THE ROLE OF ESG (ENVIRONMENTAL, SOCIAL, AND GOVERNANCE) FACTORS ON INVESTMENT DECISIONS: A STUDY ON INDIAN INVESTORS

DOI: https://doie.org/10.65985/APER.2026629913

Authors:

Muntazir Abass, Faisal Faheem Khan, Manish Kumar, Kafeel Ahmad

Keywords:

Environmental, Social, and Governance (ESG), Sustainable Investing, Trust and Awareness, sustainable finance

Abstract:

Purpose - Socially responsible investments have recently gained popularity and become an important area of discussion. This study examines whether incorporating environmental, social, and governance (ESG) factors into investment strategies can support the shift to a more sustainable financial system. Methodology - This study examines how ESG factors influences investment decisions with special focus on whether the influence is direct or indirect through mediating factor as Awareness and Trust. The is based on Sustainable Asset Pricing Theory, Value-Belief-Norm Theory, and signalling theory by using quantitative cross sectional research design. Data were collected from 200 respondents with only one condition that respondent should be an investor in BSE/NSE or any recognized stock exchange. Findings - Data were analysed using PLS-SEM the findings of this study concluded that environmental factor influences the investment decision making highlighting the growing importance of environmental sustainability in investment evaluation, however other two factors like Social and Governance does not demonstrate any effect reflecting the uncertainty and credibility concern surrounding non environmental disclosure in Indian context. Research Implications - this study contributes to ESG and sustainable finance literature from an emerging market perspective and offers practical insights for regulators, firms, and policymakers seeking to strengthen ESG credibility and investor engagement in India. Originality - Socially responsible investments have gained increased attention. The present study aims to determine whether incorporating Environmental, Social, and Governance criteria into investment strategies can help the transition to a more sustainable financial system.

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