The symbolic value of different investment strategies

If we are to meet the challenges posed by climate change, the researchers in this project believe that it will not suffice merely to improve our travel habits and recycle more plastics. Action on climate must also involve our decisions on pension saving and financial investments.

The aim of the project is to gain a greater understanding of the symbolic value of investments, and use this knowledge to introduce socially-based interventions so that people’s financial decisions better reflect their relatively environmentally friendly attitudes. The researchers believe that interventions that reflect people’s explicit moral values as well as their implicit social and signaling-related motives offer greater potential than those that merely focus on one or other of these factors.

Led by Arvid Erlandsson, the research team will be addressing the question from an interdisciplinary social–cognitive viewpoint by examining the symbolism of three green investment strategies and five motives for investing sustainably.

The investment strategies are: (A) Exclusion, i.e. avoiding investing in the least environmentally friendly companies; (B) Inclusion: investing a portion of the money in exceptionally green companies; and (C) Donation: donating a portion of the profit to charitable/not-for-profit organizations working for a greener world. 

Motives that can drive investment decisions can be divided into three explicit motives: (1) Maximization of profit, i.e. making as much money as possible; (2) Environmental efficiency - a desire to make the maximum possible difference for the climate; and (3) Moral identity - a desire to behave in line with moral principles; as well as two social motives that are often unconscious: (4) Conformity - doing what others do; and (5) Esteem - doing what seems to be most admired and attractive in the eyes of others.

A central hypothesis is that the exclusion strategy in combination with the moral identity motive has the highest symbolic value, even though the actual impact of this strategy on climate is negligible.

The researchers will be using quantitative studies, questionnaires and controlled experiments of various kinds – online and in the lab – to examine the symbolic value of different green investment strategies from three persepectives: (1) An impression formation perspective - how do we perceive other people’s green investments? (2) A held beliefs perspective - what beliefs do normal people and professional investors have about different green investments? (3) An intervention perspective- what types of social influence strategies are effective in increasing the number of individuals choosing green investments, and in increasing the proportion using more effective investment strategies?

The researchers will also be measuring participants’ political ideology, cognitive ability and demographic background information, and ascertaining whether different interventions influence certain groups of people to a greater or lesser extent.

“The symbolism of climate-friendly financial decisions: Impression formation, impression management and lay-beliefs about three strategies when investing green”

Principal investigator
Arvid Erlandsson, Associate Professor

University of Gothenburg
Joakim Sandberg

Linköping University

SEK 4.5 million