Sixty-five percent of investors believe sustainable investing will become more prevalent over the next five years, but the perceived trade-off between profitability and making an impact was viewed as a barrier to the growth in the sector, according to a survey published Friday by the Morgan Stanley Institute for Sustainable Investing.
The report found that millennials and women are most interest in this type of investing.
Eighty-four percent of millennials were open to the idea of sustainable investing as compared to 79 percent of Gen X and 66 percent of baby boomers.
Millennials are also twice as likely to invest in companies or funds that target specific social/environmental outcomes, and divest because of objectionable corporate activity.
Seventy-six percent of women showed interest in sustainable investing, compared to 62 percent of men.
In addition, women are nearly twice as likely as men to consider rate of return as well as the impact of the investment when making an investment decision (40 percent versus 23 percent).
However, “the survey shows that the perception of trade-off between profitable and sustainable investments is still a major barrier to the growth of the field,” said Audrey Choi, managing director and CEO of the Institute for Sustainable Investing at Morgan Stanley.
Investors are divided over the perception of sustainability and financial gains as being a trade-off, with 54 percent agreeing and 46 percent disagreeing.
Nearly three out of four investors (72 percent) believe that companies with good environmental, social and governance practices can achieve higher profitability.
“We and others trying to advance sustainable investing at scale have a job to do, demonstrating that it is possible to achieve positive impact and market-rate returns,” added Choi.