Revealed preferences in sustainable investing: the portfolio allocation choices of high-net-worth-individuals

Abstract

Mobilizing private capital toward sustainable development requires understanding how sustainability-related information influences individual investment decisions. While prior research has examined investors’ sustainable preferences, less attention has been paid to how such information is mediated in practice. This study aims to investigate the role of financial advisors as key informational intermediaries between corporate environmental, social, and governance (ESG) disclosures and private wealth allocation. Using survey data from 800 Italian high-net-worth individuals (HNWIs), the study analyses actual portfolio holdings across five asset classes, including sustainable investment products. Logistic regression models examine the determinants of SI ownership, complemented by mediation analyses assessing how advisor interactions and sustainability-related information shape trust and perceived effectiveness. Sustainable investment adoption among HNWIs depends not only on sustainability orientation, but critically on perceptions of credibility and effectiveness of sustainability claims. Financial advisors play a central role in shaping these perceptions by mediating sustainability information. Regulatory-driven disclosures increase exposure to sustainable products, while richer and discretionary sustainability communication is more strongly associated with sustainable portfolio allocation. Enhancing advisors’ ESG competencies and improving the clarity and transparency of sustainability ratings can enhance effective communication with private investors. By clarifying how sustainability information is translated into investment decisions, the study informs efforts to reorient private wealth toward sustainable development goals. The study contributes to sustainability accounting, management and sustainable finance research by highlighting financial advisors as organizational intermediaries linking ESG disclosure to private capital allocation.