A recent survey conducted by the Morgan Stanley Institute for Sustainable Investing reveals that most institutional investors anticipate growth in sustainable assets over the next two years. The "Sustainable Signals" report surveyed over 900 institutional investors across North America, Europe, and Asia Pacific in July and August 2024 to understand their attitudes towards sustainable investing.

The findings show that 78% of asset managers and 80% of asset owners expect an increase in assets under management (AUM) in sustainable funds. This growth is attributed to new mandates and increased allocations from existing clients. Additionally, more than three-quarters of asset owners believe that sustainable investing offerings influence mandate decisions, with a significant number requiring asset managers to have a sustainable policy or strategy.

"Institutional investors see a growth trajectory for sustainable assets globally in the coming years to meet increasing client and stakeholder demands in a more mature sustainable investing market," stated Jessica Alsford, Chief Sustainability Officer at Morgan Stanley.

However, challenges remain in this field. The primary obstacles identified include data availability (71%), regulatory guidance fluctuations (69%), and greenwashing concerns (68%). APAC investors reported higher challenges compared to their European and North American counterparts.

Globally, healthcare and financial inclusion are prioritized as investment themes. Regional differences were noted, with European investors placing higher importance on nature and biodiversity solutions. Climate adaptation solutions are viewed as undervalued opportunities across all regions.

Net-zero targets have been set by nearly two-thirds of asset owners and managers, with most having plans to achieve these targets. Despite this commitment, there is varied opinion on using carbon offsets as part of decarbonization strategies among institutional investors.

The "Sustainable Signals" series started in 2015 to gauge views on sustainable investing from various investor groups.

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