From Choices to Change: Household Finance and Sustainability

The growing awareness of the need for an energy transition has led to the development of new financial products aimed at promoting sustainability, with a focus on Socially Responsible Investments (SRI). Research on household savings and their allocation into SRI has increased since the 2000s, exploring motivations, return comparisons, and socio-demographic profiles. The rise of ESG (Environmental, Social, Governance) investing, particularly after the 2015 Paris Agreement, has expanded asset options, including Green Bonds and Sustainable Bonds. Households are increasingly aware of sustainability, but preferences vary between direct (stocks, bonds) and indirect (funds) investments. The study uses survey and experimental data to examine household preferences, willingness to pay for sustainability, and the effectiveness of nudges in promoting green investments. Results show growing ownership of ESG assets and a preference for environmental over social or governance aspects, with mutual funds being more attractive than individual assets. Households are willing to accept slightly lower returns for investments focusing on environmental or ESG issues.