Morgan Stanley: 82% of asset owners to add sustainable allocations

Morgan Stanley's sustainable investing survey, reported by ESG Today, found that 82% of asset owners and 85% of asset managers expect to raise the proportion of assets in sustainable strategies over the next two years, roughly similar to last year. The bank surveyed 900 institutional investors across North America, Europe and Asia Pacific, including 600 asset owners and 300 asset managers, for the report released Oct. 29.

Fifty-two percent of asset owners and 51% of asset managers forecast growth of no more than 5% a year, excluding investment performance. Only around a third expect more than 5%. Last year nearly two thirds anticipated growth above 5%. Almost no investors in any region reported plans to cut sustainable allocations. By region, 93% of European investors expected to increase their sustainable allocations, against 80% in Asia Pacific and 77% in North America.

Sustainable investing capability has become a due-diligence item even for mandates with no sustainability label: 95% of asset owners agreed that sustainable investing options are a key differentiator in asset manager selection and retention. Increased allocations from existing clients were the most likely source of growth for 75% of asset owners. Fourteen percent named clients allocating for the first time.

Exposure to growth opportunities ranked first for asset owners and asset managers alike, up from third last year, followed by the rising materiality of sustainability-related risks, which ranked seventh a year earlier. In 2025, investors named the strong financial performance of sustainable investments or ESG strategies and the increasing maturity of sustainable investing as their top two reasons. Concern about the subject also eased, including a sharp drop in significant concerns about negative views in media and wider society.