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When green turns red: Is the perception of greenwashing a barrier to individual green investment?

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  • Gacem, Syrine
  • Hervé, Fabrice
  • Marsat, Sylvain

Abstract

Based on a survey of 2215 French investors, this study examines the impact of greenwashing perception on individual investment decisions. Our findings reveal that greenwashing perception is negatively related to green investing. Specifically, A one-point increase in greenwashing reduces investment likelihood by 1.68 percentage points. This perception discourages traditional investors from considering green funds and dissuades existing green investors from increasing their green investments. Moreover, consistent with negativity bias, low perceptions of greenwashing have no positive effect on green investments, while high perceptions negatively affect them by triggering negative emotions that heighten risk perception and deter green investment.

Suggested Citation

  • Gacem, Syrine & Hervé, Fabrice & Marsat, Sylvain, 2025. "When green turns red: Is the perception of greenwashing a barrier to individual green investment?," Finance Research Letters, Elsevier, vol. 82(C).
    • Handle: RePEc:eee:finlet:v:82:y:2025:i:c:s1544612325008645
    DOI: 10.1016/j.frl.2025.107605
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    Keywords

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    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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