Other Work · 2023
Does Reframing Fund Carbon Emissions to Increase Their Personal Relevance Boost Investment in Sustainable Funds?
Joe J. Gladstone, Jamie Reynolds & Jose Ramos
Journal of the Association for Consumer Research, 2023
In brief
Can the way a fund's carbon footprint is presented change where people invest? In a discrete-choice experiment with retail investors, we compared visual and numeric carbon labels with everyday analogies (the emissions of cooking, commuting, or streaming). Clearer, more comparable labels moved investment towards greener funds; the results speak directly to how regulators and platforms should present environmental information.
Abstract
The market for green investments can be expanded by providing investors with clear information about the environmental impact of their investment options. Using a discrete choice conjoint experimental design with retail investors (, ), we investigate the impact of presenting environmental information in different formats on investment decisions. Drawing on psychological theories of attention and information processing, we test whether reframing the presentation of a fund’s carbon emissions to make them more personally relevant and easier to evaluate leads to increased investment in more sustainable funds. We compare the effectiveness of visual and numeric carbon labels, designed to improve the clarity and comparability of emissions, with analogies equating fund emissions to everyday activities such as cooking, commuting, and watching Netflix, which aim to increase the personal relevance of emissions. We find that, contrary to our predictions, carbon emission labels outperformed analogies in increasing green investment choices.
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