Morgan Stanley Commits to Net-Zero Financed Emissions

As a further step in its commitment to sustainability—and to battling climate change in particular—Morgan Stanley is pledging to reach net-zero financed emissions by 2050. The decision builds on the firm’s work in sustainable finance for more than a decade, and its own carbon neutral goal announced in 2017.

“Climate change is one of the most complex and interconnected issues of our time,” says Audrey Choi, the firm’s Chief Sustainability Officer. “Morgan Stanley believes we have an important role to play in facilitating the transition to a low-carbon future, and we are proud to embark on this journey.”

Globally, achieving net-zero emissions—a state in which the amount of carbon produced is offset by the amount removed from the atmosphere—is critical to ensuring that the Earth’s average temperature increases no more than 1.5˚C above preindustrial levels, a goal set out in the 2015 Paris Agreement.

That’s why three years ago, Morgan Stanley set a goal to achieve carbon neutrality in global operations and business travel by 2022.  Under the firm’s new commitment, “financed emissions” refers to greenhouse gases emitted by entities that receive financial services, loans or investments from Morgan Stanley. 

For financial services firms, one of the biggest challenges to achieving net-zero financed emissions is a lack of standardized tools and methodologies around measurement and disclosures. To address this issue, Morgan Stanley joined the Steering Committee of the Partnership for Carbon Accounting Financials, a global cohort of financial institutions that aims to develop and implement an approach for assessing and disclosing greenhouse gas emissions associated with loans and investments.

Morgan Stanley is also one of 17 global financial firms testing the Paris Agreement Capital Transition Assessment, which enables users to measure the alignment of financial portfolios with climate scenarios. This tool, developed by the 2° Investing Initiative, helps financial institutions understand how their corporate loan portfolios align with the international goals set by the Paris Agreement. Defining consistent, robust and comparable metrics and methodologies will be essential to reaching the firm’s 2050 milestone.

For more than a decade, Morgan Stanley has been integrating sustainability into all of the firm’s businesses, spearheaded by the Global Sustainable Finance group, which was created in 2009. Crucial to this legacy are Morgan Stanley’s efforts supporting climate change mitigation, adaptation and the transition to a low-carbon world. These initiatives include facilitating the construction of two wind farms that will deliver a significant portion of the firm’s renewable energy required to achieve 100% carbon neutrality and 100% renewable electricity by 2022 and mobilizing $250 billion toward low-carbon solutions by 2030.

“Morgan Stanley has been a leader in sustainable finance since we founded our Global Sustainable Finance Group over a decade ago,” says Matthew Slovik, Head of Global Sustainable Finance at Morgan Stanley. “This is the next major evolution of our efforts as we continue to integrate the potential risks and opportunities of climate change into our core business.”