Value matters or values matter? An analysis of heterogeneity in preferences for sustainable investments

Abstract

Pension fund investments have a substantial influence on sustainability. We analyze preferences for sustainable investment among a representative cross-section of 2486 pension fund participants in the Netherlands, through a questionnaire survey fielded in the LISS panel. In contrast to standard investment theory, we find that sustainable investments are commonly favored, even if they harm financial interests. To explain variation among participants' preferences for sustainable investments, we test socio-demographic factors suggested by dominant neoclassical investment and behavioral finance theories. Moreover, we add to the existing literature by developing an alternative cultural-theoretical explanation that stresses the role of value orientations. We estimate linear and generalized ordered logit regression models, and find little support for neoclassical and behavioral finance theories, but substantial support for the importance of value orientations. Given established patterns of value-change, this finding suggests that a further increase in the demand for sustainable investments across developed economies is a likely scenario.

Who cares about sustainable investments?

“…The existence of dependants, related to the size of the family unit, was not statistically significant in Delsen and Lehr (2019) with regard to investors in pension funds in the Netherlands, and in Méndez-Rodríguez et al (2015), in relation to Spanish and Australian investors. However, Wins and Zwergel (2016) report a positive association between the existence of dependants and the probability that an individual will invest in socially responsible funds, whereas Rossi et al (2016) conclude that interest in financial products with SRI characteristics decreases if there are children in the household.…”

“…The literature documents more homogeneous results for education. Chamorro-Mera and Palacios-González (2019), Delsen and Lehr (2019), Rossi et al (2019), Riedl and Smeets (2017), Wins andZwergel (2016), Pérez-Gladish et al (2012), Cheah et al (2011), Junkus and Berry (2010), Nilsson (2008), Haigh (2007), Getzner and Grabner-Kräuter (2004), Tippet (2001) and Woodward (2000) found a positive association between level of education, namely university education, and holding (or willingness to hold) SRIs, while Méndez-Rodríguez et al (2015) found the same association for Australia but not for Spain, and Williams (2007) and McLachan and Gardner (2004) did not find a statistically significant relationship between these variables.…”

“…Although the question only elicits a rough assessment of preference for sustainability, reference to similar methodologies already exists in the literature. See, for example, Delsen and Lehr (2019), who use the question "Do you agree with the following statement: My pension fund should do responsible investment, even if this will require me to pay a higher pension premium or receive a lower pension".…”

“…Many studies conclude that women are more interested than men in SRI investments (Delsen and Lehr, 2019;Dorfleitner and Nguyen, 2016;Rossi et al, 2016;Wins and Zwergel, 2016;Hood et al, 2014;Junkus and Berry, 2010;Nilsson, 2008;Clark-Murphy andSoutar, 2004 andTippet, 2001, for example). However, Haigh (2007) reaches the opposite conclusion, while Chamorro-Mera and Palacios-González (2019), Riedl and Smeets (2017), Williams (2007) and McLachlan and Gardner (2004) do not discover any gender differentiation.…”

“…However, Rossi et al (2016) conclude that "working status" does not influence the financial decisions of individuals regarding SRI investment. Delsen and Lehr (2019), in turn, state that "self-employed persons" and "housekeepers" are more likely to favour sustainability.…”