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Morgan Stanley sets up sustainable investment institute, signs up to PRI

Major push into impact investing and sustainable finance

US banking giant Morgan Stanley has set up an Institute for Sustainable Investing and its asset management arm has become a signatory to the Principles for Responsible Investment (PRI).

The new institute, announced by the bank’s Chairman and CEO James Gorman today, will be led by Audrey Choi, who heads the bank’s Global Sustainable Finance group. An advisory board will be chaired by Gorman and include figures such as Ceres’ President Mindy Lubber, Global Impact Investing Network (GIIN) CEO Luther Ragin and Karen Elliott House, former publisher of the Wall Street Journal.

It will pursue three focus areas: financial products and solutions enabling investment in sustainability-focused strategies seeking financial returns; thought leadership; and partnerships with the public, private and nonprofit sectors to build capacity and best practices within sustainable investing.
The institute has set a goal of $10bn in total client assets through Morgan Stanley’s Investing with Impact Platform in the next five years. It will also create new products − in coordination with Morgan Stanley Investment Management − in which positive social and/or environmental impact is a core part of the underlying investment strategy. An annual sustainable investing fellowship program will also be set up at Columbia Business School.

The bank will also invest $1bn in a sustainable communities initiative for affordable housing.
Choi said the institute “is committed to playing a catalytic role in forging innovative cross-sector partnerships that develop solutions to mobilize capital efficiently and effectively to meet these challenges at scale”.In addition, Morgan Stanley Investment Management, which has more than $347bn (€256.5bn) in assets under management or supervision, has signed up to the PRI having already signed up to other industry measures such as the UK’s Stewardship Code.

MSIM is following peers such as State Street Global Advisors, Wellington Management Co., PIMCO, Capital Group, Goldman Sachs Asset Management and T. Rowe Price in backing the initiative.

In November 2012 Morgan Stanley made a commitment to support the protection and advancement of human rights. As well as co-forming the Carbon Principles with other Wall Street Banks in 2008, it is part of the US partnership for Renewable Energy Finance.

Other recent new signatories to the PRI include real estate specialist Knight Frank Investment Management, the Superannuation Arrangements of the University of London (SAUL) and Japan-based Asahi Life Asset Management. The PRI now has 1,213 signatories, according to its website.
MSIM’s decision to sign up to the PRI comes as the initiative is facing a revolt from Nordic signatories over claimed problems with governance and public policy strategy.
And the PRI has also been hit by the suspension of Advisory Council member John Oliphant from his position as head of South Africa’s Government Employees Pension Fund (GEPF) over “supply chain management practices” at the fund. Oliphant, who has stepped down from his PRI role until he clears his name, tweeted yesterday (October 31): “When the time is right I will set the record straight!”