Dive Brief:
- Institutional investors are increasingly considering responsible use of artificial intelligence as part of their sustainable investing strategy, according to a new survey from Morgan Stanley.
- Around two-thirds (66%) of the 900 institutional investors polled across North America, Europe and Asia Pacific by the Morgan Stanley Institute for Sustainable Investing said they were incorporating AI into their sustainable investing practices. Almost all respondents (94%) said they viewed responsible AI as part of other sustainable investment themes — like climate adaptation, mitigation, circular economy, conservation and biodiversity — rather than a separate topic.
- The majority of respondents prioritizing AI (61%) also said in the survey they were most focused on companies’ governance around corporate AI adoption, especially when it came to board oversight and capabilities, responsible and ethical AI policies, and cybersecurity controls.
Dive Insight:
Nearly a quarter (24%) of the 590 surveyed institutional investors that are incorporating AI into their broader sustainable strategies also said they were focused on the social and environmental impacts of AI adoption, like the carbon and water footprint of AI use and data centers’ effect on local communities. Around 15% of investors incorporating AI said they were also spending time on assessing the economic impact of its adoption, including on employment, supply chain transparency, public policy and regulatory discourse surrounding AI use.
The bank’s latest edition of the Sustainable Signals survey, published last week, also found that over 80% of institutional investors, which include asset owners and asset managers, anticipate increasing sustainable allocations over the next two years. However, the report also noted that such growth will be slower and “more measured” compared to the pace in 2025.
The report noted that only 2% of asset owners and 4% of asset managers surveyed anticipate growth of over 10 percentage points over the two years, compared to around the one-fifth increase recorded last year.
Sustainability also emerged as an important component of risk management, according to the survey.
Despite recent political headwinds and data challenges, sustainability remains important to institutional investment decisions, the report said. Over 90% of asset owners and asset managers somewhat or strongly agreed that sustainable investing options were a “key differentiator in awarding or winning mandates.” More than 90% of respondents also said sustainability was an important consideration when it came to managing investment risk, while more than two-thirds of respondents cited reducing risk across portfolios as a reason to prioritize sustainable investments, up from the half who said so in 2025.
“In 2026, a consistent picture has emerged across our Sustainable Signals series — with individuals, corporates and institutional investors all showing high levels of continued commitment to sustainability, yet at a more measured pace and with a sharper focus on managing risk,” Jessica Alsford, chief sustainability officer and chair of the Institute for Sustainable Investing at Morgan Stanley, said in an Oct. 22 press release.
Morgan Stanley conducted the survey between August and October, collecting responses from institutional investors who practice or plan to practice sustainable investing.
