Financial literacy and sustainable finance decisions among Italian households

Abstract

This paper empirically investigates whether financial literacy affects people’s attitudes toward sustainability, considering the degree of knowledge on sustainable finance, sustainable development and Environmental, Social, and Governance (ESG) factors and whether this knowledge affects sustainable investment decisions. We investigate a sample of 5000 respondents from the 2022 survey led by the Italian Financial Education Committee. We find that financial literacy is positively related to the level of knowledge of sustainable finance topics and that understanding these topics has a positive effect on several sustainable investment variables. We aim to highlight the role of financial literacy in sustainability goals and enrich the existing literature on the relationship between financial literacy and sustainable finance, providing further empirical evidence about a relationship that is not yet sufficiently explored. • Financial literacy is positively related to the knowledge of sustainable finance. • Sustainable literacy is positively associated with sustainable investment decisions. • Financial advice also plays a role in guiding sustainable investment decisions.

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