Investor Behaviour in Sustainability: Three Essays on Sustainable Finance

Achieving the low-carbon transition and the broader sustainable development goals requires a large amount of investment. Investors are decision-makers who play an important role in determining the direction and level of capital flows and are therefore key to mobilising the investment needed for the low-carbon transition and sustainable development. For instance, investors can predominately decide on whether their investment capital is used to achieve low-carbon and sustainable development goals or whether it is invested in coal-fired power plants or companies with sub-optimal Environmental, Social and Governance practices. The three essays in this cumulative dissertation focus on investor behaviour towards sustainability in the energy market and the retail investment market. Together, they provide a timely examination of investor behaviour towards sustainable investments and contribute to the latest debates and challenges in sustainable finance. The collected essays examine investment behaviour and decisions in a controlled environment with climate policy or information interventions. Chapter 2 contains the paper entitled Regulated Correlations - Climate Policy and Investment Risks, co-authored with Dr. Oliver Schenker. We examine the mechanisms of climate policy instruments that shape the regulated covariance structure between electricity generation assets and thus affect the investment decisions of risk-averse investors. Chapter 3 encloses the essay entitled Does an Ecolabel Suffice on its Own? Evidence from a Discrete Choice Experiment on Investor Preferences and the Effect of Informational Messages and Visual Framing, co-authored with Dr. Marco Nilgen. We examine how specific information content influences potential retail investors' preferences for funds with a standardised EU ecolabel. Chapter 4 contains my single-author essay entitled A Tale of Financial Advice with Sustainability Preferences and Fees: Do Retail Investors Take the Advice? This is a study on how financial advice incongruent with retail investors’ sustainability preferences affects their investment decisions.