Sustainable investing has immense potential for generating positive environmental and social impacts. This dissertation delves into the often-overlooked psychological dynamics and affective factors that drive this form of investing. We extend the Theory of Planned Behavior (TPB) to elucidate the interaction between emotions and attitudes towards sustainable investing. Our research methodology, underpinned by structural equation modeling and an exhaustive literature review, leverages survey data from 382 investors. The goal is to examine the interrelated roles of emotions, financial literacy, trust, and environmental values within the TPB framework. Consequently, we propose an extended TPB model that integrates components from behavioral finance, environmental psychology, and trust research. Our findings underscore the profound influence of emotions on shaping investors' attitudes towards sustainable investing. Interestingly, trust has been identified as an important factor that not only affects attitudes directly but also interacts with emotional elements. Moving from broad influences to more specific emotional factors, we delve into the concept of warm glow, a gratifying sensation that investors derive from sustainable investments. This effect plays an integral role in promoting positive attitudes towards sustainable investments. Simultaneously, the affective state of an investor, whether positive or negative, plays a significant role in this dynamic, exerting considerable influence on their attitudes. Moreover, our findings hint at the possibility of variations among investors, with some potentially emphasizing the positive impact and rational considerations, and others possibly relying more on their emotions, with the actual impact of their investments appearing less central. In summary, this dissertation substantially enriches our understanding of the emotional determinants that shape attitudes towards sustainable investing. It provides insights that can be employed in the development of messaging strategies for financial institutions. Further, it strongly advocates for the incorporation of emotional dynamics into financial decision-making models, a move that could potentially trigger a paradigm shift in conventional investment strategies, stimulating more interest and engagement in sustainable investing.
