Sustainable Finance Fatigue: Discourse, Markets and Investors

Since the Paris Agreement in 2015, sustainable finance has gained momentum in academic discussion and remains a substantial part of the finance literature today. At the same time, markets have seen large inflows into products classified as sustainable. This market trend, however, has been declining for several years now. The reasons behind this reversal are complex and so far insufficiently researched. Disappointment over the weaker performance of green products, disappointment over false sustainability promises (greenwashing), and disappointment over overly detailed regulation and excessive reporting requirements are among them. This overall retreat from sustainable finance is referred to as fatigue. This dissertation investigates the reasons behind this market-observable reversal and asks whether sustainable finance fatigue is an actual, consistent phenomenon that can be explained, or the wrong label for what is currently observed in the markets. The analysis proceeds from three perspectives: the discourse in the literature, how markets react to political events, and investor influence, to build as complete a picture as possible of this development.