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

Author

Listed:
  • Auzepy, Alix
  • Bannier, Christina E.
  • Gärtner, Florian

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.

Suggested Citation

  • Auzepy, Alix & Bannier, Christina E. & Gärtner, Florian, 2024. "Looking beyond ESG preferences: The role of sustainable finance literacy in sustainable investing," CFS Working Paper Series 719, Center for Financial Studies (CFS).
    • Handle: RePEc:zbw:cfswop:289626
    DOI: 10.2139/ssrn.4773211
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    More about this item

    Keywords

    Sustainable finance literacy; sustainable investments; behavioral finance; SFDR; MIFID;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G53 - Financial Economics - - Household Finance - - - Financial Literacy

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