Key Takeaways
Sustainable investment choices, as performance is the main driver for both interest and portfolio allocation.
<a Sustainable Signals: Individual Investors" report from the Morgan Stanley Institute for Sustainable Investing. However, despite growing enthusiasm, the average portion of portfolios dedicated to sustainable investments has seen a modest decline over the past year.
A survey of 2,250 individual investors across Asia Pacific, Europe, and North America reveals that 92% are interested in sustainable investing, marking a four-percentage-point increase from 2025. Conversely, the average portfolio allocation to these investments dropped from 33% in 2025 to 31% in 2026, highlighting a slight gap between investor sentiment and actual allocation trends.
“Our latest Sustainable Signals survey shows that performance continues to be the top driver of individual investors’ interest in sustainable investing as they look to achieve both market-rate returns and real-world impacts,” said Jessica Alsford, Chief Sustainability Officer and Chair of the Institute for Sustainable Investing at Morgan Stanley. “Looking ahead, a majority of individual investors see greater opportunity for sustainable investments in private markets, especially for portfolio diversification and investing in innovation.”
Expectations about returns remain the key driver of investment decisions
Financial performance remains a core factor influencing both the interest in and the allocation toward sustainable investments, consistent with previous years. More than 80% of those surveyed state that returns are a primary driver of their interest, whether they are seeking market-rate returns alongside real-world outcomes or believe that sustainable assets can provide competitive performance.
These expectations continue to dictate portfolio strategies. Nearly 64% of investors intend to boost their sustainable investment allocations over the coming year, primarily citing confidence in financial performance. Another 28% plan to maintain their current levels, often for the sake of diversification, while only 5% intend to reduce their exposure, most commonly due to underwhelming returns.
These results indicate that while many investors see sustainability as a way to complement their financial goals, performance confidence remains a critical requirement.
Investors pursue diverse sustainability themes, with greenwashing a top concern
The survey also indicates that investors are exploring a wide range of sustainability themes. One-quarter of respondents prioritize a mix of social and environmental goals, while health and wellness and financial inclusion are each favored by 15%. Across all regions, every one of the seven sustainability themes covered in the survey ranks as a top-two priority for at least 20% of investors.
Simultaneously, obstacles to sustainable investing have become more prominent. Greenwashing remains the most cited concern, with nearly one-third of investors labeling it a significant issue. Beyond allocation and interest, more than 75% of investors note that the availability of sustainable options plays a role in their choice of financial advisor.
Private markets emerge as a growing area of opportunity
Private markets are playing an increasingly important role in how investors approach impact and sustainable investing. Nearly 75% of respondents report that they either currently invest in private markets or intend to do so, and 64% believe private assets offer more opportunity for sustainable or impact-oriented investments than public markets.
Investors who already hold the highest levels of sustainable investments are the most likely to participate in private markets, reflecting a desire for diversification, new technologies, and innovation alongside potential impact.
Read the “Sustainable Signals: Individual Investors 2026” Report
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Private Funds (which include hedge funds are private equity funds) often engage in speculative investment techniques and are only appropriate for long-term, qualified investors. Investors could lose all or a substantial amount of their investment. They are generally illiquid, not tax efficient, and have higher fees than many traditional investments.
