Sustainable Finance Literacy and the Determinants of Sustainable Investing

by Massimo Filippini, Markus Leippold, Tobias Wekhof; CeRP WP 210/22Abstract. This paper introduces the concept of sustainable finance literacy. We survey a large sample of Swiss households and measure financial, sustainability, and sustainable finance
literacy using two complementary approaches. First, we use traditional multiple-choice questions, and second, a novel approach based on open-ended questions that ask respondents
to write a text response. We find that Swiss households, which are generally highly financially literate by international standards, exhibit low levels of sustainable financial
literacy. Interestingly, multiple-choice questions lead to a gender gap, with women performing worse than men. However, this difference disappears when open-ended questions
are used. Moreover, despite its low level, knowledge about sustainable finance turns out to be a highly significant factor for the ownership of sustainable products. Therefore,
our results show that there is an urgent need to create transparent regulatory standards and to strengthen information campaigns about sustainable financial products.

Published: March 2022