For decades now, investors have seen how powerfully their decisions can drive impactful outcomes for people and the planet. Here are 10 ways to continue making an impact with your investment dollars.
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Investors have a long history of seeking to drive positive change in the world. The end of South African apartheid in the early 1990s, for example, marked the culmination of a decades-long divestment campaign that saw investors successfully pressure companies around the world to cut ties with the country’s apartheid regime.
This movement also gave rise, two decades earlier, to the “Sullivan Principles,” a code of conduct that helped companies resist apartheid policies and set standards for corporate social responsibility that remain influential today. And it helped to bring us some of the earliest socially-conscious investment strategies, including the first ethical mutual funds, which allowed asset managers to act on investors’ behalf to avoid objectionable industries.
Since then, the sustainable and impact investing industry has grown tremendously. Just one example: When the United Nations Principles for Responsible Investing launched in 2006, there were 60 sustainable funds available to investors.1 By the third quarter of 2023, there were estimated to be more than 7,600 globally.2
The anti-apartheid movement helped to bring us some of the earliest socially-conscious investment strategies.
Investing With Impact Today
At Morgan Stanley, we are committed to helping investors align their portfolios with their values. Our innovative Investing with Impact Platform, launched in 2012, offers a diverse range of investments designed to advance environmental, economic and social goals, while striving to also help meet our clients’ financial goals. Today, clients on our platform have collectively invested over $68 billion across more than 320 investment strategies.3
Here’s a look at 10 ways investors can continue to align their capital with their vision for a more sustainable world:
1. Understand the range of approaches available to create positive change. Having a framework for decision-making can help. At Morgan Stanley, we encourage investors to consider what we call the “Three I’s” of impact:
- Intentionality of the investment process, which can range from reducing exposure to companies you find objectionable, to actively seeking out companies generating positive environmental or social impact
- Influence, which focuses on the role shareholders can play in helping change company behavior for the better through active engagement
- Inclusion, which considers the level of diversity at asset-management firms and across investment professionals managing your portfolio
2. Learn to identify asset managers that are driving authentic impact versus those simply claiming to do so. The proliferation of sustainable funds in recent years can make it difficult to measure how much an asset manager actually prioritizes environmental or social issues. Our Diversity, Equity and Inclusion (DEI) Signal and Impact Signal tools help you and your Morgan Stanley Financial Advisor evaluate asset managers’ commitment to seeking sustainable outcomes on a consistent basis.
3. Measure how well your portfolio is achieving alignment with your values. A lack of standard industry metrics—coupled with competing measurement frameworks—has historically made it challenging for investors to determine how aligned their investments are with their impact goals. Tools like Morgan Stanley Impact Quotient® can help you identify and prioritize your impact preferences and assess your current holdings for opportunities to bring your portfolio into closer alignment with your values.
4. Consider investments that support the transition to a lower-carbon economy. Your Morgan Stanley Financial Advisor can help identify opportunities for climate-focused investments, such as companies developing new technologies for renewable and alternative energy sources. Those opportunities aren’t limited to the equity side of your portfolio: The proceeds of corporate “green bonds,” for example, go toward climate change mitigation activities or other environmental sustainability projects.
5. …Or that help advance racial equity at companies and asset managers. There are several approaches you can take in this area, including supporting diverse-owned or -run asset managers, or looking for investments in companies that are creating products or solutions aimed at addressing the needs of disadvantaged communities. You might also consider looking at the diversity and inclusion records of publicly traded companies and minimizing or avoiding exposure to companies with lagging racial-equity records.
6. … Or that support equality for women in the workforce. If you’re interested in gender lens investing, your Morgan Stanley Financial Advisor can help you find the right strategies, whether those involve shareholder efforts to increase gender diversity in the C-suite or boardroom or investing in businesses with products and services that benefit women and girls.
7. … Or that improve people’s lives through access to education, health care and housing. For example, investors can support affordable housing, community development, schools and even provide access to lower-cost clean energy in diverse communities through bond funds.
8. If religion plays an important role in your life, explore faith-based ways to invest. Many people look to their faith for guidance when making decisions to positively impact the world. Investment strategies based on the values of Catholicism, Christianity, Judaism, Islam or other faiths may help you align your investments with your faith traditions.
9. Think about how your impact goals fit into your broader financial picture. There’s no need to sacrifice your financial goals to invest according to your values. Whether you’re focused on building wealth, preserving it, generating income or other objectives, there are many ways you can integrate your impact goals for investors of all sizes.
10. Consider working with a financial professional to help you invest with impact. Morgan Stanley Financial Advisors are equipped with a broad range of robust tools, research and other proprietary resources to help you build a portfolio towards your impact goals. Our Financial Advisors with the special Morgan Stanley Investing With Impact Director designation can share investment ideas that help meet your environmental, social and financial goals.
Think about how your impact goals fit into your broader financial picture.
Preparing for the Road Ahead
At Morgan Stanley we are proud to play a part in advancing the role of values-aligned investing. The momentum has never been stronger, and investors today have access to increasingly sophisticated advice, reporting tools and more that can help them achieve their goals.
Connect with your Morgan Stanley Financial Advisor to discuss how you can achieve your impact goals.
Questions to Ask Your Morgan Stanley Financial Advisor:
- How can I gain a better idea of whether my portfolio aligns with my personal values and financial goals?
- When it comes to investing with impact, what are the different approaches or strategies I should consider?
- How can I gain insight into how much an asset manager truly prioritizes environmental or social issues?
