Sustainable finance literacy and the determinants of sustainable investing

Abstract

In this paper, we survey a large sample of Swiss households to measure sustainable finance literacy, which we define as the knowledge and skill of identifying and assessing financial products according to their reported sustainability-related characteristics. To this end, we use multiple-choice questions. Furthermore, we measure Swiss private investors' level of awareness about sustainable financial products using open-ended questions. We find that Swiss households, which are generally highly financially literate by international standards, exhibit low levels of sustainable financial literacy compared to the current working definitions of sustainable finance. Moreover, despite its low level, knowledge about sustainable finance is a significant factor in the reported ownership of sustainable products. The empirical results also show a relatively low level of awareness. Generally, these empirical findings suggest a need to create transparent regulatory standards and strengthen information campaigns about sustainable financial products.