Pacific Business Review (International)

ESG Investments, a Sustainable Option: A Study of Intention and

Behaviour of Indian Retail Investors

Abstract
Supriya Purpose-This work aims to provide an academic contribution to the
Research Scholar, field of sustainable development in financial systems by comprehending
Amity College of Commerce the behaviour and decision-making processes of ESG investors. It
and Finance (ACCF), examines the impact of various antecedents such as investment attitude
Amity University, Noida towards environmental, social, and governance (ESG) factors, social
[email protected]
norms, financial self-efficacy, ESG concerns, risk perception, and return
expectations on ESG investment intention and behaviour in the Indian
Dr. Puneeta Goel setting.
Professor,
ACCF, Amity University, Research Methodology-Utilising a cross-sectional methodology, the
Noida present study gathered quantitative data from a sample size of 390
[email protected], participants through an online questionnaire administered using a
Google form hyperlink. The survey was distributed across multiple
social media platforms. The present study utilised the partial least
Dr. Rupali Mishra
Associate Professor, squares structural equation modelling (PLS-SEM) technique to
ACCF,Amity University, investigate the proposed hypotheses.
Noida Results- This study has revealed noteworthy positive impacts of
[email protected]
investment attitude towards environmental, social, and governance
(ESG) concerns, financial self-efficacy, risk perception, and return
Dr. Vibhash Kumar expectations on the desire to engage in ESG. Contrary to expectations,
Associate Professor, research indicates that social norms do not have a statistically significant
O.P. Jindal Global University, association with ESG investment intention. The intention to engage in
Sonipat
ESG investment was found to have a notable impact on ESG investment
[email protected]
behaviour. This study found evidence indicating that the Financial-eco-
system partially mediates the connection between ESG investment
intention and ESG investment behaviour. In contrast, the presence of
informativeness did not demonstrate any mediating influence on the
individual associations between ESG investment intention and ESG
investment behaviour. Moreover, the application of PLS Predict yielded
significant results, indicating a robust predictive relevance of the model
in predicting ESG investment intention and behaviour.
Originality of the Study-This study uniquely integrates several
antecedents into a comprehensive framework focussing on investment
intention and behaviour towards ESG investing by building upon the

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Theory of Planned Behaviour(TPB). It considers two novel India is presently seeing a significant growth, mostly driven
factors in the research framework, that is, social norms and by regulatory support, investor interest, and recognition of
ESG concerns, which have neither been used in TPB nor feasible business opportunities(Bhatt,2021 and
have been frequently studied by other authors as risk and Chauhan,2023).The growing acknowledgement of climate
return. Also, this study investigates the hitherto unexplored change, societal issues, and corporate governance
mediating role of the financial eco-system and challenges acts as a driving force behind the escalating
informativeness between ESG investment intention and desire for sustainable investment options(Townsend,2020).
behaviour .Since ESG investing is new in India ,this Indian investors are increasingly integrating ESG
research work would help the academic fraternity, investors considerations into their investment strategies, spanning
and the industry as a whole,especially mutual funds, in various asset classes such as bonds, stocks, investments in
gaining a deeper understanding on this subject matter. private equity, and venture funding (Ramachandran and
Implications- ESG investments have garnered significant Prabhu,2022).By embracing ESG investing, India has the
interest from investors. This study provides a significant capacity to pave the way for a sustainable future that
contribution to the current literature on sustainable successfully integrates financial performance with societal
investing by examining relationship between investment and ecological well-being(Shah,2018 and
attitude, social norms, financial self-efficacy, Sarangi,2021).The growing prominence of ESG investing
environmental, social, and governance concerns, risk as a widely adopted strategy among investors and
perception, return expectations, ESG investment intention, businesses necessitates a comprehensive examination of
informativeness, financial eco-system, and ESG investing the behaviour and decision-making mechanisms employed
behaviour. In relation to ESG investments, it is imperative by ESG investors.
for both governmental bodies and industry to encourage a Furthermore, previous studies have mostly concentrated on
conducive ecosystem that supports and facilitates such quantifying the return or financial efficacy of socially
sustainable investments. This study represents a limited responsible investments (SRIs)(Shaikh,2022).The bulk of
number of initial endeavours to examine the factors and studies on ESG investing has been focused on developed
challenges associated with ESG investing within the countries such as the USA, Europe, Australia. ESG
context of retail investors in a developing nation. investing in emerging markets, such as India, is a minor
Keywords : ESG investing ,ESG investment behaviour , component of the existing body of literature. Furthermore,
Sustainability there is a paucity of research regarding the extent of
understanding or awareness, attitude, and behaviour of
Introduction Indian investors towards ESG investing that is available in
ESG investing has had a global surge in adoption in recent the public domain. A limited group of researchers (Nair and
years, and India is no exception to this trend (Kiymaz,2019 Ladha, 2013; Wins and Zwergel, 2016 etc.) have identified
and Chauhan,2023).According to an analysis conducted by and analysed the impact of different variables on the
Forbes India, the size of AUM of ESG Mutual Funds intention and behaviour of retail investors regarding ESG
increased significantly from Rs 2,703 crore in 2019 to Rs investments. Existing research has predominantly
10,635 crores in 2023(Sultana,2023).The significant concentrated upon investigating the influence of individual
expansion of ESG investment may be ascribed to a range of traits (Vyas, Mehta, and Sharma, 2020 ;Owen and
variables, encompassing heightened consciousness of Qian,2008) and expectations of financial rewards
worldwide sustainability difficulties, intensified regulatory (Palacios-González and Chamorro-Mera, 2018;
examination, and the acknowledgment that ESG aspects Lewis,2001) on intention to engage in socially responsible
might have a substantial influence on financial investing (SRI).Furthermore, the determinants that drive
performance (Nair and Ladha,2013) .ESG investing in investors to participate in ESG investments remain

