Finance & Investment

Survey:
Sustainable Investments Drive Positive Change, Competitive Returns

Morgan Stanley’s latest ‘Sustainable Signals’ report shows increased interest and confidence in sustainable investing, though greenwashing fears remain a barrier.

Published 1 month ago | About a 5 minute read

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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.”

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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.