A Morgan Stanley Institute for Sustainable Investing report reveals that value creation is the primary motivation for corporations pursuing sustainability strategies. This conclusion is based on a survey of over 300 companies across various industries and regions. Regulatory compliance and moral responsibilities also drive sustainability efforts, though to a lesser extent.
The survey indicates that 85% of respondents view sustainability as a significant opportunity for long-term value creation, with half rating it a very significant reason for their sustainability strategy. Despite this, the high level of investment required is cited as the biggest barrier, with 70% of respondents highlighting it as a significant challenge.
Access to capital is crucial, as 84% of respondents emphasise the importance of investor support for sustainability initiatives. Notably, 76% believe sustainability measures could reduce the cost of capital in the next five years. However, only 42% feel their current efforts in aligning corporate financing with sustainability strategies are meeting or exceeding expectations.
Climate change is seen as a current business risk, with 23% of respondents acknowledging its impact, comparable to supply chain instability and geopolitical conflict. By 2050, 92% anticipate that climate change will significantly impact their business models.
Sustainability is increasingly integrated into corporate decision-making, with 55% of respondents incorporating sustainability criteria into key business decisions. However, only 37% report that their boards possess adequate sustainability expertise, suggesting a need for greater knowledge in areas such as regulations and sustainability financing instruments.
Overall, the survey demonstrates that while there are challenges, corporate leaders increasingly view sustainable practices as essential for value creation and risk mitigation.
i(x) Net Zero plc (LON:IX) is an investing company which focusses on Energy Transition and Sustainability in the Built Environment, and was founded in 2015 by Trevor Neilson, Pär Lindström and Howard W. Buffett.