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 Pacific Business Review (International)

ambiguous, as investors seek to optimise financial returns is new in India, this study will help the academic fraternity,
while simultaneously upholding the significant societal the investors and the industry in general and mutual funds in
influence of their capital (Berry & Junkus, particular, in gaining a deeper understanding on the subject
2013).Therefore, additional research is necessary to matter which will further help them in predicting
investigate and clarify the factors that impact choices of prospective market shifts, make better-informed decisions,
investors in allocating different proportions of their and potentially avoid costly mistakes. This paper seeks to
investment portfolios to ESG investments (Jonwall, Gupta, address two research inquiries. One, what is the impact of
and Pahuja, 2022; Raut et al., 2021).To address these various antecedents of ESG investing on ESG investment
research gaps, our study uniquely integrates several intention and behaviour? Two, how do informativeness and
antecedents into a comprehensive framework focussing on financial eco-system mediate the relationship between
investment intention and behaviour towards ESG ESG investment intention and ESG investment behaviour?
investing. Following this, the subsequent sections of the paper have
An ESG conscious financial ecosystem is a very important been organised as follows: the exhaustive analysis of the
foundation for any country which encourages an ESG existing literature on the subject is detailed in Section 2 of
agenda (Karkera, 2023).The previous lack of attention from the document. Additionally, it includes the formulation and
researchers, particularly in developing nations, has resulted validation of hypotheses. The research methodology is
in little exploration of the mediating role of this variable detailed in Section 3 of the document. It includes the
within the realm of ESG investing. Also, informativeness is sampling strategy, measures of various constructs, and the
a significant factor which influences investors' decisions selected data analysis method. Section 4 contains the
(Naveed et. al. ,2020).Given that India is classified as a presentation of the results and findings of the investigation,
developing nation and ESG investing is gaining whereas Section 5 encompasses the discussion and
prominence as a nascent concept in this context, the conclusion of this study.
examination of this particular issue assumes heightened
Literature Review
significance. Our research paper presents a novel approach
to examine the mediating effect of informativeness and Theoretical foundation
financial eco-system on the relationship between ESG Numerous previous research have endeavoured to examine
investment intention and behaviour. the behavioural patterns of investors who prioritise social
The present study offers three significant theoretical responsibility.The TPB pertains to a person's cognitive
advances to the field of sustainable finance. Firstly, it inclination towards engaging in a specific behaviour.The
investigates the correlation among investment attitudes study by Raut et.al.(2021) provides empirical evidence
towards ESG factors, social norms, financial self-efficacy, supporting the significant impact that financial success,
ESG concerns, risk perception regarding ESG investments, subjective norms, attitude and, moral norms have on
return expectations from ESG investments, ESG investors' intention towards Socially Responsible Investing
investment intention, and ESG investment behaviour (SRI). Vyas, Mehta, and Sharma (2020) and Mehta, Singh,
within the Indian context by building upon the conceptual and Mittal (2020) examined the relationship between non-
structure of the TPB(Ajzen,1991). We are considering two economic goals and the personal characteristics of
novel factors in our research framework, that is, social individual investors, encompassing factors such as
norms and ESG concerns, which have neither been used in "environmental attitude,""religiosity,""materialism,
TPB nor have been frequently studied by other authors as ""collectivism,""risk tolerance," and "social investing
risk and return. Secondly, this study investigates the efficacy." The diverse characteristics of individual
hitherto unexplored mediating effects of the financial eco- investors have shown significant importance in influencing
system and informativeness. Thirdly, since ESG investing their non-economic and socially responsible goals. Nair

