Climate Transition Beliefs

Marco Ceccarelli and Stefano Ramelli
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Marco Ceccarelli: VU University Amsterdam
Stefano Ramelli: University of St. Gallen - School of Finance; Swiss Finance Institute

No 24-22, Swiss Finance Institute Research Paper Series from Swiss Finance Institute

Abstract: We study expectations about the energy transition (climate transition beliefs) as drivers of “green” investment decisions and financial performance expectations. In a preregistered survey of U.S. retail investors (N=1,007), we document considerable heterogeneity in climate transition beliefs at different horizons. More optimistic climate transition beliefs are associated with higher green expected financial performance and investments, especially for investors without strong pro-environmental preferences. A pre-registered information provision experiment (N=3,003) provides causal evidence of the role of climate transition optimism in investment behavior. By influencing the availability of capital for green projects, the prevailing narratives and beliefs around the energy transition can have important self fulfilling properties.

Keywords: Behavioral Finance; Climate Change; ESG; Expected returns; Heterogeneous beliefs; Information provision experiment; Survey; Sustainable finance. (search for similar items in EconPapers)
JEL-codes: D14 G18 H42 P16 (search for similar items in EconPapers)
Pages: 97 pages
Date: 2024-03
New Economics Papers: this item is included in nep-ene, nep-env, nep-exp, nep-ppm and nep-res
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Persistent link: https://EconPapers.repec.org/RePEc:chf:rpseri:rp2422

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