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What drives retail portfolio exposure to ESG factors?

Author

Listed:
  • D’Hondt, Catherine

    (Université catholique de Louvain, LIDAM/LFIN, Belgium)

  • Merli, Maxime
  • Roger, Tristan

Abstract

Using both survey and trading data from 9,286 retail investors for the 2005–2011 period, we highlight the impact of financial literacy and risk tolerance on retail stock portfolio exposure to environmental, social and corporate governance (ESG) factors. Our results also reveal that the three ESG factors are not homogeneous and should be considered separately. Lower exposure to ESG factors during the crisis period suggests that ESG investing is a luxury good for most investors.

Suggested Citation

  • D’Hondt, Catherine & Merli, Maxime & Roger, Tristan, 2021. "What drives retail portfolio exposure to ESG factors?," LIDAM Reprints LFIN 2021020, Université catholique de Louvain, Louvain Finance (LFIN).
    • Handle: RePEc:ajf:louvlr:2021020
    DOI: https://doi.org/10.1016/j.frl.2021.102470
    Note: In: Finance Research Letters, 2021, 102470
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    Cited by:

    1. Simona Galletta & Sebastiano Mazzù, 2023. "ESG controversies and bank risk taking," Business Strategy and the Environment, Wiley Blackwell, vol. 32(1), pages 274-288, January.
    2. Tang, Xiaobo & Yao, Xingyuan & Dai, Ruyi & Wang, Qian, 2024. "Does green matter for crowdfunding? International evidence," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 92(C).
    3. Pavel Ciaian & Andrej Cupak & Pirmin Fessler & d’Artis Kancs, 2022. "Environmental and Social Preferences and Investments in Crypto-Assets," JRC Research Reports JRC129919, Joint Research Centre.
    4. Bazrafshan, Ebrahim, 2023. "The role of ESG ranking in retail and institutional investors' attention and trading behavior," Finance Research Letters, Elsevier, vol. 58(PC).
    5. Beatrice Bertelli & Marianna Brunetti & Costanza Torricelli & Mariangela Zoli, 2025. "From Knowledge to Allocation of Sustainable Assets: Results From An In-Field Survey In Italy," CEIS Research Paper 612, Tor Vergata University, CEIS, revised 07 Oct 2025.
    6. Yao, Xingyuan, 2025. "The green premium in sustainable fintech: Cross-country evidence from crowdfunding," Finance Research Letters, Elsevier, vol. 77(C).
    7. Ann Susan Thomas & Ambili Jayachandran & Ajithakumari Vijayappan Nair Biju, 2024. "Strategic mapping of the environmental social governance landscape in finance – A bibliometric exploration through concepts and themes," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(5), pages 4428-4453, September.
    8. Jimnee Deka & Meghna Sharma & Nishant Agarwal & Kamesh Tiwari, 2023. "Linking ESG-Investing Consciousness, Behavioral Biases, and Risk-Perception: Scale Validation with Specifics of Indian Retail Investors," European Journal of Business Science and Technology, Mendel University in Brno, Faculty of Business and Economics, vol. 9(1), pages 70-91.
    9. Lanciano, Edoardo & Previati, Daniele & Ricci, Ornella & Santilli, Gianluca, 2025. "Financial literacy and sustainable finance decisions among Italian households," Journal of Economics and Business, Elsevier, vol. 134.
    10. Nektarios Gavrilakis & Christos Floros, 2023. "ESG performance, herding behavior and stock market returns: evidence from Europe," Operational Research, Springer, vol. 23(1), pages 1-21, March.
    11. Victoria Gevorkova & Ivan Sangiorgi & Julia Vogt, 2024. "Cleansing Investor’s Conscience: The Effects of Incidental Guilt on Socially Responsible Investment Decisions," Journal of Business Ethics, Springer, vol. 193(1), pages 89-114, August.
    12. Kumar Manaswi & Archana Singh & Vikas Gupta, 2023. "Building a Better Future with Sustainable Investments: Insights from Recent Research," Indian Journal of Human Development, , vol. 17(2), pages 320-343, August.
    13. King Fuei Lee, 2025. "Decoding ESG disclosure: unveiling the role of catering incentives," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 22(2), pages 504-519, June.
    14. Capelli, Paolo & Ielasi, Federica & Russo, Angeloantonio, 2023. "Integrating ESG risks into value-at-risk," Finance Research Letters, Elsevier, vol. 55(PA).
    15. Pavel Ciaian & Andrej Cupak & Pirmin Fessler & d'Artis Kancs, 2022. "Environmental-Social-Governance Preferences and the Holding of Crypto-Assets," EERI Research Paper Series EERI RP 2022/07, Economics and Econometrics Research Institute (EERI), Brussels.
    16. Christos Papademetriou & Konstantina Ragazou & Alexandros Garefalakis & Ioannis Passas, 2023. "Green Human Resource Management: Mapping the Research Trends for Sustainable and Agile Human Resources in SMEs," Sustainability, MDPI, vol. 15(7), pages 1-26, March.
    17. Assaf, Cynthia & Monne, Jérôme & Harriet, Loic, 2025. "Gender and ESG investing: Same behavior but different motivations," International Review of Financial Analysis, Elsevier, vol. 104(PA).
    18. Lee, King Fuei, 2023. "The Role of Catering Incentives in ESG Disclosure," MPRA Paper 120930, University Library of Munich, Germany.

    More about this item

    Keywords

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    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G40 - Financial Economics - - Behavioral Finance - - - General

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