This policy brief examines the pressing issue of investor disengagement from sustainable investment products. Despite strong initial interest, a notable share of retail investors—approximately 16% in a representative two-wave survey of Italian investors—have exited these investments, raising concerns about the durability of commitment to sustainability and the effectiveness of current regulatory frameworks. 

Former sustainable investors tend to be younger, moderately riskaverse, rely more on social networks and informal sources for information, and exhibit lower financial literacy, while women show greater continuity in holdings but also higher uncertainty about their investment status. Possible drivers of disengagement include concerns about greenwashing, unrealistic financial expectations, limited attention to tangible ESG impacts, and procedural rather than meaningful integration of sustainability preferences under MiFID II. 

To tackle these challenges, the brief recommends (i) enhancing transparency through simplified ESG reporting, (ii) introducing post-investment engagement mechanisms, (iii) implementing continuous and personalized feedback systems, (iv) strengthening advisory quality, and (v) promoting basic financial literacy tailored to sustainable investing. 

These measures aim to improve investor understanding, trust, and sustained commitment to ESG products. By fostering long-term engagement, these interventions are expected to help achieve the EU’s sustainable finance objectives, ensuring that initial investor interest leads to meaningful and lasting social and environmental impact.