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and Ladha (2013) found that Collectivism, Religiosity, and Hypothesis Development
Environment Attitude are significant factors that impact the
Investment Attitude towards ESG
desire of Indian investors to pursue non-economic
investing objectives. Jonwall, Gupta, and Pahuja (2022) The TPB posits that attitude, together with subjective
utilised the TPB to examine the factors that impact the standards and perceived behavioural control, is a
socially responsible investing (SRI) behaviour of determinant in the formation of intention (Ajzen,
individual investors. The study's findings demonstrated 1985).Multiple investigations have been done to examine
that investors' decisions to participate in SRIwere the impact of investment attitude on individuals' ethical
significantly influenced by their level of knowledge about decision-making behaviour. These studies include research
socially responsible/ESG indices, their awareness of by Lewis and Mackenzie (2000), Lewis (2001), McLachlan
SR/ESG funds, and their inclination to invest in SRI and Gardner, Gladish et al (2012), and Berry and Yeung
options.Garg et al. (2022) conducted a research to (2012).The research conducted by Asif et al. (2020)
investigate the investment behaviour of retail investors in examined the influence of investors' money attitudes on
India the context of SRI.A positive correlation was their decisions regarding involvement in the stock
discovered between investors' beliefs, such as collectivism market.Several studies have examined various dimensions
and biospheric values, their biases, such as social of investment attitudes towards socially responsible
responsibility prejudice and reliance on expert bias, and investment (SRI) (Wins and Zwergel ,2014 ;Vyas, Mehta,
their perceived success of socially responsible investing and Sharma ,2020 ;Manjit Singh, Manju Mittal, Pooja
(SRI). On average, investors in sustainable funds Mehta, and Himanshu Singla ;2020; Beal, Goyen, and
demonstrate better values in three pro-social categories: Phillips (2005).
"pro-social attitudes" (PSA), "perceived consumer Hypothesis 1(H1) : Investment attitude has a significant
effectiveness" (PCE), and "trust" in socially responsible positive effect on ESG investment intention among Indian
(SR) funds (Wins and Zwergel, 2016).Therefore, there are retail investors.
other elements that can impact an investor's inclination to Social Norms
invest in ESG related ventures.
Social norms encompass the collective perceptions and
Previous research has revealed a dearth of studies that beliefs held by individuals towards a particular behaviour.
examine the investment behaviour of individuals in ESG The aforementioned perspective could be attributed to
investing, both in a general sense and especially within the individuals inside one's familial, social, and professional
Indian setting. The bulk of existing research pertaining to circles. Studies have shown that social interaction and
the conduct of SR/ESG investments is predominantly media have a positive effect on decision-making in the
derived from the markets of the United Kingdom, United trading domain. Moreover, within the realm of social
States, and Europe. Furthermore, a significant portion of considerations, it has been observed that social interaction
scholarly investigations has focused on the examination of has a significant role in shaping trading decisions
empirical data pertaining to the financial success (Jasuja (Shanmugham & Ramya, 2012). Furthermore, the study
et.al.,2021) of socially responsible funds or ESG funds , conducted by Wu, Huang, Chen, Davison, and Hua (2018)
rather than delving into the analysis of individuals' attitudes provided evidence supporting the notion that social
and behaviour towards ESG investments. Given the connection has a beneficial effect on customers' investment
aforementioned confirmations, the current study aims to intention.Several scholars have examined this issue in their
examine the conduct of individual investors with regards to respective research, including Sparkes (2001), Iyer and
ESG investment within the context of India. Kashyap (2009), Peifer (2012), and Brimble et al. (2013).
Hypothesis 2(H2): Social Norms have a significant positive
effect on ESG investment intention among Indian retail
investors.

