How to elicit preferences for sustainable investments?

Recently, the EU delivered an action plan on financing sustainable growth in which “Sustainable Finance” is a key policy pillar. Several of the actions are directly related to the duties of institutional investors. Institutional investors need to integrate the preferences of their participants for sustainable investments into contractual arrangements. The action plan further explicitly demands policies on incorporating sustainability in investment advice. How can institutional investors, such as pension providers, identify their clients’ preferences for sustainable investments? This is challenging for two reasons. First, an elicitation method has to overcome demand or social desirability effects. Second, preferences for sustainable investments depend on how much it impacts financial returns in expectation.

In our project, we will develop and validate scientific methods to elicit preferences and beliefs for sustainable investments and apply them to different financial institutions in various European countries. We will measure and analyze investors’ preferences and beliefs in a passive as well as active choice environment by investigating delegated investments and direct individual investments. Further, we will explore the role of personal experiences and biased memory of those in both contexts. Finally, we will validate our results across types of institutional setups and countries. Our project will have academic, practical, and policy contributions by providing empirical evidence for when and why investors’ sustainability preferences and beliefs impact investment behavior. Moreover, we will develop a valid elicitation method of sustainability preferences, which can inform future research, pension practitioners, and policy makers.

Read all project publications here.


Pension funds are under social and political pressure to make their investment policies more sustainable. Furthermore, European legislation will increasingly require pension funds to explicitly measure participants’ preferences for sustainability in their investment policies. However, do pension fund participants prefer sustainable investments and do they want a say in how the fund does that? We assessed this by conducting two field experiments in which a Dutch pension fund gave its participants a real voice in its policy to advance sustainable investment.

Read the paper about the experiments and results here.

For this project, €180,000 PPS surcharge is being used.

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