Financial professionals and climate experts have diverging perspectives on climate action

The climate crisis demands a fundamental economic transformation, with the finance industry playing a crucial role in facilitating sustainable investments and lending. This study focuses on the attitudes and preferences of two key stakeholder groups: financial professionals and climate experts. The finance industry's effectiveness in driving decarbonization hinges on the actions and beliefs of its professionals, while the expertise and perspectives of climate experts significantly influence public policy and economic regulation. Despite the growing urgency of the climate crisis and the finance industry's increasing focus on ESG (environmental, social, and governance) factors, a lack of scientific evidence exists to measure the differences in preferences, opinions, and beliefs between these two crucial groups. This gap is significant because their priorities inherently differ: financial professionals focus on maximizing returns and managing risk, while climate experts prioritize minimizing climate damage. Furthermore, potential differences in political ideologies, particularly regarding free-market interventions, might also contribute to diverging views. This study aims to address this gap by measuring the differences in preferences, opinions, and beliefs between financial professionals and climate experts regarding the climate crisis and the roles of governments and companies in addressing it. The study uses a pre-registered, three-pronged approach to achieve this goal.

The existing literature highlights the importance of the finance industry in addressing climate change (Sachs et al., 2019; Hong et al., 2020; Krueger et al., 2020; Bolton & Kacperczyk, 2021). Studies have explored the risk-taking behavior of financial professionals (Kirchler et al., 2018; Razen et al., 2020; Holmen et al., 2023) and the opinions of climate experts on climate policy (Cologna et al., 2021). However, direct comparisons of the preferences and beliefs of financial professionals and climate experts regarding climate action have been lacking. This study contributes to the literature by offering a comprehensive comparison of these two groups, using both incentivized choice experiments and surveys to measure revealed preferences and stated beliefs.

The study employed a pre-registered, threefold methodology. First, an incentivized choice experiment measured participants' willingness to mitigate climate change. Respondents chose between receiving monetary payments and purchasing carbon offsets (10 tons of CO2). The choice list ranged from €0 to €360, with a carbon offset price of €170. The indifference valuation (switching point) indicated willingness to forego personal gain for climate mitigation. Second, a survey assessed attitudes and beliefs about the climate crisis and policy actions. The survey was structured in four modules: 1. **General Views:** Assessed the seriousness of climate change and the likelihood of its negative economic impact using 6-point Likert scales. 2. **Motives:** Explored motivations for climate mitigation (financial, reputational, environmental, intergenerational justice) using 6-point Likert scales. Second-order beliefs (perceptions of the other group's responses) were also elicited. 3. **Priorities:** Assessed the importance of various priority areas for climate mitigation (economic, ecological, governance, health, social) using 6-point Likert scales. Again, second-order beliefs were collected. 4. **Policy Support:** Measured support for government and corporate climate mitigation policies (hard and soft measures, including carbon tax and carbon labels) using 6-point Likert scales. Second-order beliefs were included. Third, detailed demographic information and professional background were collected. The samples included financial professionals (recruited through professional organizations and a proprietary subject pool), climate experts (identified from relevant journal publications), and financial regulators (recruited from European central banks and regulatory authorities). Data analysis employed Mann-Whitney U tests for Likert scale data, two-sample t-tests for valuations, and interval regressions with robust standard errors to incorporate control variables. A multiverse analysis approach was used to assess the robustness of the findings. The study was pre-registered on OSF (https://osf.io/7q5du/).

The study revealed significant differences between financial professionals and climate experts across several key areas: 1. **View on Climate Change and Valuation of Carbon Offsets:** Financial professionals considered climate change less serious and less likely to have long-term negative economic impacts than climate experts. They also placed significantly lower valuations on carbon offsets (€144.30 vs. €191.90). This difference remained robust even after controlling for demographic and political factors. Financial professionals also overestimated climate experts' valuations of carbon offsets. 2. **Attitudes Towards the Climate Crisis:** Financial professionals prioritized financial and reputational motivations for climate mitigation, while climate experts emphasized environmental and intergenerational justice. Both groups held inaccurate beliefs about the other's motives, tending to perceive the other as more extreme. 3. **Priorities for Climate Change Mitigation:** While both groups considered all priority areas important, financial professionals consistently viewed ecological, governance, health, and social aspects as less important than climate experts. Beliefs about the other group's priorities were often inaccurate. 4. **Policy Support:** Financial professionals expressed significantly less support for hard government and corporate climate mitigation policies (including carbon taxes) than climate experts. Climate experts exhibited significantly stronger support for both hard and soft measures. Financial professionals underestimated climate experts' support for hard measures. In an exploratory analysis, financial regulators' valuations were similar to climate experts but significantly higher than financial professionals; their policy support fell between that of the other two groups. Additional exploratory analysis was conducted on a sample of financial regulators. Regulators exhibited valuations similar to those of climate experts but higher than financial professionals. They were more supportive of hard measures than financial professionals but less than climate experts. For soft measures, there was little difference between regulators and climate experts, but both groups were more supportive than financial professionals.

The findings highlight the significant gap in perspectives between financial professionals and climate experts. While financial professionals acknowledge the seriousness of climate change, their priorities and willingness to take action differ substantially from climate experts. This divergence can be attributed to differing professional focuses, political orientations (financial professionals leaning more center-right), and potentially, a preference for minimal market intervention. The presence of biased beliefs within both groups further complicates effective communication and collaboration. These findings resonate with broader research on climate change attitudes, but this study uniquely focuses on the crucial differences between these two specific stakeholder groups. The results offer valuable insights for designing effective communication strategies aimed at bridging this gap and fostering more impactful climate action within the finance sector.

This study demonstrates significant differences in attitudes, beliefs, and willingness to act on climate change between financial professionals and climate experts. Financial professionals show less concern, lower valuations of carbon offsets, and less support for strong policy interventions. Understanding these diverging perspectives is crucial. Future research could focus on communication strategies to bridge the gap, considering financial incentives, reputational concerns, and targeted educational interventions (like carbon literacy workshops) to increase awareness and promote more effective climate action within the finance industry. Further research could explore the role of other stakeholder groups, such as politicians and top-level executives.

The study primarily focuses on the differences between financial professionals and climate experts, potentially neglecting the views of other significant stakeholders. The incentivized choice experiment, while a common method, may have limitations, although the use of the same task for both groups minimizes potential systematic bias. The approach of asking respondents about their peers' opinions might reduce social desirability bias but could also introduce biased perceptions of the other group. The sample, while comprehensive for the groups studied, does not represent all relevant stakeholders. Future research should expand the scope to include additional stakeholders and potentially explore alternative methods for assessing preferences and beliefs.