“When the mood decreases, it leads to higher flows to sustainable funds,” said Alexandre Garel, an associate professor at Audencia in Nantes, France.

Garel, along with professors Adrian Fernandez-Perez at Auckland University of Technology in New Zealand and Ivan Indriawan of University at Adelaide in Australia, decided to study how emotions play a role in determining people’s preference for environmental, social and governance-oriented investments.

They focused on two conflicting theories:

The first was based on the idea that sustainable assets are generally less risky, and that people with “a lower mood” tend to be more risk-averse.
The second and competing theory examined the notion that “a positive mood” promotes pro-social behaviors and greater altruism.
Both theories were tested, and the overwhelming tendency was for people with a worse mood to devote a larger proportion of their money to sustainable assets because of the perception that they are less risky investments, Garel said.