Attitudes towards socially and environmentally responsible investment

• Published in: Journal of behavioral and experimental finance 2014-03, Vol.1, p.27-44
• Main Authors: Borgers, Arian C.T., Pownall, Rachel A.J.
• Format: Article
• Language: English
• ISSN: 2214-6350; 2214-6350
• DOI: 10.1016/j.jbef.2014.01.005

Institutional investors invest billions of dollars on behalf of investors whilst knowing little about investors’ social preferences. Using survey data from a customized wave of the Dutch CentERdata panel for citizens who are obliged to participate in a pension plan, we find significant variation in attitudes towards proposed social investment screens. Although individuals are able to express their attitudes towards social investment criteria they have difficulties making financial decisions while simultaneously taking their non-financial preferences into account. This is partially driven by the low financial sophistication of households. To emphasize the importance of these findings we show that the majority of beneficiaries derive positive utility from environmental and social pension investment screens and that expressing a positive attitude towards screened pension investments is the most important driver of this effect.