Interest in sustainable investing remains strong – and virtually unchanged – with allocations to sustainability-focused strategies poised to grow over time, with younger investors in particular reporting a growing focus on sustainability in their investment considerations and indicating plans to increase sustainable investment allocations in the near-term, according to a new survey released by Morgan Stanley.

The survey also identified confidence in returns as the top factor motivating investors to increase sustainable investment allocations, and found that investors have become less likely to believe that there is a tradeoff between sustainability and financial performance. Nearly 60% of investors said that they plan to increase allocations to sustainable investments over the next year, with only 3% planning to decrease.

For the report, “Sustainable Signals – Individual Investors 2025,” Morgan Stanley surveyed 1,765 individual investors across North America, Europe and Asia Pacific. The survey was conducted in February an March 2025.

The survey found that interest in sustainable investing remains strong, with 88% of investors globally reporting that they are interested in sustainable investing, including over half stating that they are “very interested.” Interest levels were fairly consistent across regions, with 84% of North American investors reporting being interested in sustainable investing, compared with 88% of European investors and 92% of APAC investors.

Notably, despite recent controversy and political pushback on ESG, the survey found that investor interest in sustainable investing has remained virtually unchanged, with a 2023 Morgan Stanely survey finding U.S. and European interest levels of 84% and 85%, respectively.

The survey found that younger investors expressed much stronger interest in sustainable investing than their older counterparts, with 99% of Gen Z (age 18 – 28) and 97% of Millennial (age 29 – 44) investors reporting being interested in sustainable investing, including around 70% of each group reporting being “very interested.”

Younger investors were also found to already be directing a substantially larger proportion of their portfolios to sustainable investments, with 68% of Gen Z and 65% of Millennials reporting having more than 20% of their portfolios currently invested in companies or investment funds that seek to make a positive social or environmental impact, compared with only 37% of Gen X and 22% of Baby Boomers.

Overall, 59% of global investors reported that they plan to increase allocations to sustainable investments over the next year, with 31% planning to maintain allocations, and 3% planning to decrease.

Notably, the survey found much stronger intentions by younger investors to direct an increasingly higher proportion of their portfolios to sustainable investments, with 80% of Gen Z and Millennials reporting plans to increase sustainable investment allocations, compared with 56% of Gen X and only 31% of Baby Boomer investors.

Jessica Alsford, Chief Sustainability Officer and Chair of the Institute for Sustainable Investing at Morgan Stanley, said:

“Younger investors plan to increase portfolio allocations to sustainable options at higher rates and prioritize a broader range of environmental and social issues when making investment decisions. This suggests that sustainability could become an even greater focus area for investors in the future as younger generations gain more financial influence.”

The top reason reported by investors driving expected growth in sustainable investments was anticipated investment performance, with 24% of investors saying that they plan to increase allocations because they are more confident that sustainable options offer comparable or better returns.

Additionally, a large majority of investors rejected the idea that there is a tradeoff between sustainability and financial performance, with 85% of respondents reporting that they believe that it is possible to balance financial gains with a focus on sustainability, with U.S. and European investors more likely to express this opinion than in the 2023 survey. Additionally, 84% of investors reported believing that funds can generate returns in line with the market alongside positive social or environmental outcomes.

The survey also explored sustainable investment challenges facing investors, with greenwashing concerns reported as the top barrier to including sustainable investments in portfolios, followed by a lack of transparency and trust in reported data.

Younger investors were more likely to report a lack of knowledge or advice as a barrier to sustainable investing. Accordingly, they were also much more likely to say that they would be likely to select a financial advisor or investment platform based on their sustainable investing offerings, at 96% of Gen Z and 92% of Millennials, compared to 76% of Gen Z and 52% of Boomers.

Overall, the survey found that sustainability factors play a strong role in the investment process, with more than three quarters of investors globally saying that they would be likely to consider factors including a company’s efforts to reduce greenhouse gases, climate disclosures, or human rights policies and practices when making an investment.

By sustainable investment theme, the survey found a strong interest in climate-related strategies, with over 80% reporting seeing the energy transition as an opportunity to generate returns. Additionally, over half of investors said that they would only invest in traditional energy companies if they had robust plans to reduce their greenhouse gas emissions and address climate change, and 60% of companies saying that they would be somewhat (20%) or very (40%) likely to purchase carbon offsets for their investment portfolios.

Alsford added:

“Our Sustainable Signals survey shows that investors across demographic groups and regions continue to believe that investments can achieve both positive real-world outcomes and competitive market-rate returns.”

Click here to access the survey.