocations will continue to grow across regions, with North America, Europe, and Asia Pacific all showing strong momentum. As institutional investors deepen their commitments, ESG strategies are set to remain a cornerstone of global investment planning through 2027.
