M Global Foundation2024 Global Sustainability Outlook8 Key Questions on the Journey to Maturity We focus on 8 key questions as we explore what's next for Sustainability investing. We see under-appreciated approaches to Sustainability investing that we believe can drive both alpha generation and progress in achieving a range of Sustainability goals. M Morgan Stanley & Co. LLCStephen C ByrdEquity Analyst Stephen.Byrd@morganstanley.com +1 212 761-3865 Brenda DuverceEquity Strategist Brenda.Duverce@morganstanley.com +1 212 761-4772 Laura SanchezEquity Analyst Laura.Sanchez@morganstanley.com Morgan Stanley & Co. International plc+Michael P CanfieldEquity Strategist Mike.Canfield@morganstanley.com +44 20 7425-1188 Morgan Stanley Asia Limited+Tim Chan, CFAEquity Strategist Tim.Chan@morganstanley.com +852 3963-4568 Morgan Stanley Australia Limited+Rob KohEquity Analyst Rob.Koh@morganstanley.com +61 3 9256-8932 Morgan Stanley & Co. LLCCarolyn L CampbellStrategist Carolyn.Campbell@morganstanley.com +1 212 761-3748 Morgan Stanley & Co. International plc+Rachel Fletcher, Ph.D.Equity Strategist Rachel.Fletcher@morganstanley.com +44 20 7677-4089 Morgan Stanley Asia Limited+Ehsernta FuEquity Strategist Ehsernta.Fu@morganstanley.com +852 3963-3711 Morgan Stanley & Co. International plc+Arushi AgarwalResearch Associate Arushi.Agarwal1@morganstanley.com +44 20 7677-3944 Morgan Stanley & Co. LLCJamil OhayiaResearch Associate Jamil.Ohayia@morganstanley.com +1 212 761-4776 The resilience and evolution of sustainability. The "survival of the fittest" applies not only to biology but to the investment process. Companies that cannot evolve or innovate frequently lose market share to those that can, and we should not be surprised to see this principle in the world of Sustainability investing. We believe evolution in Sustainability investing in 2024 and beyond will center on prioritizing investments that drive alpha while meeting Sustainability goals. We continue to see an expansion of integration of ESG criteria into investors' decision-making process, and not surprisingly, we are seeing a wide range of approaches to the integration process. We believe 2024 will be an unusually complex year to navigate for Sustainability investing, given new rules and regulations, increasing physical damage from climate change, a likely rapid acceleration in the development of GenAI and the adoption of this technology across many sectors, a perhaps unavoidably chaotic energy transition, heightened geopolitical concerns/questions, and an increasing focus on "moving beyond the E in ESG" to consider other important investment criteria. As we think about where key risks and opportunities lie for the year, we highlight 8 key questions we believe will matter to the sustainability investment community as we take to capitalize on the continued evolution of Sustainability investing: 1. Is the energy transition investable globally? The favorable...
