This policy brief examines the surprising challenge that many retail investors are uncertain about whether their portfolios include sustainable investments, despite the European Union’s regulatory efforts to integrate sustainability into financial advice. 

Preliminary evidence from a two-wave survey of roughly 1,000 Italian investors shows that about 20% were unsure of their holdings’ sustainability in 2024, with significant uncertainty persisting in 2025. Investor awareness depends on perceived competence, knowledge of portfolio composition, and the type of interaction with financial advisors. Passive reliance on advisors increases uncertainty, while active engagement reduces it. 

Uncertainty about sustainability holdings may stem from factors such as ineffective ESG profiling, the technical complexity of sustainability concepts, and limited focus on actual impact. To reduce investor uncertainty, we recommend: (i) strengthening regulatory oversight to ensure that ESG profiling supports meaningful understanding; (ii) enhancing advisory practices to provide clear, tailored guidance; (iii) promoting sustainability-focused financial education; (iv) using digital tools to provide real-time portfolio insights; and (v) increasing visibility of ESG indicators in reporting. 

By reducing investor uncertainty, these measures aim to foster informed engagement and more effectively align portfolios with broader sustainability objectives.