Introduction

This research examines the potential for green investing to reduce political support for climate regulation. It addresses concerns that sustainable finance products might crowd out political engagement for government interventions targeting negative externalities, like climate change. The study, conducted in Switzerland, focuses on the 2023 referendum regarding a national climate law aimed at reducing greenhouse gas emissions by 2050. A pre-registered experiment involving 2,051 participants provides the basis for the analysis.

Experimental design

The experiment was structured to investigate whether offering individuals the option to invest in a climate-conscious fund affected their support for climate policy. Participants were divided into two groups: a treatment group, provided with information about a climate fund, and a control group, who were only given standard financial details. Both groups were then asked to make an investment decision, followed by an opportunity to support or oppose the upcoming climate law through donations. The final stage collected data on participants’ voting intentions and perceptions of their investment decisions.

Political context

The study took place against the backdrop of the Swiss climate referendum in June 2023, which sought to accelerate the transition to renewable energies and achieve climate neutrality by 2050. The previous attempt to pass similar legislation in 2021 had narrowly failed. The two main campaigns leading up to the 2023 referendum argued either in favour of stronger climate action or against the potential economic costs associated with the law.

Procedures

The experiment involved three stages: (1) the “investment stage” where participants chose between two funds; (2) the “political stage” where they could donate to either the pro- or anti-climate law campaigns; and (3) the “survey stage” where participants’ political preferences, emotional responses, and financial expectations were collected. The study emphasised the real financial consequences of the investment decisions by selecting 10 participants whose choices were implemented with actual capital.

Investment stage

In the investment stage, participants in the treatment group were significantly more likely to invest in the climate fund than those in the control group (76.9% vs. 30.2%). This suggests that the provision of climate-related information had a strong impact on investment decisions, demonstrating that financial professionals should be mindful of how sustainability metrics influence investor behaviour.

Political stage

Despite concerns that green investing might reduce political support for climate policy, the study found no significant crowding-out effect. The average net donation to the pro-climate campaign was higher in the treatment group (35.1 CHF) than in the control group (31.2 CHF), although the difference was not statistically significant. Similarly, a marginally significant increase in alignment with the pro-climate campaign was observed in the treatment group. However, there was no significant difference in voting intentions.

Survey stage

Survey results indicated that participants in the treatment group perceived the climate fund as having a meaningful impact on climate protection. Those who selected the climate fund also expressed greater emotional satisfaction with their choice, despite expecting lower financial returns. These findings suggest that green investment products provide both emotional and moral benefits to investors, but do not undermine their political engagement.

Results

Overall, the experiment demonstrated that offering sustainable investment products does not erode political support for formal climate regulation. The study highlights the importance of providing transparency around sustainability characteristics, as this significantly influences investor behaviour without negatively impacting broader policy support.

Robustness

The robustness of the findings was confirmed through several tests. The treatment effect held across various subgroups, including swing voters, individuals with sustainable investment experience, and those with differing political preferences. The experiment also compared well with real-world voting and donation behaviours observed in the Swiss climate referendum.