85% of 300 companies polled by Morgan Stanley say they see sustainability initiatives, at least in part, as a value creation opportunity.
The finding appears in a report from the financial services provider’s Institute for Sustainable Investing arm, titled ‘Sustainable Signals: Understanding Corporates’ Sustainability Priorities and Challenges’ (pdf). More than half (53%) of overall respondents said they saw sustainability as primarily around value creation, with 15% saying it was predominantly a risk management play. 32% said it was both.
With regard to a specific reason why companies pursue their sustainability strategies, half of respondents (50%) mentioned value creation, making it the most popular option. Compliance with government regulations was next on the list (48%), followed by a moral obligation to do so (47%), and reacting to sustainability as a ‘significant challenge’ to the organisation’s business model (46%).
Only 26% of respondents said they were looking to sustainability strategies because of pressure from civil society, be they NGOs, activists, or the media. Morgan Stanley noted that this indicates how sustainability is converging with core business strategies, with outside pressure being considered less important.
Climate change is now firmly entrenched as a key headwind for corporations. 23% of those polled said there is already an impact from climate change, which puts it on a similar footing with supply chain instability and geopolitical conflict, both also cited by 23% of respondents.
The biggest barrier to implementing sustainability strategies is investment, with 70% of respondents saying it was either a very or somewhat significant hurdle. Lack of corporate leadership and employee skills, by comparison, was cited by only 19% of those polled. One in three (34%) said there was room for improvement in aligning corporate financing with the organisation’s sustainability strategy, through instruments such as green bonds.
The research also found that while sustainability is a boardroom issue with two in five (40%) companies, only 37% of respondents said that the board had sustainability expertise. Sustainability-focused regulations, cited by 57% of overall respondents, was the biggest sticking point.
The overall theme, however, was positive. “There may yet be challenges in developing expertise and financing models, but corporate leaders view sustainable business practices as fuelling the creation of value as well as the mitigation of risk,” said Jessica Alsford, Morgan Stanley chief sustainability officer.
Photo by Sven Piper on Unsplash
