From Knowledge to Action: Boosting Sustainable Investments with Financial Literacy and ESG Disclosure

Purpose of research project *

The purpose of this research was to identify and address the key barriers preventing retail investors from engaging in sustainable, responsible, and impact investing (SRI), thereby promoting a shift towards more sustainable investment practices.

Who has, is or will benefit *

Retail investors have benefited significantly from the educational programs and ESG disclosure, enabling them to make more informed and sustainable investment decisions. Financial advisors have also gained valuable tools to guide their clients towards responsible investing practices.

Description of impact *

Between August 2022 and December 2023, under the MQ Industry Linkage project funded by Futu Securities (Australia) Ltd., we conducted a three-phase study to identify and address barriers preventing retail investors from engaging in ESG investing. In the first phase, we surveyed over 3,000 retail investors in Australia and pinpointed two main obstacles: a lack of sustainable financial literacy and social preferences.

In the second phase, we developed an innovative sustainable financial literacy (SFL) educational program, the first of its kind. This phase involved 2,563 participants, with those receiving SFL training showing a 21% increase in their Portfolio ESG Score compared to the control group. In 2024, Futu Securities Ltd. adopted the curriculum, creating a five-minute video on sustainable financial literacy accessible to all traders on their platform. The video has been viewed by over 35,000 people, demonstrating the program's scalability and impact.

In the third phase, we developed an ESG scoring model for all US public companies. Futu adopted the model to calculate and disclose the ESG scores for all US public companies on their trading platform. ESG scores were firstly disclosed to 2,000 randomly selected Australian users in March 2024, empowering informed, sustainable investment decisions. Within one month, Futu observed a significant increase in these users' portfolio ESG scores. Futu plans to extend ESG disclosure to all users in January 2025.

This research aligns with UN SDGs 4, 12, and 13, revolutionizing the retail investment sector and encouraging a societal shift towards sustainable investing.

Impact date	20 Aug 2022 → 15 Dec 2023
Category of impact	Society impacts
Impact level	Benefit (mid)