Environmental-Social-Governance Preferences and Investments in Crypto-Assets

Abstract: Individuals invest in Environmental-Social-Governance (ESG)-assets not only because of (higher) expected returns but also driven by ethical and social considerations. Less is known about ESG-conscious investor subjective beliefs about crypto-assets and how do these compare to traditional assets. Controversies surrounding the ESG footprint of certain crypto-asset classes - mainly on grounds of their energy-intensive crypto mining - offer a potentially informative object of inquiry. Leveraging a unique representative household finance survey for the Austrian population, we examine whether investors' ESG preferences can explain cross-sectional differences in individual portfolio exposure to crypto-assets. We find a strong association between investors' ESG preferences and the crypto-investment exposure. The ESG-conscious investor attention is higher for crypto-assets compared to traditional asset classes such as bonds and shares.