5 questions to Valeria Fanghella (EDHEC) and Clara Hansen (Akuo Energy) on tackling perception bias around climate action

A study published in September 2025 (1) by Valeria Fanghella sheds light on a contradiction at the heart of climate action: most of us believe we are doing more than we really are. This applies to individuals, organisations and institutions alike. For Clara Hansen, whose work at Akuo Energy focuses on financing low-carbon power generation projects, the same pattern often emerges in the field. Left unaddressed, such bias can lead to complacency and slower action on climate issues. But if understood properly, it may offer new and surprisingly powerful ways of engaging with people.

Valeria Fanghella, your research highlights a gap between how people perceive their carbon footprints and their actual emissions. Where does this disconnect come from?

Valeria Fanghella: Joachim Schleich from the Grenoble School of Management and I did a study (1) – based on a demographically representative sample of 1,825 adults in Germany – which found that roughly twothirds of respondents underestimated their CO2 emissions. We called this “optimism bias.” In practical terms, it means that on climate issues, most people see themselves as more virtuous than they really are.

Clara Hansen, do you see the same disconnect in business settings, either in your company or among external stakeholders?

Clara Hansen: At Akuo Energy, I would say optimism takes very different forms depending on whether we are looking inside the company or outside. In house, most employees know about the need for a transition and actively contribute to it, both personally and professionally. Their beliefs and behaviours are aligned. With some of our partners, though, enthusiasm can sometimes lead to a premature sense of satisfaction. Financial institutions, for example, may feel that investing in green infrastructure is already a significant effort in itself, and that this is enough. That kind of mindset does not always encourage deeper engagement.

Valeria Fanghella, your work also shows that people are more likely to make more of an effort when they learn their carbon footprint is lower than that of their peers. But finding out they emit more than others doesn’t push them to do more and may even discourage them from acting. How do you interpret that?

Valeria Fanghella: This is one of the most striking findings of the study. It runs counter to the “regression to the mean” you typically observe in research on social norms. In previous work on electricity or water consumption, people tended to reduce their usage when they learned they consumed more than their peers. With carbon footprints, the opposite appears to happen. Learning that we emit more than others tends to be discouraging. 

My interpretation is that reducing electricity or water use often comes with a clear financial benefit, whereas reducing your carbon footprint is more often framed as a moral commitment with no immediate economic reward. In that sense, the mechanism is closer to what we see in studies involving ego-related comparisons involving things like intelligence or attractiveness. Positive comparison tends to reinforce effort while negative comparison can be discouraging. Carbon behaviour seems to follow a similar pattern: being told you are doing better than average encourages you to do even more, while learning that others are doing better than you can weaken commitment.

What kinds of mistakes do organisations make when they try to drive behaviours to protect the climate, and what would a more effective approach look like?

Valeria Fanghella: Our findings help explain why public institutions often struggle to communicate effectively on climate issues. One recurring mistake is to overlook the financial dimension. When there is no clear monetary incentive or visible economic upside, both optimism bias and social comparison become critical factors that shape mitigation efforts. For people who are already driven by these issues, reinforcing the idea that they are doing better than their peers can be highly effective. But telling high emitters that they are among the worst performers may simply deepen their lack of commitment. This could also explain why some environmental messaging is criticized for being moralizing or preachy. It directly collides with the optimism bias of the highest emitters and can ultimately backfire (2).

Clara Hansen: I fully agree that guilt is rarely productive. Whether we are talking with individuals or organizations, change is much more likely when actions are presented as being concrete and achievable. In our business, economic arguments are still the most persuasive ones in favour of wind or solar projects. In fact, it is sometimes difficult to lead with anything else, particularly at a time when anti-renewable policies in the United States are creating uncertainty across the sector. We often speak with senior executives whose primary concern is managing energy costs in an intensely competitive environment. For them, environmental benefits can be seen as a welcome extra, but not the deciding factor. That is precisely where we can create value. At equivalent cost, financing low-carbon energy delivers broader returns because it also strengthens a company’s reputation and brand image. Consumers increasingly expect large businesses to demonstrate clear ESG commitments, and bank clients are paying closer attention to where capital is being allocated. That reputational dimension gives us real negotiating power.

Valeria Fanghella, your 2025 study suggests that one of the strongest drivers of action is the positive reinforcement of people’s self-image as being environmentally committed. Can people’s egos be a useful tool for mitigating climate change?

Valeria Fanghella: Absolutely, but you must be careful. Ego and reputation can both accelerate action and reinforce inertia, depending on how you use them. That is why climate policies and engagement strategies need to be designed very carefully. For example, in 2014 researchers Magali A. Delmas and Neil Lessem (3) showed that publicly displaying university students’ electricity consumption led heavy users, who were eager to improve how they were perceived, to cut their consumption by 20 percent. But ego is not the only thing you can use. Sometimes, structural changes are more effective than moral arguments. A 2016 study (4) found that employees at a Swedish university reduced paper use by 15 percent simply because printers were set to double sided printing by default. A targeted awareness campaign had failed whereas a simple design change was successful.

Clara Hansen: That’s exactly why strategies need to be tailored to the audience. At Akuo Energy, training and awareness initiatives work well with employees because they are already highly receptive to climate and environmental issues. Comparing carbon footprints or sharing everyday habits creates a sense of positive momentum that encourages action. With external stakeholders, the approach is different. We sometimes rely on what I would call “corporate ego.” In certain Balkan countries, where market conditions are not always favourable to low-carbon energy, we try to secure power purchase agreements with major companies by leveraging peer dynamics. The first company is always the hardest to convince, but once one commits, others tend to follow. There is also another argument that may sound more personal, but which often proves surprisingly effective: future generations. Many of the executives we speak to in banks, investment funds, and large corporations are parents themselves. They worry about the world their children will inherit. To me, that is a powerful example of how moral conviction and personal interest can intersect to encourage taking meaningful action.

References

(1) Fanghella, Valeria, and Joachim Schleich. “Effect of the Interplay between Comparative Feedback and Beliefs on Climate Change Mitigation Efforts.” Journal of Environmental Economics and Management, September 2025 - https://www.sciencedirect.com/science/article/abs/pii/S009506962500097X

(2) Brouwer, Claire, Jan-Willem Bolderdijk, Gert Cornelissen,and Tim Kurz. “Communication  Strategies for Moral Rebels: How to Talk about Change in Order to Inspire Self-Efficacy in Others.” WIREs Climate Change, April 2022 - https://wires.onlinelibrary.wiley.com/doi/10.1002/wcc.781

(3) Delmas, Magali A., and Neil Lessem. “Saving Power to Conserve Your Reputation? The Effectiveness of Private versus Public Information.” Journal of Environmental Economics and Management, May 2014 - https://www.sciencedirect.com/science/article/abs/pii/S0095069614000072

(4) Egebark, Johan, and Mathias Ekström. “Can Indifference Make the World Greener?” Journal of Environmental Economics and Management, March 2016 - https://www.sciencedirect.com/science/article/abs/pii/S009506961500090X