Willingness to take risks for sustainability during the COVID-19 pandemic

Abstract

This paper empirically shows an increase in investor attention to sustainability during the COVID-19 pandemic using various measures of investor sentiment. To understand the drivers of increased interest in sustainability among investors, we use evidence from two experiments conducted before and during the pandemic. Results collected in an investment task reveal that the shift towards sustainable investments during the pandemic is primarily driven by risk-averse individuals and those with pessimistic risk expectations. These findings suggest that investors exhibit a “willingness to take risks” for sustainability during times of crises.