RCT Evaluation of Responsible Investing Preferences

Socially responsible investing (often known as environmental, social and governance (ESG) or sustainable and responsible investing (SRI) investing) has been at the centre of recent regulatory scrutiny and academic debate. We leverage a randomized controlled trial (RCT) experiment to study environmental, social and governance and sustainable and responsible investing preferences. Our results reveal potential externalities from retail flows may affect institutional motivation for responsible investing preferences. In line with Pastor et al. (2020), this retail investor source of fragility in the demand for socially responsible investments is consistent with constraints imposed by market stress and uncertainty.