Finance literacy and sustainable finance literacy

Abstract

Financial literacy is highly heterogeneous across the population, depending on school education, family influence, gender and age. However, many tests highlight the low level of basic financial skills in the general population, particularly among young people. Yet financial knowledge and confidence in that knowledge have a direct impact on investors’ choices and ultimate wealth, particularly when concepts such as risk are poorly understood. Beyond, traditional financial literacy is not enough to guarantee a sustainable financial culture. This also requires an understanding of environmental, social and governance (ESG) issues and their impact on financial decisions. Attitudes towards sustainable investments are correlated with understanding of these financial products and perceptions of greenwashing. In addition, recent research shows that sustainable finance is increasingly integrated into financial assets valuation and investors behavior. We review the literature on these topics.