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 Pacific Business Review (International)

Financial Self-Efficacy by individuals while making investment decisions (Iyer and

Financial self-efficacy refers to the level of confidence that Kashyap, 2009; Gregor and Utz, 2014; Vyas, Mehta, and
individuals have in their capacity to participate in and make Sharma, 2020).Kakeu (2017) conducted a study that
wise financial decisions and actions. Palacios-González yielded findings pertaining to the premium anticipated by
and Chamorro-Mera (2018) found that investors' investors in relation to environmental risk.The study
perspective is crucial in determining the effectiveness of conducted by Asif et al. (2020) found that risk attitudes
socially responsible investments and the personal benefits partially mediate the relationship between money attitudes
they associate with responsible investment. These variables and involvement in the stock market.
also impact their propensity to engage in responsible Hypothesis 5 (H5): Risk-perception has a significant effect
investment. on ESG investment intention among Indian retail investors.
Hypothesis 3 (H3): Financial Self-Efficacy has a Return Expectations from ESG Investing
significant positive effect on ESG investment intention Several studies have examined the return expectations
among Indian retail investors. associated with socially responsible investing. These
ESG concerns studies include Domini (2002), Sparkes (1998),
ESG worries encompass an individual's apprehensions McLachlan and Gardner (2004), Nilsson (2007), Vyvyan et
pertaining to environmental, social, and governance al. (2007), Nilsson (2009), Gladish et al. (2012), Berry and
issues.ESG concerns have permeated the advanced Yeung (2012), Beal, Goyen, and Phillips (2005), Gregor
countries and worldwide investment practises, whereas the (2014).According to Zwergel, Wins, and Klein (2019),
notion of ESG investing remains relatively nascent in India their research on retail investors in Germany revealed
(Tripathi and Bhandari, 2014). Given that India now holds varying expectations among investors related to
the position of the fastest expanding economy globally, it is sustainable investments.The integration of ESG factors, as
imperative for the nation to assume a proactive role in well as socially responsible investing (SRI), can offer
spearheading the Environmental, Social, and Governance diversification advantages to investors. By considering
(ESG) agenda(Karkera,2023).Thus, ESG concerns are a country-specific effects, social impact, and financial
very important factor in our research framework. Several rewards, responsible investing can provide a
researchers have examined environmental problems, comprehensive approach to investment decision-
ethical concerns ,social concerns and governance concerns making(Tripathi and Kaur, 2021).
as Lewis (2001),Williams (2005), Beal, Goyen, and Hypothesis 6 (H6) : Return expectations have a significant
Phillips (2005),Owen and Qian (2008), Iyer and Kashyap positive effect on ESG investment intention among Indian
(2009),Nilsson (2009), Pasework and Riley retail investors.
(2009),McLachlan and Gardner (2012), Gladish et al. Impact of ESG Investment Intention on ESG
(2012),Berry & Junkus (2013), Wins and Zwergel (2014), Investment Behaviour
Nakai et al. (2018).
The term "investment intention" pertains to a conceptual
Hypothesis 4(H4): ESG concerns have a significant framework that signifies the potential course of an
positive effect on ESG investment intention among Indian individual's future actions.The prediction of future
retail investors. behaviour can be attributed to an individual's intention, as
Risk Perception/tolerance intention serves as an initial stage leading to later
The selection of a socially responsible investing route is behavioural patterns (Ajzen, 1985).The identification of
also influenced by the risk tolerance of individuals. the relative significance of the factors influencing
Numerous distinguished scholars have presented empirical behavioural intention is a crucial aspect in the examination
findings pertaining to the risk tolerance attitudes exhibited of the behavioural intention exhibited by individual

