Mind the Gap: Why European retail investors don't get what they want

The European Commission’s 2018 Action Plan sought to channel EU household savings into sustainable investments to help close the €1.2 trillion annual funding gap for the 2030 climate targets. Key regulatory reforms (SFDR, MiFID II, IDD) required integrating sustainability preferences into financial advice and product governance. To assess their effectiveness, the Sustainable Finance Observatory conducted one of Europe’s largest research programmes (2017–2024), analysing investor demand, product supply, and advisory practices across 14 Member States.

Key Findings:

Retail Investor Demand: Strong but Untapped

• 74% of EU retail investors have sustainability-related objectives (i.e. value alignment and/or impact), yet in key markets only 19% hold sustainable financial products, revealing a significant attitude-behaviour gap.
• Despite increased average allocations towards sustainable products post-regulation, we expect that a multi-trillion EUR market remains untapped.
• Key barriers preventing retail investors from walking their talk include limited expertise, high information costs, and a lack of trust in the credibility of sustainable financial products.