The Political Economy of Green Investing: Insights from the 2024 U.S. Election

Marco Ceccarelli, Stefano Ramelli, Anna Vasileva and Alexander F. Wagner
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Marco Ceccarelli: VU University Amsterdam
Stefano Ramelli: University of St. Gallen - School of Finance; Swiss Finance Institute
Anna Vasileva: University of Zurich - Department of Finance
Alexander F. Wagner: University of Zurich - Department of Finance; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI); Swiss Finance Institute

No 25-36, Swiss Finance Institute Research Paper Series from Swiss Finance Institute

Abstract: Does the political context shape investors’ non-pecuniary demand for green assets? We provide evidence from incentivized surveys of U.S. investors before and after the 2024 U.S. presidential election. After Trump’s victory, investors reduced green investments on average. However, investors who strongly disapprove of his climate policy increased their green investment taste. These “contrarians” placed greater weight on non-pecuniary considerations and less on financial ones, suggesting they view green investing as a way to compensate for perceived climate inaction. Empirical analyses of real-world ETF flows align with this interpretation. The findings have implications for understanding and modeling green investment behavior.

Keywords: Beliefs; Climate change; Expected returns; Investments; Political economy; Surveys; Sustainable finance; Transition risk; Behavioral finance (search for similar items in EconPapers)
JEL-codes: D83 G11 G12 G41 G51 P18 (search for similar items in EconPapers)
Pages: 92 pages
Date: 2025-03
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Persistent link: https://EconPapers.repec.org/RePEc:chf:rpseri:rp2536

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