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investors (Phan and Zhou, 2014). Furthermore, it is widely investigation into the mediating role of this factor in the
accepted that intention serves as a construct that field of ESG investing. However, few researchers such as
encompasses the motivational elements that impact a Dominique Diof, Tessa Hebb, and El Hadji Toure (2016),
certain behaviour, reflecting an individual's inclination to Formankovaa and Trenz (2018), Tucker III, James J., Jones,
engage in the behaviour and the level of effort they are and Scott (2020), Pasework and Riley (2009) and Williams
willing to invest in its execution (Ajzen, 1991). (2005) have incorporated this element into their scholarly
Hypothesis 7(H7): ESG Investment Intention has a investigations.
significant positive effect on ESG investment behaviour Hypothesis 9 (H9) : Financial eco-system mediates the
among Indian retail investors. relationship of ESG Investment Intention with ESG
Mediating role of Informativeness investment behaviour among Indian retail investors.
The concept of informativeness pertains to the level of Figure 1: Research Framework
accessibility to the necessary information or knowledge for
the purpose of engaging in ESG investment. The extent of
informativeness plays a crucial role in shaping the
judgements made by investors. Considering India's
classification as a developing nation and the increasing
importance of ESG investing as a new concept in this
context, the analysis of this specific issue becomes
particularly significant. Our research paper introduces a
new approach for studying how informativeness mediates
the relationship between ESG investing intention and
behaviour. This issue has been examined by several
researchers, including Hai Yap Teoh and Godwin Y Shiu Source: Authors' compilation
(1990), Tucker III, James J., Jones, and Scott (2020),
Pasework and Riley (2009), and Wins and Zwergel (2014). Research Methodology
Hypothesis 8 (H8): Informativeness mediates the Population and Sample
relationship of ESG Investment Intention with ESG The collection of quantitative data for this primary
investment behaviour among Indian retail investors. investigation was carried out through an online
Mediating role of Financial Eco-system for ESG questionnaire in the format of a hyperlink to a Google form.
investment The hyperlink was distributed throughout many digital
media including WhatsApp, email, Facebook, and
The financial ecosystem refers to the comprehensive array
Instagram. The researchers applied the convenience
of market participants inside the financial system who play
sampling methodology, a frequently employed method, to
animportant role in the effective and prudent deployment of
collect the responses. The sample size was obtained using
capital. The paper encompasses an examination of the
the formula suggested by William Godden in 2004. The
involvement of financial advisers and the necessary
data collection period extended from July 2022 to June
infrastructure support for investments in ESG factors. In
2023, during which a total of 390 participants provided
order to achieve success in ESG investing, the
responses. The collected data was analysed to assess the
establishment of an ESG-conscious investing ecosystem
influence of identified factors on the intention of ESG
inside a given country is of paramount importance.
investing and the behaviour of ESG investment among
(Karkera, 2023).The limited focus of researchers,
retail investors in India. The data in this study underwent
especially in developing nations, has led to little

