Sustainable Finance Literacy Predicts Investment Behavior Beyond General Financial Literacy: Evidence from Two Representative Samples

Sustainable finance literacy (SFL) is emerging as an essential complement to traditional financial literacy, crucial for enhancing sustainable investments that play a key role in addressing climate change and enabling individuals to avoid greenwashed products. In two large-scale studies with representative Austrian samples (N = 1,047; N = 1,510), we introduce a comprehensive SFL inventory and demonstrate its predictive power for investment behavior in both an incentivized framed field experiment and in self-reported investment behavior. Individuals with higher SFL made greater sustainable and non-sustainable stock market investments, and were more adept at identifying and avoiding potentially greenwashed products. Furthermore, SFL demonstrated more explanatory power than did general financial literacy, for both experienced investors and non-investors. Our findings underscore the need for enhanced SFL education and policy measures to foster the growth of sustainable finance and safeguard investors from deceptive sustainability claims.