The majority of institutional investors worldwide anticipate an increase in sustainable investments over the next two years, according to a recent survey by the Morgan Stanley Institute for Sustainable Investing. The survey, conducted in August and September 2025, included responses from more than 900 asset owners and managers across North America, Europe, and Asia Pacific who currently engage in or plan to pursue sustainable investing.
The report found that 86% of asset owners expect their allocation to sustainable funds to grow within two years—a six percent rise compared to 2024. Among asset managers, 79% foresee growth in assets under management related to sustainability. Asset owners pointed to strong financial performance as the main reason for expanding these allocations, while asset managers noted that increases would largely come from existing clients boosting their investments and potential new mandates.
Jessica Alsford, Chief Sustainability Officer and Chair of the Institute for Sustainable Investing at Morgan Stanley, stated: “In our latest global survey of institutional investors, the majority expect to increase their proportion of assets in sustainable funds – with financial performance and a maturing track record driving these allocations. Similar to individual investors and corporates surveyed in this year’s Sustainable Signals series, asset owners and asset managers anticipate growing impacts from climate risk in the coming years and are aligning their priorities to mitigate these challenges.”
Survey participants expressed heightened concern about external factors affecting sustainable investment. In 2025, 38% rated issues such as data availability, regulatory guidance, and political uncertainty as very significant—an increase from 25% the previous year.
Additional findings highlighted that both asset owners and managers view sustainability options as key differentiators when awarding or winning mandates. More than four out of five respondents see sustainability as important for managing investment risks. Over three-quarters expect physical climate risks to have a major impact on asset prices within five years; more than half now consider climate resilience central to their risk-return approach for sustainable investments.
Investment priorities among respondents continue to focus on emissions-related solutions globally. Energy efficiency and renewable energy remain top choices for investment; climate adaptation has moved up as a priority since last year.
The Sustainable Signals series began in 2015 and continues to track views among individual investors, institutions, and companies regarding sustainable investing practices.
For further information about Morgan Stanley or its Institute for Sustainable Investing, visit www.morganstanley.com or www.morganstanley.com/sustainableinvesting.
“In our latest global survey of institutional investors, the majority expect to increase their proportion of assets in sustainable funds – with financial performance and a maturing track record driving these allocations,” said Jessica Alsford, Chief Sustainability Officer and Chair of the Institute for Sustainable Investing at Morgan Stanley. “Similar to individual investors and corporates surveyed in this year’s Sustainable Signals series, asset owners and asset managers anticipate growing impacts from climate risk in the coming years and are aligning their priorities to mitigate these challenges.”
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