Taking a systems approach to sustainability
These days we are all striving for connections. In families, between generations, in neighborhoods, and even among co-workers. We rely on it for learning, for trading, for economic growth, for innovation and for global change.
Audrey Choi is the Chief Sustainability Officer and Chief Marketing Officer at Morgan Stanley.
If we didn't know it before, we certainly realize it now: our connectedness-the ways we are knit together-holds both benefits and risks for our health, our economies, our communities, and our planet.
That's the essence of sustainability, really. It's not just an environmental issue but also a fundamental economic issue. And it's not just a health issue but also a moral imperative. The size and complexity of the challenges we face require creative, systems-level thinking.
No one acting alone-no country, no sector, no scientist, no corporation-will effect meaningful change. Solving the world's biggest sustainability challenges will require a new kind of innovation, one that leverages insights and expertise from across a broad spectrum of sectors and industries.
Tackling plastic wasteTake the plastic waste problem. Every year, $80 to $120 billion dollars of economic value is thrown away in the form of single-use plastic packaging.(i) Every minute the equivalent of a garbage truck's worth of plastic waste is dumped into the ocean,(ii) and according to University of Georgia environmental engineering professor Jenna Jambeck, at the current rate, by 2030 it will be a football stadium's worth of plastic waste being dumped into our oceans every day.(iii)
Stemming the tide of plastic waste will require innovation across the entire plastics value chain - from how it is formulated in the lab, designed into products, used by consumers, and ultimately collected, recycled, and disposed of.
Two years ago, Morgan Stanley launched its Plastic Waste Resolution,(iv) not because we produce or use a lot of plastic, but because as a global financial firm we are connected to the investors, the corporations, the governments, the innovators, and the nonprofits that can make a difference. If we all work together.
The resolution is very straightforward: as a firm, we committed to facilitating the prevention, reduction, and removal of 50 million metric tons of plastic waste from nature by 2030. As part of that, we're underwriting the Debris Tracker app,(v) which supports citizen science by empowering individuals to collect and report data litter so scientists and researchers can better understand the causes of plastic waste in coastlines and waterways.
Our social compactOf course, sustainability is bigger and broader than plastic pollution, and environment" is just one leg of the environmental, social, and corporate governance (ESG) stool. The last year, in fact, has brought renewed attention to the full spectrum of sustainability, and again, innovation and partnership were key to the response.
A relatively new product, social bonds" are now helping foundations and other nonprofits fund the critical work of renewing communities, battling racial injustice, and securing a more equal future for all people. Last year, for example, Morgan Stanley partnered with the Ford Foundation to underwrite a first of its kind $1 billion social bond,(vi) which allowed the foundation to increase grant making to nonprofits during the pandemic and ensure the continuity of organizations fighting for equality and supporting vulnerable communities. And later in the year we raised our own $1 billion with a social bond that allocated capital in equal amounts to the financing and refinancing of affordable housing projects for low- or moderate-income individuals and families across the US.(vii)
That broad understanding-that sustainability takes integrated, innovative approaches to achieve-sits at the core of Morgan Stanley's Global Sustainable Finance Group. We started it more than a decade ago with the express purpose of partnering with teams across our businesses to implement sustainable solutions and integrate sustainability into our products and services. It is also why as a firm, in September, building on our announced goal to be carbon-neutral by 2022,(viii) we became the first major US bank to pledge to reach net-zero financed emissions by 2050.(ix)
What seemed like a novelty to some back then has become core to many investor portfolios and corporate risk statements. Sustainable investing accounts for $1 out of every $3 under professional management in the US,(x) and is now a more-than $30 trillion market globally.(xi) In a recent survey, a remarkable 85% of US individual investors express interest in sustainable investing strategies,(xii) and we think the investment, the innovation and the commitment will only grow.
Real efforts are underway at our firm and across many sectors to develop, launch, and scale real sustainability efforts that together will make a difference for us and future generations. That's good news, because our most pressing complex ESG problems will not be solved in silos.
