Morgan Stanley: Transitioning to a Low-Carbon, Green Economy

To prevent catastrophic global warming, the transition to a low-carbon, green economy must be accelerated.

Sustainable development isn’t cheap – it’s a huge shift across every industry to focus on preserving the environment and society for the future.

Morgan Stanley is a leading global financial services firm employing more than 82,000 people in 41 countries. 

With such wide reach, the company is uniquely poised to make a difference in supporting the transition to a sustainable economy.

Morgan Stanley is already making a difference, guided by its core values – put clients first, do the right thing, lead with exceptional ideas, commit to D&I and give back. 

Morgan Stanley’s sustainability goals

Morgan Stanley aims to leverage its expertise and resources to help drive adoption of more sustainable and inclusive practices across capital markets and communities where it conducts business. 

It has already achieved carbon neutrality across its global operations in 2022 and is committed to achieving net zero financed emissions by 2050.

Morgan Stanley was the first major US bank to make this commitment.

Jessica Alsford, Chief Sustainability Officer and CEO at the Morgan Stanley Institute for Sustainable Investing, says: “I am proud of Morgan Stanley’s ambition to reach net-zero financed emissions by 2050.

“To achieve these goals, we recognise how important it is to operationalise our commitments in a way that balances the need to rapidly decarbonize the global economy with the real-world circumstances acutely affecting individuals and communities.”

In 2021, the company committed to mobilising US$1tn by 2030 for sustainability solutions.

Morgan Stanley’s sustainability tools

Morgan Stanley aims to be the financial services partner of choice for clients seeking to create sustainable, long term value.

Its platform, Wealth Management Investing with Impact, offers a range of investment products, portfolio solutions, tools and analysis for clients who aim to make measurable positive social and environmental impact. 

This platform offers the ‘three Is of impact’ framework for investors to consider when thinking about climate action investing.

The Morgan Stanley Impact Quotient (IQ) enables users to identify and prioritise more than 130 social and environmental impact preferences and use data to make investment decisions aligned with these goals.

Morgan Stanley’s Impact Signal is one of the industry’s first holistic manager scoring tools and allows Morgan Stanley Financial Investors to evaluate more than 20,000 funds and SMAs globally.

This tool focuses on evaluating the intentionality and influence of investments to make sustainable decisions. 

The 310 Group 

Sustainability is embedded throughout Morgan Stanley, including in teams like The 310 Group that focuses on providing investment expertise in global sports and entertainment.

Gidon Nach, Global Sports and Entertainment Director and Senior Portfolio Manager at Morgan Stanley, The 310 Group, says: “Aside from wealth management, our team at The 310 Group has been focussing on customising solutions for carbon offsets in the sports and entertainment industries.

“Growing interest in sustainable investing, scalable innovations and new technologies are helping investors, companies and municipalities combat climate change, protect biodiversity and preserve ecosystems.”

The 310 Group utilises Morgan Stanley’s sustainability tools to create a positive economic, social and environmental impact and make a meaningful difference in the world.

Carbon offsetting at Morgan Stanley

Carbon offsetting is a way to balance out CO2 emissions by investing in projects that reduce CO2 elsewhere.

Carolyn Campbell, Head of ESG Fixed Income Research at Morgan Stanley, says: “The carbon-offsets market has evolved rapidly, prompting increasing interest from investors and corporates."

82% of the offsets market is projects focused on avoiding or reducing atmospheric emissions of CO2. 

Nature-based carbon offsets projects generally reduce emissions from deforestation and forest degradation, but this makes their impact difficult to measure.

Morgan Stanley expects technology based carbon offsets to overtake these by 2030.

Morgan Stanley Institute for Sustainable Investing

The Morgan Stanley Institute for Sustainable Investing aims to accelerate sustainable finance and the adoption of sustainable investing strategies across capital markets alongside driving ESG initiatives across the firm.

James Gorman, Executive Chairman at Morgan Stanley says: “For us at Morgan Stanley, it is abundantly clear that the solutions to global challenges can only achieve the required scale if they can attract a critical mass of private capital.

“To this end, we’ve established the Morgan Stanley Institute for Sustainable Investing to lead work across our firm, with our clients, and with academic institutions to help mobilise capital to sustainable enterprises, via global markets and the investors who drive them.”

The Institute reports that 84% of the general population is interested in sustainable investing, and expects the voluntary carbon-offset market to grow to around US$250bn by 2050.

Morgan Stanley’s Social Bond

Morgan Stanley’s Social Bond, issued in 2020 at US$1bn, is now valued at nearly US$4bn.

The proceeds from this go towards financing or refinancing affordable housing projects across the United States.

So far, the bond has supported around 57,000 affordable housing units, impacting around 148,000 beneficiaries.

Morgan Stanley partnered with National Affordable Housing Trust to build 16 residential apartment buildings with around 200 affordable housing units for families in Washington D.C., including permanent supportive housing units for homeless individuals and families. 

The bond is aligned with the United Nations Sustainable Development Goals, focussing on sustainable cities and communities, poverty and reduced inequalities.

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