I feel and I invest: Social emotions and sustainable investing in Germany and Japan

Abstract

This research focuses on the increasing but unexplored role of individual investors in sustained sustainable investment. Sustainable investment with pecuniary motives tends to be fractured by economic downturns. Drawing on research on social emotions shaping decision-making, this study explores how non-pecuniary motives and emotions-empathy and self-esteem-affect the attention to sustainability ratings by individual investors. We administered the original survey-embedded experiments to nationals of two countries in the Global North, Germany, and Japan. We found that evoking empathy can lead experienced Japanese investors to focus on sustainability ratings while German investors are unaffected. On the other hand, self-esteem stimuli are effective for German potential investors who have expressed an interest in investing but not for Japanese investors. These results underline the potential of emotional stimuli in promoting sustainable investment and highlight the importance of tailoring such stimuli to different cultural contexts and groups of people.