Do Investors Compensate for Unsustainable Consumption Using Sustainable Assets?

To understand retail investor demand for sustainable assets, I estimate carbon footprints for 6,151 investors by linking their administrative consumption data to product-level carbon intensities. I show that compensation motives drive investments in low-emission assets and formally rule out alternative explanations. A survey with 3,646 participants reveals that investors who believe they have above-average footprints choose sustainable investing specifically as a form of compensation and significantly more often than others. I provide further evidence that portfolio sustainability is related to religious beliefs which are historically tied to offsetting and that income or sample selection effects are not driving my results