Educate or Automate? The Role of Sustainable Finance Literacy and Default Nudges in Sustainable Investing

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As sustainable investing becomes mainstream, retail investors increasingly face choices that require understanding both financial and sustainability-related implications, yet many lack the knowledge to do so effectively. This paper asks: should we educate investors – or simply automate their choices? In a large online framed field experiment (N = 1,790), we compare brief, just-in-time sustainable finance literacy (SFL) trainings – via quiz, video, or brochure – with an automated green default. All SFL interventions raise literacy by up to 15 percentage points and significantly increase sustainable investments; video and quiz formats also boost stock market participation. In contrast, the default nudge shifts behavior without improving understanding and reduces self-efficacy. Higher SFL predicts lower investment in greenwashed products, yet many investors fail to act on greenwashing disclosures. These findings highlight the promise of brief, informational interventions – and the limits of purely behavioral automation – for promoting sustainable and confident financial decisions.