The impact of an ESG nudge on retail investor engagement in sustainable finance: evidence from an investment decision experiment

Unofficial AI-generated summary based on the public title and abstract. Not an official translation.

🔬研究者:Provides experimental evidence on how disclosure format (nudge vs. text) affects retail investor decision-making, contributing to behavioral accounting and sustainable finance literature.

🏢実務担当者:Suggests that firms and standard-setters should consider using simplified ESG scores in reports to better engage retail investors, potentially increasing sustainable investment flows.

🏛政策担当者:Indicates that regulatory mandates on disclosure content may need to consider presentation format; simple, comparable indicators could enhance retail participation in sustainable finance.

Purpose Retail investors have a significant role to play in transitioning economies to a more sustainable future, yet their participation remains limited. Drawing on insights from nudge theory and behavioural finance, the purpose of this study is to investigate whether an environmental, social and governance (ESG) nudge, embedded within corporate sustainability reports, influences the investment decisions of retail investors. Design/methodology/approach An investment decision experiment is used to evaluate the effect of a simplified, commensurated score (the ESG nudge) on retail investors’ ability to distinguish between companies based on sustainability attributes and on their subsequent capital allocation decisions. Findings The ESG nudge significantly increases investment in companies with stronger sustainability attributes. In contrast, the same information expressed in less readable textual disclosures does not produce a comparable effect. These findings suggest that disclosure format plays a critical role in determining how sustainability information is perceived and used by retail investors. Practical implications To enhance sustainable investment outcomes, sustainability standard setters should consider not only the content but also the presentation format of ESG disclosures. Commensurated, easy-to-interpret indicators may be more effective than detailed but complex textual narratives in guiding retail investor behaviour. Social implications Disclosure of effective ESG nudges within corporate sustainability reports could enhance the efficiency of sustainable finance markets and contribute to a more sustainable future. Originality/value To the best of the author’s knowledge, this is the first study to test whether an ESG nudge, embedded within corporate sustainability reports, influences the investment decisions of retail investors. The findings suggest that behavioural interventions within existing disclosure mechanisms can enhance retail investor engagement in sustainable finance. The development and reporting of standardised ESG nudges may offer a valuable complement to corporate sustainability reporting and future mandated textual disclosures.

• openaire https://doi.org/10.1108/sampj-10-2024-1104first seen 2026-05-05 19:08:08