Sustainable Investments Drive Positive Change, Competitive Returns

Individual investor interest in sustainability remains strong and stable,
according to the Morgan Stanley Institute for Sustainable
Investing’s
latest Sustainable Signals
report.

Launched in 2015, the Sustainable Signals series measures the views of
individual investors, institutional investors and corporates on sustainable
investing. This year’s survey polled 1,765 active individual investors with more
than $100,000 in investable assets across North America, Europe and
Asia Pacific (APAC) between February and March 2025 to assess attitudes
toward sustainable investing and where investors see the greatest opportunities
and challenges.

The majority of global investors surveyed (88 percent) say they are interested
in sustainable investing. Younger investors show the most interest in
sustainability, with 99 percent of Gen Z and 97 percent of Millennial investors
expressing interest. Nearly two-thirds of all investors (64 percent) say their
interest has increased in the last year.

“Our Sustainable Signals survey shows that investors across demographic groups
and regions continue to believe that investments can achieve both positive
real-world outcomes and competitive market-rate returns,” said Jessica
Alsford, Chief
Sustainability Officer and Chair of the Institute for Sustainable Investing at
Morgan Stanley. “Younger investors plan to increase portfolio allocations to
sustainable options at higher rates, and prioritize a broader range of
environmental and social issues when making investment decisions. This suggests
that sustainability could become an even greater focus area for investors in the
future as younger generations gain more financial influence.”

Other notable survey findings include:

Drivers of allocation decisions

Over half of investors surveyed (59 percent) say they plan to increase their
portfolio allocation of sustainable investments in the next year — with growing
confidence that these options offer comparable or better returns than
traditional investments cited as the top reason (24 percent). Investors also
said seeing the real-world impacts of climate change is a compelling reason
for increasing their allocation. Just under a third (31 percent) plan to
maintain their current allocation to sustainable investments, with greenwashing
fears
topping the most common reasons.

No trade-offs seen between sustainability and financial performance

Most global investors reject the idea that sustainability comes at the cost of
performance. Over 80 percent agree it’s possible to achieve financial gains
while focusing on positive environmental or social outcomes, and that companies
can drive impact without compromising profitability. APAC investors are
especially confident on these points, slightly outpacing peers in North America
and Europe.

Corporate environmental and social performance are key considerations

More than 80 percent of respondents agree that companies should address
environmental issues, and over two-thirds believe social issues should also be
prioritized. US investors showed slightly stronger agreement on environmental
topics compared to 2023 levels (+2 pp) but slightly weaker on social issues (-2
pp); European investors expressed stronger support on both fronts. Between 69 percent and 86 percent of investors say they consider a
company’s sustainability practices when making investment decisions. Corporate
transparency
and environmental
stewardship
rank especially high, while topics such as board diversity and
inclusion
receive somewhat less — but still meaningful — attention, especially from
younger investors (69 percent).

Top areas of interest

Across all regions, investors ranked renewable energy and energy
efficiency as top investment priorities; and over 80 percent see the energy
transition
as an opportunity to generate returns. When it came to other sustainable
solutions, regional differences emerged. North America respondents placed
greater focus on healthcare affordability and innovation, while investors in
Europe and APAC put more emphasis on energy storage and battery technology,
as well as regenerative
agriculture
and sustainable building
materials.
Nuclear
power
ranks higher in Europe and North America, indicating greater openness to it as
a clean energy
source.
Meanwhile, APAC uniquely emphasizes climate
adaptation,
likely due to its heightened vulnerability to extreme weather
events.
These patterns reflect how sustainability priorities are shaped by global trends
and local context.

Across each region, investors have generally similar sentiments on what outcomes
they hope to achieve with their investments, with reducing pollution and waste
the top outcome across all regions. Biodiversity and nature issues appear to be
higher priority in Europe, while access to food and healthcare are higher ranked
in North America and APAC. Supporting military veterans is also a standout for
North American investors.

Seeking better advice on sustainable investments

Almost 80 percent of global investors surveyed are likely to choose a financial
advisor or investment platform based on its sustainable investing offerings.
This is stronger for Gen Z (96 percent) and Millennials (92 percent), suggesting
a major opportunity for advisors to differentiate their offerings and help
clients meet their sustainability goals — especially
as wealth transfers to these younger investors in the years to come.

Greenwashing a primary concern

As in the 2023 Sustainable Signals survey, concerns around greenwashing and
trust in reported
data
remain the top barriers (70 percent) to including sustainable investments in
portfolios for investors across age groups and regions. And while confidence in
returns may be improving, performance is still top of mind for investors (64
percent globally). While these findings may seem contradictory to previous
figures, they instead likely reflect the broader realities of a market in
transition.

Overall, the data suggest performance perceptions are improving; but trust,
clarity and consistent results are still needed to boost investor confidence.
Millennials and Gen Z are significantly more likely than Gen X and Baby Boomers
to cite lack of knowledge, limited product availability and insufficient
financial advice as meaningful barriers.

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Sustainable Brands Staff

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Published May 13, 2025 8am EDT / 5am PDT / 1pm BST / 2pm CEST