Public and private sectors are coming together with more coordination and innovation than ever before to help mitigate the world’s biggest sustainability problems
SOURCE: Morgan Stanley
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By Audrey Choi
The past two years have been a clear and constant reminder that solving the world’s greatest sustainability challenges—climate change, the pandemic and racial injustice—will require public and private organizations embracing environmental and social responsibilities with greater coordination, commitment and innovation. And increasingly, we are seeing this happen as governments and businesses focus on issues such as climate-change mitigation, community access to public health and equitable socio-economic opportunities.
In 2009, we formed our Global Sustainable Finance Group to work across our core businesses and integrate sustainability into everything we do at the firm because we believed that there was a real business case to be made for sustainable investing. At the time, climate change was thought of by many as solely an environmental issue, but today it is beginning to be understood as far more wide-ranging and as something critical to business continuity and risk management. Our approach has allowed us to work hand in hand with our business partners on product innovation, operational sustainability, leading Morgan Stanley’s global sustainability reporting activities and integrating climate change and ESG (environmental, social and governance) considerations across the firm, and why in 2013, we took the step of launching the Morgan Stanley Institute for Sustainable Investing.
The Institute has been a leading force in mobilizing capital to sustainable enterprises via the global markets and the investors who drive them and has been key to disproving the tired myth that investing and having a positive impact requires a tradeoff. Over the past decade, there has also been a fundamental change in how investors and corporate leaders regard climate change. Today, sustainable investing accounts for more than $35 trillion in assets under management (AUM) globally1 and is on track to exceed $53 trillion in global AUM by 2025. This represents more than a third of the projected total assets under management globally.
The need to take a cross-sector approach to our greatest sustainability challenges is also why in 2020, we launched the Morgan Stanley Sustainable Solutions Collaborative to help scale early-stage sustainability initiatives that can benefit from partnerships across private and public industries. This year, we announced our first class of five winning teams—a diverse group of innovators who are tackling problems across the world, including e-commerce applications to the drug supply chain in Africa to improve health accessibility, refill stations and mobile delivery to reduce plastic waste in Indonesia and a systematic approach for U.S. farmers to use soil to capture carbon and help reduce greenhouse gas emissions.
And next week, in our continuing mission to advance thought leadership, the Institute will host our third annual Sustainable Investing Summit. The Summit will gather leading thinkers from across industries and from business, academia and government to share information and insights on sustainable investing. Participants will include CEOs, institutional investors and policymakers such as former Vice President and Nobel Peace Prize recipient Al Gore, Pfizer CEO Dr. Albert Bourla, former Governor of the Bank of England Mark Carney and former U.S. Securities and Exchange Commission Chair Mary Schapiro. The conversations will focus on cross-sector and cross-industry collaboration to help progress the impact that’s needed today and for the future.
As we focus on the transition to a low-carbon future, it is essential that leaders think about sustainability as a critical piece of their fundamental business strategy and recognize that in the future, sustainability will be of central importance across industries and geographies as the case is made that what’s good for society is also beneficial for business. Or, as IKEA CEO Jesper Brodin told me in a recent conversation, “Purpose and profit actually go hand in hand.”
1 http://www.gsi-alliance.org/wp-content/uploads/2021/08/GSIR-20201.pdf
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Because of their narrow focus, sector investments tend to be more volatile than investments that diversify across many sectors and companies.
The returns on a portfolio consisting primarily of Environmental, Social and Governance (“ESG”) aware investments may be lower or higher than a portfolio that is more diversified or where decisions are based solely on investment considerations. Because ESG criteria exclude some investments, investors may not be able to take advantage of the same opportunities or market trends as investors that do not use such criteria. Diversification does not guarantee a profit or protect against loss in a declining financial market.
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KEYWORDS: Morgan Stanley, NYSE: MS, Global Sustainable Finance Group, Institute for Sustainable Investing
