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Beliefs About the Climate Impact of Green Investing

Author

Listed:
  • Florian Heeb

    (Leibniz Institute for Financial Research SAFE; Goethe University Frankfurt - Faculty of Economics and Business Administration; Massachusetts Institute of Technology (MIT) - Sloan School of Management)

  • Julian F Kölbel

    (University of St. Gallen - School of Finance; MIT Sloan; Swiss Finance Institute)

  • Camilla Weder

    (University of St. Gallen)

Abstract

This paper surveys beliefs about the climate impact of green investing among academic experts and retail investors. Using the views of academic experts as a benchmark, we show that retail investors have overly optimistic climate impact beliefs. While most academic experts do not believe that a typical green fund has a meaningful climate impact, the vast majority of retail investors do. The median retail investor expects a €10,000 green investment to offset 10% of an average person's carbon footprint. By contrast, the median estimate among academic experts is 2%, with 0% being the most common estimate. Impact beliefs influence investment decisions: When informed of academic experts' views, retail investors reduce their climate impact beliefs and willingness to pay for the green fund. Qualitative statements suggest that retail investors' optimistic beliefs are driven by a neglect of financial-market transmission mechanisms.

Suggested Citation

  • Florian Heeb & Julian F Kölbel & Camilla Weder, 2026. "Beliefs About the Climate Impact of Green Investing," Swiss Finance Institute Research Paper Series 26-01, Swiss Finance Institute.
    • Handle: RePEc:chf:rpseri:rp2601
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    File URL: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=5841424
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    Keywords

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    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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