It’s been another strong performance for Morgan Stanley, with 2021 marking a record year for M&A, with more than $5 trillion in global volume, writes Fiona Keating.
Sustainable investing interest is gathering apace, an uptick in M&A related to environmental, social and governance (ESG) strategies.
“A manifestation of that could be in the energy and natural resources sectors, where an increased ESG focus by the broader investor community could lead to asset portfolio rebalancing to improve a company’s environmental footprint,” says Tom Miles, Co-Head of Americas M&A at Morgan Stanley.
Despite economic uncertainty during the COVID-19 pandemic, individual investor interest in sustainable investing has reached new highs in some demographics.
In a large majority of individual investors – nearly 80% – sustainable investing interest was up, despite market volatility and economic uncertainty, according to the report Institute for Sustainable Investing from Morgan Stanley.
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Millennial investor interest was up by 4 percentage points to a record high of 99%.
“As economies begin to emerge from the volatility of the pandemic, sustainable investing continues to show its mettle by empowering investors to make more informed decisions that allow them to align their investments with their desire for impact while mitigating concerns around performance,” says Audrey Choi, CEO of the Institute for Sustainable Investing and Chief Sustainability Officer at Morgan Stanley.
However, interest in ESG has dropped. In 2019, 70% of millennials were very interested in sustainable investing, compared to 57% in 2021.
The report shows that 70% of individual investors thought that sustainable investing resulted in a financial tradeoff, up from 64% in 2019. Millennials felt this most strongly, with 83% of investors who are in the 25-38 age bracket, believing this to be true – more than for any other age group.
Sustainable US equity funds outperformed traditional peer funds by a median total return of 4.3 percentage points in 2020.
Concerns about greenwashing was the second biggest concern, at 71%. However, 80% of investors believe that companies with strong ESG practices can generate higher returns and make stronger investments in the longer term. Going forward, investors can benefit from more in-depth education and information about the financial performance of sustainable investments.
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