Morgan Stanley Sustainable Signals: Global Survey Shows Institutional Investors Maintain Positive Outlook on Sustainable Investing

• Majority of asset owners (86%) and asset managers (79%) expect proportion of sustainable assets to increase over next two years
• Concerns rising around data availability, regulatory guidance and political uncertainty compared to a year ago
• Sustainability seen by institutional investors as a differentiator and important to managing investment risk
• Physical climate risks expected to have a major impact on asset prices in next five years, with climate adaptation solutions now ranking among top priorities

The majority of asset owners and managers globally expect allocations to sustainable funds to increase in the next two years, according to a new "Sustainable Signals" report by the Morgan Stanley Institute for Sustainable Investing. Conducted in August and September 2025, the survey polled more than 900 institutional investors across North America, Europe, and Asia Pacific – all of whom currently or plan to practice sustainable investing – to assess attitudes, motivations and emerging trends in the space.

When asked about the allocation of their assets to sustainable funds over the next two years, 86% of asset owners said they expect the proportion to grow, a six percent increase from 2024. This is similar to asset manager expectations, as 79% anticipate an increase in AUM over the same period. Asset owners cited strong financial performance of sustainable investments as their top reason for the expected increase, followed by the established track record of sustainable investing. For asset managers, the growth in AUM is expected to come from existing clients increasing their allocations, with further potential for new mandates and first-time allocations.

"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," said 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."

Both asset owners and managers share growing concerns around external factors impacting sustainable investing. In 2025, respondents were more likely to rate a range of concerns as very significant (38%) compared to the year before (25%). Data availability and consistency remains the most significant issue, followed by regulatory guidance and political uncertainty.

Additional findings from the survey include:

• Key Differentiator – Asset managers and asset owners see sustainable investment options as a key differentiator when awarding or winning mandates. Over 80% of both groups also see sustainability as an important part of managing investment risks.
• Climate Risk – Over 75% of institutional investors expect physical climate risk to have a "major impact" on asset prices in the next five years. Accordingly, more than half of respondents deem climate resilience a core part of their risk-return model for sustainable investments.
• Top Investment Priorities – Investors remain focused on emissions-related solutions across regions, with energy efficiency and renewable energy ranked as the top two investment priorities for investors globally. Climate adaptation now ranks third, up from sixth in 2024.

The Sustainable Signals series was launched in 2015 and measures the views of individual investors, institutional investors and corporates on sustainable investing. View the full results of the latest survey here.

About Morgan Stanley

Morgan Stanley (NYSE:MS) is a leading global financial services firm providing a wide range of investment banking, securities, wealth management and investment management services. With offices in 42 countries, the Firm's employees serve clients worldwide including corporations, governments, institutions and individuals. For further information about Morgan Stanley, please visit www.morganstanley.com.

About Morgan Stanley Institute for Sustainable Investing

The Morgan Stanley Institute for Sustainable Investing (The Institute), established in 2013, aims to accelerate the growth and adoption of sustainable finance across capital markets. The Institute produces thought leadership and develops partnerships and programs to inform and empower clients, investors and the next generation of sustainability leaders. For more information about the Morgan Stanley Institute for Sustainable Investing, visit www.morganstanley.com/sustainableinvesting.

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