When surveyed about 2/3 of citizens say they want to invest sustainably, and 40-50% say they want to have a measurable impact in the real economy through their investments and savings, climate mitigation being one of the top priorities.
The first behavioural finance field experiments conducted by the University of Maastricht suggest that end-users walk the talk when they have the possibility to do so. However, another experiment conducted by the University of Zurich suggests that individuals optimize the warm glow associated with their investment decisions rather than their actual impact as investors.
Many other barriers appear when individuals have to combine financial objectives (returns, risk, etc.) with environmental objectives:
As a result, "individual impact investors" constitute a 'silenced' majority. In Europe, preliminary evidence suggests that at least 75 million people might be currently invested in financial products that are considered ‘unsuitable’ by the existing regulation.
Addressing this problem will require progress on impact measurement, behavioural finance, fintech innovation and further changes in regulatory framework.
Chapter in "Making the Financial System Sustainable"
(Cambridge University Press, 2020, edited by Paul Fischer)
Collective book from the members of the EU High Level Expert Group on Sustainable Finance. Stan Dupre's chapter focus on the integration of sustainability into financial advice and the related reform of MIFID/IDD.
Behavioural finance experiment - Bauer et al (2018)
Investors tend to optimize the warm glow - Heeb et al (2021)
Reviewing the mechanisms of investor impact - Köelbel et al (2020)
Why sustainable products do not match consumers' preferences
About the draft EU Ecolabel criteria (v2)
Paths for integrating sustainability into the suitability questionnaire
About the draft EU Ecolabel criteria (v1)
What's does diversification means in a transition scenario?
Technical feedback on the regulatory framework
Presentation of the analysis of 280 funds by Better Finance, the European Federation of individual investors and pension funds beneficiaries.
Presentation of the results of the experiment conducted by the University of Maastricht (paper Get Real! Individuals prefer more sustainable investments - 2018)
Presentation of the EU action plan and regulatory package related to consumers by WWF European Policy Office
Presentation by the European Commission