Does Social Capital Foster Sustainable Investment?

How do country-level societal norms affect financial investments? We provide evidence that mutual funds managed in high social capital countries are inclined to consider environmental, and governance filters their portfolios, especially when acquiring new stocks investing abroad. argue nurtures the investment preferences of retail investors, whose demand incentivizes fund managers respond kind. Such impact is more pronounced individualistic high–power distance societies, suggesting cohesion benefit complements altruistic inclinations former provides mechanisms punish unsustainable behaviour latter.