Morgan Stanley's Latest Survey Reveals Prospects and Hurdles of Corporate Sustainability

According to #Morgan Stanley's report "Sustainable Signals: Understanding Corporates’ Sustainability Priorities and Challenges," corporations primarily pursue sustainability for value creation, followed by regulatory compliance and moral responsibility. The survey, conducted among over 300 companies with revenues over $100 million across various industries in North America, Europe, and Asia, reveals that 85% view sustainability as a #value creation opportunity, with 53% seeing it primarily as such and 32% as both value creation and risk management.

Respondents indicate that sustainability strategies are increasingly aligned with business objectives, with value creation cited by 50% as a significant motivation. Regulatory compliance (48%) and moral obligations (47%) are also top motivations, whereas only 26% cited external pressure from NGOs, activists, and media.

Investment is a major barrier, with 70% of respondents highlighting the required investment as a significant hurdle. Conflicts with financial goals (28%) and macroeconomic uncertainty (25%) are also notable obstacles. Access to capital is crucial, with 84% emphasizing investor support and 76% believing sustainability measures could reduce the cost of capital. Only 42% feel their efforts to align financing with sustainability via instruments like green bonds are satisfactory.

Climate change is a significant risk, with 23% of companies already impacted. By 2050, 92% expect climate change to affect their business models. Sustainability considerations are increasingly integrated into business decisions, including capital expenditures and mergers. However, only 37% of boards have sustainability expertise, despite 40% having board-level responsibility for sustainability. Key areas needing more board knowledge include sustainability regulations (57%) and financing instruments (43%).

Overall, the survey suggests that while challenges remain, sustainability is becoming integral to corporate strategy, driven by its potential for value creation and risk mitigation.

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