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Money Management

Most managers see sustainable investing as essential to thrive — survey

Most U.S. money managers view sustainable investing as a strategic business imperative and have adopted such investment practices, said results of a new survey from the Morgan Stanley (MS) Institute for Sustainable Investing and Bloomberg.

According to the survey, "Sustainable Signals: Growth and Opportunity in Asset Management," 75% of respondents reported that their firms have adopted sustainable investing, up from 65% in 2016, when Morgan Stanley and Bloomberg conducted the previous survey of this kind.

"The survey results demonstrate that sustainable investment strategies are now a strategic imperative," said Matthew Slovik, managing director and head of global sustainable finance at Morgan Stanley, in a news release announcing the survey results. "It is clear that asset managers will continue to invest new resources and expand their product portfolios in the coming years."

Increased investment stability, high client satisfaction, product popularity and possible high financial returns were cited as key drivers of success in sustainable investing. And although most managers recognize sustainable investing as a business imperative, almost all of them said that increased expertise, better data and impact reporting is needed to drive future success within the space.

Other key findings from the survey include that 89% of asset managers believe that sustainable investing is here to stay, with 63% expecting it to continue growing over the next five years.

Also, 82% of respondents believe that strong ESG practices can lead to higher profitability and that companies with such practices might be better long-term investments. Meanwhile, nearly two-thirds of asset managers (62%) believe it's possible to maximize financial returns while investing responsibly.

Many managers employ a full spectrum of sustainable investing approaches, with 63% employing more than one strategy across shareholder engagement, restriction screening, ESG integration, thematic investing and impact investing.

Most respondents (89%) said their firms will devote more resources to sustainable investing in the next two years. Common strategies for developing in-house skills and capacity include employee training (41%), dedicating more employee time (36%) and specialist hires (34%).

The survey polled 300 respondents at U.S. asset management firms with at least $50 million in assets under management.