Sustainable Signals 2025 Report Reveals How Corporations Are Turning Sustainability into Strategy

Key Takeaways

• Sustainability is Business Strategy: 88% of corporations see sustainability as a value creation opportunity, not just a risk management tool.
• Returns Are Real: 83% say they can measure ROI on sustainability investments just like any other business spend.
• Climate Impacts Are Escalating: Over half of companies report disruptions from extreme weather in the past year, with expectations of more to come.
• Cost Remains the Top Barrier: High investment needs continue to be the biggest challenge, despite growing confidence in long-term value.
• Regional Gaps Are Widening: North America, Europe, and APAC differ sharply in how they approach regulation, accountability, and readiness.

Deep Dive

Sustainability has officially entered the core business agenda. For many corporations, it’s directly tied to profitability, investment decisions, and long-term risk management, no longer a side initiative or a reputational hedge. That shift comes through clearly in Morgan Stanley’s latest Sustainable Signals: Corporates 2025 report, where 88% of surveyed companies said they view sustainability as a value creation opportunity. The report, based on responses from over 330 decision-makers worldwide, shows that sustainability is maturing, but so are the risks and the complexities.

The optimism is tangible. Sixty-five percent of companies say they’re meeting or exceeding expectations on their sustainability strategy, up from 59% last year. And most aren’t flying blind. In fact, 83% say they can measure the return on sustainability investments in the same way they do for other capital allocations. Whether it’s capital spending on new technology or operational investments aimed at reducing climate exposure, companies are increasingly treating sustainability as part of the business engine, not just a corporate responsibility function.

But for all the progress, cost remains the constant headwind. Investment needs topped the list of barriers once again, with nearly a quarter of companies citing them as a major challenge. Political uncertainty, shifting regulatory expectations, and internal capability gaps, particularly in Asia-Pacific, further complicate delivery. And while the narrative has moved beyond risk avoidance, the risk itself is becoming harder to ignore. More than half of companies say climate-related events, such as heatwaves, storms, floods, disrupted their operations in the past year. That figure climbs to 73% in APAC. Transition risks, such as regulatory changes and investor pressure, are expected to weigh just as heavily over the next five years.

Still, most companies feel relatively prepared. Around 80% say they’re ready (or getting ready) to increase their resilience, whether that means upgrading infrastructure, adapting supply chains, or building climate-related financial risk models. There’s also strong conviction in the potential upside, which is one in four companies say sustainability could drive profitability, with others pointing to revenue growth, reduced capital intensity, or a lower cost of capital as likely benefits.

The report also draws out some sharp regional contrasts. North American firms are more likely to flag political volatility and strategy execution as obstacles, even as more of them embrace sustainability as a strategic driver. In Europe, regulatory costs continue to dominate concerns, while confidence in data and delivery appears to be improving. Companies in APAC are more focused on internal challenges, like accountability and data gaps. Meanwhile, new additions to the survey (firms in MENA and Latin America) show strong optimism. MENA leads all regions in viewing sustainability as a value opportunity, though it also reports the highest incidence of climate-related business impacts.

Across industries, the story is more nuanced. Sectors like Utilities and Consumer Staples are increasingly seeing sustainability as a path to growth. In Real Estate and Consumer Discretionary, the shift has been even more pronounced. But in others, like Industrials and Energy, the emphasis still leans toward risk management and regulatory navigation.

What’s clear from this year’s data is that corporations are growing more sophisticated in how they approach sustainability. They're tracking ROI, refining strategies, and preparing for disruption. But the gap between intention and execution is still wide in many places. Whether companies can stay on course amid rising costs, tougher regulations, and worsening climate volatility will define whether the momentum seen in this report translates into lasting progress, or stalls out under pressure.

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