Do Robinhood investors care about ESG?

In this paper, we investigate whether Robinhood investors consider environmental, social and governance issues in their investment decisions. Based on stock holdings from May 2018 to August 2020, we find that Robinhood investors hold stocks with high ESG risk and low ESG performance relative to the benchmark. The findings reveal a clear difference in ESG preference between Robinhood investors and other retail investors. Moreover, we find that Robinhood investors tend to increase stock holdings around negative ESG incidents. Nevertheless, we show that the increase in stock holdings is mainly driven by the high intensity of social media coverage in the stocks. The findings suggest that Robinhood investors, while not pro-ESG, are not necessarily anti-ESG as they herd on speculative and high-attention stocks.