Sustainable investments: One for the money, two for the show

This paper examines the drivers of households’ sustainable investments. Analyzing a representative sample of Dutch households, we document the existence of two types of households: those that invest in sustainable financial products for social reasons (social sustainable investors) and those that do it for financial reasons (financial sustainable investors). The two groups are of equal importance but are characterized by different features. The social sustainable investors have higher social preferences, level of education and trust, and are more likely left-wing and less risk-loving. Reliable labelling, reducing greenwashing concerns, and emphasizing the low risk and the typical left-wing thematic linked to sustainable investments is positively related to sustainable investments by social sustainable investors, whereas hyping the benefit in terms of returns of sustainable investments through social media and word of mouth is positively associated with the investment decisions of financial sustainable investors. Lack of information is the most important barrier for not holding sustainable investments and thus not participating in the stock market.