Trust, gut feeling, and life cycle assessment: angel approaches to sustainability impact assessments

This study assesses business angels’ approaches to sustainability impact assessments through a principal–agent lens. Interviews with 20 angels shed light on different frameworks and tools, as well as the drivers, challenges, and temporal aspects underlying angels’ integration of sustainability impact assessments. While some angels implement systematic sustainability impact assessments throughout the entire investment process, others consciously decide against adopting such approaches and rely on their gut feeling. A third group acknowledges the need for more applicable tools but is hindered by data and resource limitations, as well as a lack of suitable methodologies. Based on extant literature and the empirical findings, a framework for angel sustainability impact assessment is presented. These findings further support the importance of sustainability knowledge for investors. Principal–agent theory is modified to account for context- and time-specificities. Recommendations for future research and practice are made as well as contributions to the green entrepreneurial finance literature.