N°25-36: Socially Responsible Investing in the Political Context

Does the political context influence the weight investors place on non-pecuniary motives when making financial decisions? We provide evidence from incentivized surveys of U.S. investors before and after the 2024 U.S. presidential election. Following Trump’s victory, investors reduced the average green investments due to a revision in financial expectations. However, investors who strongly disapprove of his climate policy increased their non-pecuniary appetite for green assets. These "contrarians" revised their investments by placing greater weight on climate-related considerations and less on financial ones, suggesting that they view green investing as a way to compensate for perceived climate policy inaction. Empirical analyses of real-world ETF flows align with this interpretation. The findings have implications for understanding and modeling values-based investment behavior.