88% of Companies See Sustainability as a Value-Creation Opportunity: Morgan Stanley Survey – ESG Today

Almost 9 out of ten firms view sustainability as a worth creation alternative, anticipated to drive advantages together with increased profitability, income progress and improved price of capital, in line with a brand new survey launched by Morgan Stanely, which additionally discovered that firms have gotten more and more adept at quantifying the ROI of sustainability investments, enabling higher comparisons to different capital allocation priorities.

For the report, “Sustainable Indicators: Corporates 2025,” Morgan Stanley surveyed executives at greater than 330 firms with revenues better than $100 million throughout North America, Europe and APAC, and representing a broad vary of industries.

The survey discovered that firms more and more view sustainability as a chance to create worth, with 88% of respondents reporting seeing sustainability as a having a worth creation impression on their firms’ long-term technique, up 3 proportion factors over final 12 months, together with 53% who view it primarily as worth creation, and 35% as a mixture of worth creation and danger administration.

Notably, essentially the most vital progress by firms in seeing a worth creation side to sustainability was in North America and Europe, growing 9 proportion factors to 89%, and 10 proportion factors to 94%, respectively over the prior 12 months’s survey.

Elevated profitability topped the listing of the first ways in which sustainability may drive worth creation alternatives for firms over the following 5 years, cited by 25% of respondents, adopted by increased income progress at 19% and decrease price of capital, in addition to improved money circulation visibility at 13% every.

Along with anticipating sustainability-related worth creation alternatives, the survey additionally discovered that firms have gotten adept at measuring the anticipated returns from their initiatives, with 83% of executives now reporting that they’ll measure the ROI for his or her sustainability actions in an identical strategy to non-sustainability initiatives, enabling higher capital allocation capabilities when evaluating with different priorities.

Moreover, the survey additionally indicated that firms have gotten extra assured of their sustainability progress, with 65% of executives describing their firms’ sustainability technique as assembly or exceeding expectations, up from simply 59% final 12 months. The elevated confidence spanned all areas, with North America reaching 65% from 61% final 12 months, Europe at 69% vs 63%, and APAC at 60% in contrast with 53%.

The survey additionally assessed executives’ views on essentially the most vital challenges and potential enablers of their firms sustainability methods. “Excessive stage of funding required” as soon as once more topped the listing of high boundaries globally, cited by 24% of respondents’ as a high 3 alternative, adopted by political volatility or uncertainty at 17%. Notably, North American buyers have been more likely than their international friends to pick out “political volatility or uncertainty” as a sustainability barrier.

Concerning enablers, the survey discovered that essentially the most generally cited elements chosen by executives as an important in delivering on their sustainability methods have been technological developments, at 33%, adopted intently by a good financial and working setting at 32%, and rising buyer demand at 28%.

As executives more and more view sustainability as a worth creation alternative, the survey additionally discovered a rising consciousness of danger. In response to the report, 57% of executives reported that their firms have skilled climate-related occasions over the previous 12 months that impacted operations, with APAC respondents the most definitely at 73%. Probably the most generally cited occasions included excessive warmth at 55% of respondents, adopted by excessive climate or storms, at 53%, and wildfires or smoke, at 36%.

Particular climate-related enterprise impacts skilled over the previous 12 months included elevated operational prices at 54%, disruptions to the workforce at 40%, and income loss as a result of enterprise interruptions or provide chain failures at 39%.

Importantly, 60% anticipate unfavorable impacts from bodily local weather dangers within the subsequent 5 years, in line with the survey, and greater than two-thirds additionally anticipate seeing their companies impacted by local weather transition dangers as properly.

Regardless of acknowledging climate-related dangers, nevertheless, greater than 80% of respondents reported that they really feel that their firms are “very” (34%) or “considerably” (54%) ready to extend resilience in opposition to climate-related threats.

Jessica Alsford, Chief Sustainability Officer and Chair of the Institute for Sustainable Investing at Morgan Stanley, stated:

“The information recommend that sustainability stays central to long-term worth creation. Firms world wide report an alignment between company methods and sustainability priorities as they search to construct resilient, future-ready companies.”

Click on right here to entry the survey.