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 Pacific Business Review (International)

analysis using partial least squares structural equation (2020) and three items derived from Sarwar and Afaf
modelling (PLS-SEM). (2016). The measurement of the financial ecosystem was
conducted using a set of four items that were derived from
Measurement of Constructs
the works of Kaustia et al. (2008), Sarwar and Afaf (2016),
Independent constructs and Raut (2020).
The measurement of investment attitude towards ESG Dependent Constructs
factors has been conducted using a set of five measures.
The measurement of ESG investment intention was
These items were derived from previous research
conducted using a set of five items that were derived from
conducted by Sarwar and Afaf (2016), Goles et al. (2008),
the works of Pak and Mahmood (2015), Akhtar and Das
Jensen et al. (2016), Singh and Verma (2017), and Paetzold
(2019), and Raut (2020).The measurement of ESG
and Busch (2014). The measurement of Social Norms in
investment behaviour was conducted using a set of four
this study was based on three items that were derived from
statements that were derived from the studies conducted by
previous research conducted by Sarwar and Afaf (2016),
Yang et al. (2021) and Garg et al. (2022). This study utilised
Taylor and Todd (1995), Raut (2020), Iyer and Kashyap
a 5-point Likert scale, with response options ranging from
(2009), Alam et al (2012), and Sreekumar Nair and Ladha
"strongly disagree" (1) to "strongly agree" (5), to measure
(2014).The measurement of financial self-efficacy in this
the degree of association between the selected constructs
study was based on four items that were derived from the
and the intention to participate in ESG investments, as well
work of Sarwar and Afaf (2016). Four indicators were
as the actual behaviour of ESG investment.
employed to assess ESG issues, as derived from Sahi's
(2017) research.This study employed a measurement of Method of Data Analysis
risk perception utilising four items that were derived from Partial least square structural equation modelling (PLS-
the works of Wins and Zwergel (2014), Sarwar and Afaf SEM) was used to estimate complex models of cause and
(2016), Akhtar and Das (2019), and Mazumdar (2020).To effect interactions utilising latent variables. Structural
assess return expectations related to ESG factors, a set of equation modelling was deemed suitable for assessing
five items was utilised. Specifically, two items were complex conceptual models that incorporate mediation
derived from the work of Palacios-González and effects and higher-order constructs. Since the sample size
Chamorro-Mera (2018), one item was sourced from Sarwar of the study was greater than 100 (n = 390), it was
and Afaf (2016), another item was obtained from Wins and considered suitable to use the Partial Least Squares
Zwergel (2016), and the last item was taken from Duong Structural Equation Modelling (PLS-SEM) technique with
and Huang (2022).The measurement of informativeness in the SmartPLS software to analyse the hypothesised causal
this study incorporates two adapted items from Raut et al. relationships in the study model.

Data Analysis
Table 1: Demographic Characteristics
n % n %
Educational
Gender
Qualification
Female 176 45.13 Upto 12th 11 2.8
Male 214 54.87 Graduation 82 21.03
Total 390 100 Post-graduation 162 41.54

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n % n %
Above Post-
135 34.63
graduation
Total 390 100

Age group Occupation

Below 30 years 137 35.13 Student 51 13.08
30-50 years 208 53.33 Self-employed 79 20.26
Above 50 years 45 11.54 Salaried 239 61.28
Total 390 100 Retired 18 4.62
Unemployed 3 0.76

Total 390 100

Annual Income
Below 5 lakhs 115 29.49
5-10 lakhs 99 25.38
10-15 lakhs 93 23.85
Above 15 lakhs 83 21.28

Total 390 100

Table 1 presents an overview of the demographic features of the participants included in this research.
Source: Authors' data analysis

Reliability and Validity indicator reliability in this study was performed using
Cronbach's alpha (CA) as the criterion, with a minimum
In structural equation modelling (SEM), the first step is to
threshold of 0.60 for CA. The study's findings indicated that
conduct an initial assessment called the measurement
the Cronbach's alpha (CA) values of the construct were
model. This evaluation evaluates the reliability of the
considered good. The evaluation of convergent validity was
constructs, the reliability of the indicators, as well as the
performed using the average variance extracted (AVE)
convergent and discriminant validity of the given
metric. The criteria specified that the values of Average
constructs. Construct reliability can be assessed using two
Variance Extracted (AVE) must be more than 0.50. The
regularly used measures: composite reliability (CR) and
results showed that all constructs had substantial average
Cronbach's alpha (CA). A composite reliability (CR) value
variance extracted (AVE) values and exhibited convergent
of 0.70 indicates that the construct reliability is satisfactory.
validity. Table 2 displays the CR (composite reliability), CA
The results of the measurement model, as presented in
(Cronbach's alpha), and AVE (average variance extracted)
Table 2, demonstrate that the construct reliability (CR)
values.
values surpassed the threshold of 0.70, hence confirming
the good dependability of the construct. The evaluation of

