Finance Seminar Paul Smeets

The paper explores a central question in sustainable finance: Do investors truly care about social impact — or is ESG mainly about returns?

Using rich data and experimental evidence, the study shows that many investors are willing to trade off financial returns for alignment with their values. Importantly, these preferences are persistent and linked to individuals’ moral and social identity.

The findings help explain why sustainable investing continues to grow — even when performance advantages are uncertain — and highlight that capital markets are shaped not only by risk and return, but also by values and identity.

Investor behavior cannot be fully understood through financial incentives alone. Preferences, ethics, and social norms play a measurable role in capital allocation.