Morgan Stanley allocated $ 550bn for green initiatives

12 / 08 / 2023

• news
• Sustainable Development

Morgan Stanley has allocated $ 550 billion for low-carbon and green solutions, according to its 2022 ESG report.

James P. Gorman, Chairman and CEO of Morgan Stanley, said “I am proud that we have reached over $700Bn toward our goal to mobilize $1Tn in capital for sustainability solutions by 2030. This progress includes over $550Bn towards low-carbon and green solutions. Teams across the Firm contributed to this goal by delivering products that align with at least one of 12 eligible sustainability themes.”

“We also welcomed a second cohort of five visionary startups from around the world to the Sustainable Solutions Collaborative. This initiative aims to support concepts with the potential to provide breakthrough innovations by providing grants of $250,000 to participants to support their work. At Morgan Stanley, our D&I, climate and sustainability efforts go hand in hand. We have made progress across our business, with our Firm’s culture guiding our activities. As we continue to deliver long-term value for our shareholders, we remain focused on ESG objectives for our clients, employees and the communities in which we live and work,” Gorman added.

The report provides a comprehensive overview of Morgan Stanley’s activities, progress and performance on the ESG topics most important to Morgan Stanely’s clients, shareholders and communities. It represents a new approach to our disclosure that combines and brings transparency to its efforts across diversity and inclusion, climate and sustainability.

Morgan Stanley’s philanthropic efforts support communities financially and through employee engagement. The Morgan Stanley Foundation and Morgan Stanley International Foundation lead these efforts, bringing to life its core values of giving back and committing to D&I.

In 2022, Morgan Stanley’s Firm, foundations and employees collectively donated more than $160 million to nonprofit organizations around the world. Its Focus on Supporting Children Though Morgan Stanley supports a range of charitable causes, it focuses on children’s mental and physical health by addressing food insecurity, creating safe and accessible places to play, and helping kids grow and thrive. Amid the youth mental health crisis exacerbated by the pandemic and social inequity, the Morgan Stanley Alliance for Children’s Mental Health (Alliance) is actively addressing the critical challenges of stress, anxiety and depression in young people. The Alliance supports organizations through growth capital, nonprofit capacity building, seed funding and thought leadership.

Launched in 2020, Alliance programs have reached 25 million students, families and educators globally, many of whom are from diverse and underserved groups. In 2022, the Alliance launched its second annual Innovation Awards to identify and seed-fund transformative mental health care solutions for children across the United States.

Given to the growing impacts of climate change, Morgan Stanley leverages its expertise to help clients decarbonize, supporting the global economy’s transition to a more sustainable future. It also invests in resource efficiency and renewable energy for its own operations.

Jessica Alsford, Chief Sustainability Officer and CEO of the Morgan Stanley Institute for Sustainable Investing, said “I am proud of Morgan Stanley’s ambition to reach net-zero financed emissions by 2050.”

“We were the first major US bank to make this commitment, and we built on it in 2021 by announcing interim 2030 financed emissions reductions targets for energy, power and auto manufacturing. We are also committed to mobilizing $750 billion to support low-carbon and green solutions by 2030. To achieve these goals, we recognize how important it is to operationalize our commitments in a way that balances the need to rapidly decarbonize the global economy with the real-world circumstances acutely affecting individuals and communities. That is why we consider climate as part of our overall business strategy and approach to risk management. It is also why I co-chair Morgan Stanley’s Climate Risk Committee, which is focused on overseeing climate risk considerations throughout Firm processes. Morgan Stanley is in a unique position to support the climate transition and, looking to the future, I am excited to continue to work with clients and colleagues to meet our commitments in support of a fair and just transition.”

Morgan Stanley is committed to considering climate change throughout its business, operational and risk management activities. To support this work, it has a four-pillar climate strategy, with the overall goal of achieving net-zero financed emissions15 by 2050. It seeks to support the transition to a low-carbon economy with a public commitment set in 2021 to mobilize $750 billion in capital toward low-carbon and green solutions by 2030.

It manages climate risk by integrating climate change considerations across risk management processes and governance structures. In its operations, Morgan Stanley strives to minimize its emissions footprint and enhance its climate resiliency. The strength of its commitment is demonstrated by its achievement of carbon neutrality across our global operations in 2022.

“We are committed to transparency and communicate our efforts and resulting progress through our climate-related disclosures,” Alsford added.

Morgan Stanley aims to meet its climate commitments and contribute to real-economy decarbonization by supporting its clients in achieving their own climate-related commitments. Many of its clients will require capital and expertise to achieve their targets and ensure their business strategies are resilient in a decarbonizing economy.

Its clients also face complexities as they transition, and Morgan Stanley is committed to working with them at all stages of their climate journeys. It seeks to work closely with its clients to understand and assess their low-carbon transition plans, the resourcing of their plans and how these plans align with its own climaterelated commitments.
Educating its own bankers is also a critical part of this strategy. In 2022, Morgan Stanley hosted ESG training sessions for relevant banking and capital markets employees on environmental and social commitments and policies, as well as the related due diligence and governance processes.

It will continue to provide guidance going forward to educate and equip its client-facing teams with the knowledge to make climate-informed decisions.

In 2022, Morgan Stanley began to develop a new Climate Strategy Assessment Framework (CSAF) that provides additional insight into its clients’ approaches to climate.

The CSAF will leverage data from public sources and client discussions to help us understand its clients’ transition plans and climate commitments.

It will help Morgan Stanley assess company targets, climate governance, plans and actions taken toward meeting targets, and GHG emissions performance. The framework will inform client diligence practices and will also help us focus on its client engagement discussions. There will be an initial focus on companies in the sectors covered by our interim 2030 targets, with an aim to cover more companies over time as it announces additional sector targets. This new tool will deepen its understanding of clients’ climate plans and help it assess the robustness of its clients’ commitments and the resources they are dedicating to the transition.

As data improves over time, and as publishing transition plans become more widely adopted, Morgan Stanley expects this information will help enhance its analysis framework and process.

High-quality offsets can help address hard-to-abate emissions that cannot first be mitigated by existing technologies or operational changes.

Morgan Stanley believes carbon offsets will play a critical role in helping the real economy achieve net-zero emissions, particularly in the near term, as new decarbonization technologies develop sufficient maturity and scale.

Morgan Stanley acknowledges that the growing yet nascent voluntary carbon market continues to offer opportunities for real economy participants to offset emissions they are responsible for.

Morgan Stanley supports the Paris Agreement and recognizes the importance of global policy action to achieve net-zero emissions by 2050.

In 2022, policymakers globally were engaged in defining climate disclosure regulations and took steps toward implementation.

It engaged in advocacy through its industry groups to inform and further refine the International Financial Reporting Standards (IFRS) Foundation’s draft sustainability reporting standards and US Securities and Exchange Commission’s (SEC) proposed rule to enhance and standardize climate-related disclosures for investors.

It engaged with the Board of Governors of the Federal Reserve and US Treasury climate leadership on ESG data as it relates to target setting and financial institution decarbonization strategies.

In the European Union (EU), Morgan Stanley regularly engages with the European Commission, Council and Parliament on the development of ESG regulations. Topics include the development of due diligence reporting requirements, corporate sustainability reporting requirements and the creation of an EU green bond standard, among others.

In the UK, Morgan Stanley works with policymakers and provide commentary on the development of a range of legislative and policy documents, including the UK’s green finance strategy, disclosure requirements and the development of the green taxonomy.

Sustainability efforts at Morgan Stanley span ESG topics and encompass the Firm’s global operations and risk management, and the activities of the Morgan Stanley Institute for Sustainable Investing.