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Do Investors Care about Impact?

Author

Listed:
  • Florian Heeb
  • Julian F Kölbel
  • Falko Paetzold
  • Stefan Zeisberger

Abstract

We assess how investors’ willingness-to-pay (WTP) for sustainable investments responds to the social impact of those investments, using a framed field experiment. While investors have a substantial WTP for sustainable investments, they do not pay significantly more for more impact. This also holds for dedicated impact investors. When investors compare several sustainable investments, their WTP responds to relative, but not to absolute, levels of impact. Regardless of investments’ impact, investors experience positive emotions when choosing sustainable investments. Our findings suggest that the WTP for sustainable investments is primarily driven by an emotional, rather than a calculative, valuation of impact.

Suggested Citation

  • Florian Heeb & Julian F Kölbel & Falko Paetzold & Stefan Zeisberger, 2023. "Do Investors Care about Impact?," The Review of Financial Studies, Society for Financial Studies, vol. 36(5), pages 1737-1787.
    • Handle: RePEc:oup:rfinst:v:36:y:2023:i:5:p:1737-1787.
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    3. Emre Kuvvet, 2024. "Reassessing climate disclosure demands: An examination of stakeholder perspectives beyond institutional investors," Economic Affairs, Wiley Blackwell, vol. 44(1), pages 95-117, February.
    4. Seifert, Marcel & Spitzer, Florian & Haeckl, Simone & Gaudeul, Alexia & Kirchler, Erich & Palan, Stefan & Gangl, Katharina, 2024. "Can information provision and preference elicitation promote ESG investments? Evidence from a large, incentivized online experiment," Journal of Banking & Finance, Elsevier, vol. 161(C).
    5. Caramichael, John & Rapp, Andreas C., 2024. "The green corporate bond issuance premium," Journal of Banking & Finance, Elsevier, vol. 162(C).
    6. Fabrice Hervé & Sylvain Marsat, 2023. "Eco-anxiety, connectedness to nature, and green equity investments," Economics Bulletin, AccessEcon, vol. 43(3), pages 1485-1492.
    7. Benuzzi, Matteo & Klaser, Klaudijo & Bax, Karoline, 2024. "Which ESG+F dimension matters most to retail investors? An experimental study on financial decisions and future generations," Journal of Behavioral and Experimental Finance, Elsevier, vol. 41(C).
    8. Luz, Valentin & Schauer, Victor & Viehweger, Martin, 2024. "Beyond preferences: Beliefs in sustainable investing," Journal of Economic Behavior & Organization, Elsevier, vol. 220(C), pages 584-607.
    9. Montagnoli, Alberto & Taylor, Karl, 2024. "Who Cares about Investing Responsibly? Attitudes and Financial Decisions," IZA Discussion Papers 16952, Institute of Labor Economics (IZA).
    10. Annebeth Roor & Karen Maas, 2024. "Do impact investors live up to their promise? A systematic literature review on (im)proving investments' impacts," Business Strategy and the Environment, Wiley Blackwell, vol. 33(4), pages 3707-3732, May.
    11. Fabrice Hervé & Sylvain Marsat, 2023. "Eco-Anxiety, Connectedness to Nature & Green Equity Investments," Post-Print hal-04150758, HAL.
    12. Filippini, Massimo & Leippold, Markus & Wekhof, Tobias, 2024. "Sustainable finance literacy and the determinants of sustainable investing," Journal of Banking & Finance, Elsevier, vol. 163(C).
    13. Hongyu Xiang, 2024. "Commitment to the ESG investing and Individual Mutual Fund Investors’ Preference: Evidence from Stated Choice Experiments," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 14(2), pages 1-6.
    14. Scheitza, Lisa & Busch, Timo, 2024. "SFDR Article 9: Is it all about impact?," Finance Research Letters, Elsevier, vol. 62(PA).

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    More about this item

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • 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
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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