Financial Return and Environmental Impact Information Promotes ESG Investments: Evidence from a Large, Incentivized Online Experiment

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Sustainable investments are characterized by considerations about financial returns as well as environmental impact. We investigate how information on both aspects alone and in combination impacts the decision to invest sustainably. Moreover, we test whether letting investors express their sustainability preferences in a more detailed way affects their investment decisions. We run an incentivized online experiment with experienced retail investors and a representative sample of the Austrian population (N = 2,254 in total). We find that information on financial returns and information on environmental impact both stimulate sustainable investments. However, presenting the two types of information in combination yields no greater effect than presenting one of them alone. Furthermore, we find no evidence that investment decisions are affected by whether sustainability preferences are elicited generally or in a more detailed format. Results also show that sustainable investments are positively correlated with investors’ biospheric values and their financial literacy.