Climate Polarization and Green Investment

We build a nationally representative sample of retirement savers in Sweden to study how climate polarizaton affects individual investment decisions. After the record-breaking heat wave of 2018, respondents in regions with strong support for a right-wing, anti-climate party grow less concerned about climate change, while respondents outside these regions grow more concerned. Those growing more concerned rebalance their retirement portfolios toward climate-friendly mutual funds; those growing less concerned rebalance out of these funds, but to a smaller degree. Financial sophistication and inertia interact with political polarization in driving these effects.