Abstract
This paper sets the stage for research on sustainable investment (SI) related to psychological well-being (PWB). It recognizes the threat of current global consumption levels to exceed the planetary boundaries and asks what roles financial markets may play in reducing these threats without compromising PWB. SI integrates environmental (E), social (S), and governance (G) factors alongside financial factors in investments in company shares and bonds as well as through active engagement in companies. Barriers to ESG integration include lower short-term financial performance, higher financial risks, and insufficient ESG screening by investors. A brief review of PWB shows that reliable and valid measurement methods have been developed, that the resulting measures complement economic and social national welfare indicators, and that health, sufficient material welfare, income equality, and non-material consumption are important determinants of PWB. The challenge is to globally reduce private material consumption levels in affluent countries. It is suggested that one role SI may play is in investing or actively engaging in companies that efficiently meet an increasing consumer demand of non-material consumption. Future research should address this role of SI.
Highlights
It recognizes the threat of current global consumption levels to exceed the planetary boundaries and asks what roles financial markets may play in reducing these threats without compromising psychological well-being (PWB)
We show how PWB is related to health, material wealth, and consumption, all depending on financial outcomes
We suggest that sustainable investment (SI) needs selection criteria for deciding in which companies to invest or actively engage in order to reduce unsustainable consumption levels without losses in citizens’ PWB
Summary
Publisher’s Note: MDPI stays neutral with regard to jurisdictional claims in published maps and institutional affiliations. In this paper, focusing on sustainable investment (SI) and psychological well-being (PWB), we analyze what future consequences financial investment may have for a sustainable reduction in consumption levels without placing at risk citizens’ long-term PWB. Two recent reviews of SI research [15,16] suggested that non-financial returns ( equated with integration of ESG factors) have not been an important focus for investors, there are exceptions. One motivation for some investors is that alternative investments to SI run high future risks if current production and consumption patterns continue to exert pressures on the planetary boundaries [11]. Another motivation is a long-term investment horizon. The question is raised of how SI can reduce consumption levels without threatening but increasing PWB
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