P2P investors prioritize environmental impact over profit


Peer-to-peer investors would forgo part of their returns for a better environmental impact, the research claims.

A new study, led by Christoph Siemroth of the University of Essex and Lars Hornuf of the University of Bremen, set out to determine whether investors value their environmental impact over 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 in the environment because they may have more than control over projects.

Read more: The ESG trend presents opportunities for P2P

Users of the 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 the one of the three organizations that create an environmental impact.

The academics argued that the voucher would increase returns and show that investors are more concerned about profits, while the donation would suggest that the environmental impact is more of a concern.

Only a fifth took the voucher, while 14% said they would give it up for any donation amount and 65% would do so for a large donation to an environmental cause.

The study said tackling climate change will require “substantial investments” in new technologies as well as a central role for capital markets.

Read more: Confusion surrounds green finance despite growing demand

“If funding is ineffective or if financial constraints prevent the development of better technologies and the implementation of socially desirable projects, then the goal of limiting climate change and reducing greenhouse gas emissions may not be met. be achievable.

“Indeed, the conditions in the capital markets directly determine how costly the fight against climate change will be.

“For these reasons, it is important to understand how investors assess investments in ‘green’ projects that have a positive environmental impact, compared to conventional projects that have no or even a negative environmental impact.

Read more: Regulators plan sustainability disclosure rules

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