Study Finds Companies Prioritize Sustainability for Shareholder Value and Compliance

Companies around the world are increasingly prioritizing sustainability goals, with a new study from Morgan Stanley’s Institute for Sustainable Investing revealing that the main driving force behind this trend is the belief that sustainability will create value for shareholders. The study surveyed over 300 corporate executives responsible for sustainability efforts, and found that compliance with government regulations and a sense of moral responsibility were also key reasons for focusing on sustainability.

According to Jessica Alsford, chief sustainability officer at Morgan Stanley, sustainability strategies are now aligning with core business strategies, as companies recognize the importance of sustainability factors in long-term value creation. The survey results also showed that sustainability efforts are seen as supporting business objectives rather than being driven solely by societal pressures.

One significant finding from the study is that 55% of companies now consider sustainability criteria in key business decisions, such as capital expenditures, research and development, new products, and mergers and acquisitions. However, the biggest challenge faced by companies in implementing sustainability strategies is the high level of investment required.

Melissa James, head of the Global Capital Markets ESG Center of Excellence at Morgan Stanley, highlighted the evolving nature of sustainability as an investment theme, emphasizing the need for investors to focus on real impact. Climate change emerged as a major factor influencing companies to enhance their sustainability efforts, with 23% of respondents already experiencing impacts on their business models.

Looking ahead, corporate leaders anticipate that climate change will continue to affect their business models by 2050, underscoring the importance of sustainable business practices in both value creation and risk mitigation. As companies strive to meet climate commitments and access capital for sustainability initiatives, the market for financing clean tech and facilitating the energy transition is expected to mature.

For more insights from the study, you can read the full report titled “Sustainable Signals: Understanding Corporates’ Sustainability Priorities and Challenges” on the Morgan Stanley website. Additionally, investors now have a new tool for analyzing sustainability disclosures, further highlighting the growing importance of sustainability in the corporate world.