Looking beyond ESG preferences: The role of sustainable finance literacy in sustainable investing

Center for Financial Studies Working Paper No. 719, 2024

99 Pages Posted: 16 Apr 2024

See all articles by Alix Auzepy

Alix Auzepy

University of Giessen

Christina E. Bannier

Justus-Liebig-University Giessen

Florian Gärtner

Justus-Liebig-Universität Gießen

Date Written: March 26, 2024

Abstract

We assess how sustainable finance literacy affects people’s sustainable investment behavior, using a pre-registered experiment. We find that an increase in sustainable finance literacy leads to a 4 to 5% increase in the probability of investing sustainably. This effect is moderated by sustainability preferences. In the absence of moderate sustainability preferences, any additional increase in sustainable finance literacy is at minimum irrelevant, and we find some evidence that it might even reduce sustainable investments. Our findings underscore the role of knowledge in shaping sustainable investment decisions, highlighting the importance of factors beyond sustainability preferences.

Keywords: Sustainable finance literacy, sustainable investments, behavioral finance, SFDR, MIFID

JEL Classification: G11, G18, G53

Suggested Citation

Auzepy, Alix and Bannier, Christina E. and Gärtner, Florian, Looking beyond ESG preferences: The role of sustainable finance literacy in sustainable investing (March 26, 2024). Center for Financial Studies Working Paper No. 719, 2024, Available at SSRN: https://ssrn.com/abstract=4773211 or http://dx.doi.org/10.2139/ssrn.4773211

Alix Auzepy

University of Giessen ( email )

Licher Str. 64
Giessen, 35394
Germany

Christina E. Bannier (Contact Author)

Justus-Liebig-University Giessen ( email )

Licher Str. 62
Gießen, 35394
Germany
+49 641 99 22551 (Phone)

Florian Gärtner

Justus-Liebig-Universität Gießen ( email )

Licher Str. 62
Gießen, 35394
Germany

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