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US Department of Labor says fiduciaries can include ESG in investment process: Morgan Stanley reaction



Morgan Stanley today announced its support of the Department of Labor’s decision to enhance the ability of ERISA fiduciaries to consider environmental, social and governance (ESG) factors as part of their investment process.

This new direction from the Department of Labor provides a major boost for sustainable investing, a key mechanism for directing private capital at scale toward global social and environmental challenges.

“Prudent investors want to make investment decisions using as much materially relevant information available to them as possible,” said Audrey Choi, CEO of the Morgan Stanley Institute for Sustainable Investing. “Our work at Morgan Stanley has found that a large number of investors want to invest for both social impact and financial return, and today’s announcement will enable Americans saving for retirement to more easily do exactly that.”

At an event held today in New York, U.S. Secretary of Labor Thomas E. Perez announced the Department of Labor’s decision to withdraw a 2008 bulletin that had stood as a perceived hurdle to investors wanting to pursue sustainable investing. As a result, these investors, including certain financial advisors and pension plans, will now be able to fully integrate environmental, social and governance factors as part of their broader fiduciary duty to pursue investment results.

Morgan Stanley has a strong commitment across the Firm to the development of sustainable finance. In 2013, Morgan Stanley established the Institute for Sustainable Investing to accelerate the mainstream adoption of sustainable investing by developing industry-leading insights and scalable finance solutions to address global challenges.

In a study published earlier this year, the Institute for Sustainable Investing found that sustainable investing was poised for growth among active individual investors and that 71 percent of individual investors are interested in sustainable investing. In a follow-up report that included an analysis of over 10,000 open-end mutual funds, Morgan Stanley found that investing in sustainability does not require investors to take a financial sacrifice when investing sustainably, a common misperception among investors.

Morgan Stanley Wealth Management provides the Investing with Impact Platform to individual and institutional investors, including an array of sustainable investing products spanning numerous asset classes. Through the Platform, Morgan Stanley financial advisors are able to identify opportunities that support specific social and environmental benefits without compromising financial performance potential. Additionally, Morgan Stanley Research includes a Sustainable + Responsible investment research team that focuses on how ESG factors figure into the analysis of sectors and individual companies.