Peer-to-peer investors would give up some of their returns for a better environmental impact, research claims.
A new study by Christoph Siemroth of the University of Essex and Lars Hornuf from the University of Bremen, aimed to identify if investors value their environmental impact over a financial return.
The report found that many investors use debt crowdfunding, or P2P lending, rather than stocks, bonds, funds, or other investment alternatives to invest environmentally as they can have more control over the projects.
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Users of Austrian P2P lending platform Green Rocket were asked to choose between a €25 (£21.48) voucher, which they can use to invest in a non-green real estate project or a donation to one of three organisations that create either a social or environmental impact.
The academics argued that the voucher would boost returns and show investors are more worried about profits, while the donation would suggest the environmental impact is of more concern.
Only a fifth took the voucher, while 14 per cent said they would give it up for any donation amount and 65 per cent would do so for a large donation to an environmental cause.
The study said combating climate change will require “substantial investment” in new technologies as well as a central role for capital markets.
“If the financing is inefficient or financing constraints prevent better technologies from being developed and socially desirable projects from being implemented, then the goal to limit climate change and reduce greenhouse gas emissions might not be attainable.
“Indeed, the conditions in capital markets directly determine how costly addressing climate change will be.
“For these reasons, it is important to understand how investors evaluate investments in ‘green’ projects that have a positive environmental impact, compared to conventional projects that have no or even a negative environmental impact.”