Empowering Investors: Sustainable Consumption through Micro-Investment Platforms: An Abstract

Abstract

Younger generations present significant disadvantages compared with their older counterparts due to job instability, cost of living and economic stagnation amongst others, creating significant wealth inequalities across generations (IMF 2018). In light of catastrophic environmental change, economic inequality is contributing to feelings of powerlessness among consumers (Wilkinson and Pickett 2010) as it hinders their ability to reallocate capital towards sustainable businesses to drive social progress. Emerging digital micro-investment platforms provide consumers with limited capital the ability to invest in sustainable firms. This research investigates empowerment in the context of sustainable investments through micro-investment platforms. We focus on the underlying mechanisms of sustainable investing through micro-investment platforms and the role of consumers’ perceived empowerment on willingness to invest (WTI). We provide results of two different studies. The first is a qualitative study aimed at exploring consumers’ thoughts, feelings, and behaviors associated with micro-investments and the extent to which micro-investments empower consumers from a financial and sustainability perspective. We conducted 35 in-depth Zoom interviews of customers from a large micro-investment platform. Interviews lasted between 30 and 45 minutes and most participants were 25–31 years old. Findings indicate the importance of perceived empowerment for engaging in sustainable consumption through micro-investment platforms and the effects of voice, tangibility, control and accessibility on perceived empowerment. We also found that engaging in sustainable investments can result in “warm glow” feelings. In addition, a choice-based conjoint experiment was conducted to examine consumer preferences for sustainable portfolios and trade-offs between percentage of sustainable assets, screening of companies, rate of return and risk. Data was obtained from a sample of over 200 customers of a micro-investment platform. Results show customers prefer environmental sustainability over social sustainability when making investment decisions. Furthermore, there is a large difference in customers’ trade-off preferences between the proportion of investment in social causes and the rate of return. We also compared results for different customer segments and find that investors with greater levels of alignment to sustainability-related outcomes (i.e., those with high levels of biospheric and altruistic values) and customers with high levels of reported feelings of warm glow demonstrate a greater preference for portfolios with a higher percentage of sustainable investments. Results provide a better understanding of the importance of sustainable investments on willingness to invest in the context of micro-investing platforms. Marketing managers can use results for product development within the investment and banking industry that maximises feelings of empowerment of young investors, and to leverage these emerging platforms to appeal to young consumers.