Researchers at Audencia, the Auckland University of Technology, and the University of Adelaide have found a correlation between investors' feelings and sustainable assets. According to the new study, investors are more likely to buy ESG and sustainable funds when they feel pessimistic or depressed.
A professor at Audencia attributes the correlation to greater risk aversion, pushing investors to favor sustainable investments that they perceive as less risky. The researchers examined two competing theories concerning the role an investor's mood plays in investment decision-making. First, the researchers tested how depression leads to more caution. Secondly, they examined how a positive attitude promotes greater altruism. Their findings show that when there is an increase in seasonal depression, capital inflows into high-sustainability funds tend to rise.
Sustainable funds and products have increased in popularity in the last few years as more of the world focuses on the global climate crisis and renewable energy. According to Bloomberg Intelligence, ESG assets are expected to reach $41 trillion this year alone and surge to $60 trillion by 2024.
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