22 October 2019 – This study, commissioned by the Investment Leaders Group (ILG), provides insight into how decision-making behavior is influenced by the availability of information on the environmental and social impact of funds alongside standard financial data.
While the financial performance of funds is readily accessible to the public, their social and environmental impact remains largely opaque, making it difficult for savers to discriminate good sustainability performance.
This innovative study: Walking the Talk: understanding consumer appetite for sustainable investing involved a virtual investment experiment (VIE) designed to simulate real investment choices to help understand the extent to which savers value sustainability. It was undertaken in collaboration with Cambridge academics from the University’s Psychometrics Centre and the Department of Psychology.
The study analysed the decision-making of individual savers by inviting them to choose between pairs of differently specified funds. In order to simulate real-world investment experiences, the fund information presented to participants followed a typical fact sheet format with one exception: the addition of sustainability information. The sustainability information was based on the Sustainable Investment Framework – a set of six open-source metrics which investors can use as proxies for their progress towards the SDGs, which was developed by CISL for the Investment Leaders Group.
The study fills a large research gap; all other such studies to date have been based on self-reported investment intentions, rather than indicating how people behave when they are investing their own money. In order to incentivise real investment behaviour, participants were informed that they had a chance of receiving a significant investment in one of the funds they selected.
The study demonstrates that public interest in sustainability does influence investment preferences when suitable information is provided.
The long-term vision of this work is to enable a shift in investment choice, wherein social and environmental impact is transparent to investment beneficiaries in the same way that it is apparent to food and energy consumers today.
Citing this study
Please refer to this study as: University of Cambridge Institute for Sustainability Leadership (2019). Walking the talk: Understanding consumer demand for sustainable investing. Cambridge, UK: University of Cambridge Institute for Sustainability Leadership.
Download the study here and access more research from the ILG.