(i) MacArthur, D. E., D. Waughray, and M. R. Stuchtey. The New Plastics Economy, Rethinking the Future of Plastics." World Economic Forum. 2016, https://www.ellenmacarthurfoundation.org/publications/the-new-plastics-economy-rethinking-the-future-of-plastics
(ii) Pennington, James. Every minute, one garbage truck of plastic is dumped into our oceans. This has to stop." World Economic Forum. 2016, https://www.weforum.org/agenda/2016/10/every-minute-one-garbage-truck-of-plastic-is-dumped-into-our-oceans/
(iii) Parker, Laura. Plastic pollution is a huge problem-and it's not too late to fix it," National Geographic, October 6, 2020, https://www.nationalgeographic.com/science/article/plastic-pollution-huge-problem-not-too-late-to-fix-it
(iv) https://www.morganstanley.com/Themes/plastic-pollution-resolution
(v) https://www.nationalgeographic.org/education/programs/debris-tracker/
(viii) https://www.morganstanley.com/articles/carbon-neutral-by-2022
(x) Nason, Deborah. 'Sustainable investing' is surging, accounting for 33% of total U.S. assets under management," December 21, 2020, https://www.cnbc.com/2020/12/21/sustainable-investing-accounts-for-33percent-of-total-us-assets-under-management.html
(xi) Chasan, Emily, Global Sustainable Investments Rise 34 Percent to $30.7 Trillion," Bloomberg, April 1, 2019, https://www.bloomberg.com/news/articles/2019-04-01/global-sustainable-investments-rise-34-percent-to-30-7-trillion
DISCLOSURES - requiredThis material was published on April 6, 2021. All information in this material has been prepared by Morgan Stanley Smith Barney LLC and/or Morgan Stanley & Co. LLC, Members SIPC (collectively Morgan Stanley") for informational purposes only and is not a solicitation of any offer to buy or sell any security or other financial instrument or to participate in any trading strategy. This material was not prepared by the Morgan Stanley Research Department and is not a Research Report as defined under FINRA regulations. This material does not provide individually tailored investment advice. It has been prepared without regard to the individual financial circumstances and objectives of persons who receive it. Morgan Stanley recommends that recipients should determine, in consultation with their own investment, legal, tax, regulatory and accounting advisors, the economic risks and merits, as well as the legal, tax, regulatory and accounting characteristics and consequences, of any transaction or strategy referenced in any materials. The appropriateness of a particular investment or strategy will depend on an investor's individual circumstances and objectives. Morgan Stanley, its affiliates and Morgan Stanley Financial Advisors do not provide tax, accounting or legal advice. Individuals should consult their tax advisor for matters involving taxation and tax planning and their attorney for matters involving legal matters.
This material contains forward-looking statements and there can be no guarantee that they will come to pass. You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which they are made. We undertake no obligation to update publicly or revise any forward-looking statements to reflect the impact of circumstances or events that arise after the dates they are made, whether as a result of new information, future events or otherwise except as required by applicable law. You should, however, consult further disclosures we may make in future filings of our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K and any amendments thereto or in future press releases or other public statements.
Past performance is not a guarantee of future performance. Information contained herein is based on data from multiple sources and Morgan Stanley makes no representation as to the accuracy or completeness of data from sources outside of Morgan Stanley. References to third parties contained herein should not be considered a solicitation on behalf of or an endorsement of those entities by Morgan Stanley.
Please note that there is currently no legal, regulatory or similar definition of what constitutes a social" bond or as to what precise attributes are required for a particular issuance to be defined as social." Without limiting any of the statements contained herein, Morgan Stanley makes no representation or warranty as to whether a bond constitutes a social bond, unless otherwise specified by Morgan Stanley, or whether a bond conforms to investor expectations or objectives for investing in social bonds. For information on characteristics of a specific social bond, use of proceeds, a description of applicable projects and/or any other relevant information about the bond, please reference the offering documents for the bond.
The returns on a portfolio consisting primarily of Environmental, Social and Governance (ESG") aware investments may be lower or higher than a portfolio that is more diversified or where decisions are based solely on investment considerations. Because ESG criteria exclude some investments, investors may not be able to take advantage of the same opportunities or market trends as investors that do not use such criteria.
Information contained in the material is based on data from multiple sources and Morgan Stanley makes no representation as to the accuracy or completeness of data from sources outside of Morgan Stanley. References to third parties contained herein should not be considered a solicitation on behalf of or an endorsement of those entities by Morgan Stanley. Morgan Stanley is not responsible for the information contained on any third party web site or your use of or inability to use such site, nor do we guarantee its accuracy or completeness. The terms, conditions, and privacy policy of any third party web site may be different from those applicable to your use of any Morgan Stanley web site. The opinions expressed by the author of an article written by a third party are solely his/her own and do not necessarily reflect those of Morgan Stanley. Professional designations mentioned in the articles may or may not be approved for use at Morgan Stanley. The information and data provided by any third party web site or publication is as of the date of the article when it was written and is subject to change without notice.
(C) 2021 Morgan Stanley & Co. LLC and Morgan Stanley Smith Barney LLC. Members SIPC. CRC 3514255 4/2021
This content was produced by Morgan Stanley. It was not written by MIT Technology Review's editorial staff.