More Investors Think Their Portfolios Can Change the World

'Consumers and investors alike are now more than ever factoring sustainability issues into their investment decisions'

Investors increasingly believe that their investments can have a positive social or environmental effect, a survey released Wednesday by the Morgan Stanley Institute for Sustainable Investing shows.

Three-quarters of active individual investors and 86% of millennial investors described themselves as interested in sustainable investing in a poll commissioned by Morgan Stanley and independently conducted by Brunswick Insight in February.

“As widespread attention to sustainability continues to increase, consumers and investors alike are now more than ever factoring sustainability issues into their investment decisions,” Audrey Choi, Morgan Stanley’s chief sustainability officer and chief marketing officer, said in a statement.

Sustainable, responsible and impact investing rose by 33% between 2014 and 2016 to $8.7 trillion.

The new survey identified several sustainable investing trends that reflect the surging growth in the broader sustainable space.

For one, values matter. Investor attention to sustainability factors is now growing faster than that of consumers as a whole.

Moreover, increased interest in sustainable investing has come about despite a heightened sense of market volatility. Morgan Stanley said this perhaps implied that in uncertain times, companies and funds with sustainable attributes may be viewed as more stable over the long run.

Seventy-one percent of investors in the survey agreed that good environmental, social and governance practices can potentially lead to higher profitability and that ESG-conscious firms may be better long-term investments.

The poll also uncovered a strong desire for the ability to customize sustainable investments. Eighty percent of individual investors and 89% of millennials said they were interested in sustainable investments that can be customized to meet their interests and goals.

Morgan Stanley noted that three-quarters of the U.S. workforce will be millennials by the middle of the next decade, and 90% of millennials polled expressed interest in pursuing sustainable investments as part of their 401(k) portfolios.

Offering sustainable investment funds as 401(k) options may be another way for companies to attract and retain millennial talent in competitive job markets, Morgan Stanley suggested.

Millennials’ heightened interest most likely is tied to strong belief that they can make a positive difference with their own investments, the report found.

Seventy-five percent agreed that it was possible for “my investment decisions to influence the amount of climate change caused by human activities,” compared with 58% of the total individual investor population.

In addition, 84% of millennials agreed that is was possible for “my investment decisions to create economic growth that lifts people out of poverty,” versus 79% of the broader survey cohort.

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