New Survey Highlights Corporate Sustainability Trends
A new survey by the Morgan Stanley Institute for Sustainable Investing reveals that 85% of companies worldwide view sustainability as a major opportunity for value creation. This “Sustainable Signals” report surveyed over 300 companies across North America, Europe, and APAC to explore how sustainability is shaping their strategies and what hurdles they face.
Key Insights from the Survey
1. Value Creation through Sustainability
- 85% of Companies See Opportunity: The majority of companies surveyed see sustainability not just as a compliance requirement but as a strategic advantage.
- Significant Motivation: Half of the companies consider sustainability a “very significant” reason for their strategy, driven by potential value creation, regulatory compliance, and moral responsibility.
2. Investment Challenges
- High Investment Needs: The primary barrier to sustainability efforts is the significant investment required, with 31% of respondents highlighting this as a critical issue.
- Conflict with Financial Goals: 28% of companies cite conflicts with financial objectives, and 25% are concerned about macroeconomic uncertainty.
3. Financing Sustainability
- Access to Capital: 84% of respondents believe investor support is crucial for their sustainability strategies.
- Cost of Equity and Debt: 76% think sustainability measures could lower their cost of equity and/or debt within the next five years.
- Meeting Expectations: Only 42% feel they are meeting or exceeding expectations in aligning corporate financing with sustainability goals.
4. Integration into Business Decisions
- Sustainability Criteria: 55% of companies apply sustainability criteria to key business functions such as capital expenditures, R&D, new products, and M&A.
- Board Expertise: Over a third of companies acknowledge a lack of board expertise in sustainability, particularly regarding regulations (57%).
5. Impact of Climate Change
- Long-Term Impact: 92% of respondents expect climate change to affect their business models by 2050.
- Current Impact: 23% say climate change is already impacting their operations, on par with risks like technological changes, geopolitical conflicts, and supply chain issues.
The Role of Investor Support
The survey underscores the importance of investor backing in driving sustainability initiatives. Companies see access to capital as vital, with the belief that strong sustainability practices can lead to financial benefits such as lower costs of equity and debt.
Challenges and Opportunities Ahead
While companies are optimistic about the value creation potential of sustainability, they face significant challenges. High investment needs and the need for expertise and leadership in sustainability are key barriers. However, as businesses increasingly integrate sustainability into their core strategies, the alignment of financial and sustainable goals appears more achievable.
The Bigger Picture
The findings of this survey were released at Morgan Stanley’s 2024 Sustainable Finance Summit, an event that brings together leaders from various sectors to discuss trends and challenges in sustainable investing.
Conclusion
Corporate sustainability is more than a trend; it’s becoming a fundamental part of business strategy. Companies are not only recognizing the value creation potential but also identifying the necessary steps to overcome barriers, particularly in financing and expertise. As sustainability continues to merge with core business strategies, the future looks promising for companies that can successfully navigate these challenges.
