The Institute of Baltic Studies, in cooperation with the Sustainable Finance Observatory, conducted two interlinked studies to provide a comprehensive overview of the state of sustainable retail finance in Estonia.
The first study focused on retail investors’ attitudes, knowledge, and behaviour related to sustainable investing. It examined how people understand sustainable finance, what their values and level of knowledge are, and what barriers they face in making greener investment decisions. The study also assessed the market potential and provided recommendations on how to strengthen trustworthiness and simplify information and product communication.
The research was based on a nationwide survey (N = 1000), supplemented by a sub-study of high-income households (N = 200), 20 in-depth interviews, and 2 focus group discussions. The collected data were used to analyze investment motives, risk attitudes, and understanding of ESG (environmental, social, and governance) concepts. The results showed that while interest is high, nearly half of respondents intended to invest in sustainable products within the next three years, actual uptake is modest (22%). The study highlights the need for clearer communication, simplified products, and practical tools to bridge the gap between intention and action.
The second study analyzed the supply of sustainable investment products and financial advisory services. The goal was to evaluate how sustainability principles and the related regulatory framework are integrated into retail financial market products in Estonia (including their descriptions and substance) and into advisory services for retail investors. The research focused on the extent to which the offered investment products and their marketing reflect promises of environmental and social impact, and how financial advisors take clients’ sustainability preferences into account.
The study used three methods: an analysis of the environmental impact claims of 62 investment funds, an assessment of six products using the Impact Potential Assessment Framework, and 16 mystery shopping visits to major banks. The results show that claims of sustainable impact are widespread but often misleading. We also found that the actual impact potential of products is very modest compared to what is promised, and that clients’ sustainability preferences are not consistently reflected in advisory practices.
The studies were conducted by the Institute of Baltic Studies in cooperation with the Sustainable Finance Observatory and were supported by GIZ, on behalf of the German Federal Ministry for Economic Affairs and Climate Action (BMWK), through the European Climate Initiative (EUKI).