This paper surveys beliefs about the climate impact of green investing among academic experts and retail investors. Using the views of academic experts as a benchmark, we show that retail investors have overly optimistic climate impact beliefs. While most academic experts do not believe that a typical green fund has a meaningful climate impact, the vast majority of retail investors do. The median retail investor expects a e10,000 green investment to offset 10% of an average person’s carbon footprint. By contrast, the median estimate among academic experts is 2%, with 0% being the most common estimate. Impact beliefs influence investment decisions: When informed of academic experts’ views, retail investors reduce their climate impact beliefs and willingness to pay for the green fund. Qualitative statements suggest that retail investors’ optimistic beliefs are driven by a focus on the impact of portfolio companies rather than on the impact of the investment itself.
