Analysis of Morgan Stanley's ESG Compliance
Updated: Oct 7, 2022
In the past decade the financial sector has been at the forefront of ESG acceptance and application, especially as a growing number of their clients care more deeply about the internal and external impacts of a company they are investing in. One of the forefront adopters of these principles would be Morgan Stanley, a company that has made a massive transition towards sustainable investing and has integrated the practice into every part of their value chain.
Morgan Stanley has also set extremely impressive goals for themselves when it comes to environmentally sustainable investing. Their first goal is to mobilize $1 trillion for sustainable solutions that support the UN Sustainable Development Goals (SDGs) by 2030, including $750 billion in low-carbon initiatives. Meeting this 2030 target means increasing business activities in areas including clean-tech and renewable energy financing, green bond underwriting and other transactions. They went one step further and set a goal based on carbon emissions as well, committing to achieving net-zero—a state in which the amount of carbon produced is offset by the amount removed from the atmosphere—in financed emissions by 2050. This means that the net carbon footprint across their operations and the operations of all of their investments will be 0, a remarkable feat if accomplished. This is made even more impressive by the fact that they were the first US-based financial firm to commit to any such climate neutrality target when they set this goal in 2020.
Morgan Stanley extends this belief in ESG beyond just the environment into social and governance practices. The main venue by which they approach these values is their stakeholder engagement model. They identify their stakeholders as Shareholders, Employees, Clients, and Civil Society, a good model that seems to cover all essential aspects for stakeholders in the financial sector. The company prizes their ability to factor the needs of all of these stakeholders in their actions but seems to fall short a bit when it comes to employees.
Morgan Stanley has been shown to be disconnected from the needs of their employees, especially after COVID, offering them less freedoms and implementing mandatory work from officer protocols. Alternatively the company does amazing work in the communities that they are in, implementing pro bono and grant programs that greatly help non-profits and underprivileged communities.
Overall Morgan Stanley is a leader in its industry in the field of ESG, especially in terms of environmental responsibility and sustainability across their investments. Their commitment to be carbon neutral across all of their investments is a first for the financial sector and indicates that Morgan Stanley is at the cutting edge of sustainability as a financial company.
Despite these positives, Morgan Stanley has room for improvement in terms of their employee treatment. By improving this part of their company Morgan Stanley could become the ESG leader for the entire financial sector, attracting increased investment and confidence in the company for the following decades.