Influences for using sustainability information in the investment decision-making of non-professional investors

Andrea Hafenstein and Alexander Bassen

Journal of Sustainable Finance & Investment, 2016, vol. 6, issue 3, 186-210

Abstract: Non-professional investors face a series of complex decisions when considering environmental, social and governance (ESG) issues for their investment activities. As such, this study sheds light on the question: what influences the use of sustainable information and the decision to invest in a sustainable company by non-professional investors? In order to answer the question, this article builds on the behavioral finance and information overload literature. We used an online survey carried out in Germany and applied a structural equation model. The results show that the personal orientation toward sustainability issues is the most important factor in deciding to use a company’s sustainability information. Furthermore, the study reveals that the decision to invest in a sustainable company is influenced by the personal sustainability orientation, identification induced by a good feeling, their willingness to waive returns for sustainability, their exposure to sustainability information, the investor’s age and information overload. The results show that non-professional investors do not distinguish between the different aspects of sustainability, that is, ESG. The study contributes to research which explores decision-making of non-professional investors, specifically their perception of sustainability information. It identifies factors influencing the use of sustainability information and the decision to invest in sustainable companies.

Date: 2016
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DOI: 10.1080/20430795.2016.1203598

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