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 Pacific Business Review (International)

Table 2 : Reliability and Validity

Variables No. Of items C.R.(rho_a) C.A. C.R.(Rho_c) AVE VIF

IA 5 0.742 0.710 0.813 0.505 1.937

SN 3 0.711 0.678 0.821 0.607 1.715

FSE 4 0.844 0.813 0.875 0.636 1.691

ESG 4 0.859 0.845 0.895 0.681 2.055

RP 4 0.701 0.646 0.787 0.515 1.925

RE 5 0.820 0.794 0.858 0.551 2.096

INF 5 0.817 0.790 0.856 0.551 1.288

FES 4 0.702 0.691 0.811 0.518 1.458

EII 5 0.874 0.871 0.908 0.664 1.431

EIB 4 0.808 0.759 0.842 0.581 —

Note: IA: Investment attitude towards ESG, SN : Social Norms ; FSE : Financial Self-efficacy;ESG : Environmental , Social and
Governance concerns; RP: Risk Perception; RE: Return Expectations ; INF:Informativeness ; FES : Financial eco-system ; EII : ESG
Investment Intention; EIB : ESG Investment Behaviour; C.A.: Cronbach's Alpha; C.R.: Composite Reliability; AVE: Average Variance
Extracted; VIF: Variance Inflation Factors.
Source: Authors' data analysis.

The assessment of discriminant validity in this study demonstrated adequate discriminant validity for all
involved the use of two specific methodologies: the constructs, as indicated by higher loadings of each
Fornell-Larcker criterion and cross-loadings. The Fornell- construct in comparison to other constructs. The VIF values
Larcker criterion was used to assess the discriminant were ultimately determined to be below the threshold of 5,
validity of components by comparing the square root of the indicating the absence of multicollinearity. This study
average variance extracted (AVE) for each construct with project aims to evaluate the comprehensive collinearity
the correlations between constructs. In contrast, the concept diagnostics of all the independent variables, as suggested
of cross-loadings suggests that the loadings of external by Kock (2015). The research components were subjected
factors should exceed the loadings of their corresponding to regression analysis using the common variable. A
constructs. By doing this, the accuracy of the concepts can Variance Inflation Factor (VIF) value below 5 indicates the
be properly evaluated based on their capacity to absence of bias in the single-source data. The thorough
differentiate. The results of the Fornell-Larcker criterion investigation of collinearity indicates that there is no
can be observed in Table 3.The cross-loadings results have indication of bias originating from a single source.

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Table 3 : Discriminant Validity: Fornell-Larcker Criterion

EIB EII ESG FES FSE INF IA RE RP SN
EIB 0.763

EII 0.664 0.815

ESG 0.451 0.618 0.825
FES 0.436 0.509 0.588 0.719
FSE 0.411 0.492 0.469 0.524 0.797

INF 0.273 0.401 0.609 0.420 0.329 0.742

IA 0.515 0.645 0.558 0.520 0.509 0.399 0.689
RE 0.517 0.691 0.618 0.474 0.384 0.565 0.547 0.742

RP 0.406 0.579 0.550 0.611 0.483 0.448 0.498 0.623 0.699

SN 0.362 0.488 0.507 0.458 0.533 0.318 0.546 0.382 0.368 0.779

Note: IA: Investment attitude towards ESG, SN : Social Norms ; FSE : Financial Self-efficacy;ESG : Environmental , Social and
Governance concerns; RP: Risk Perception; RE: Return Expectations ; INF:Informativeness ; FES : Financial eco-system ; EII : ESG
Investment Intention; EIB : ESG Investment Behaviour.The bold values in the matrix above are the item loadings and others are cross-
loadings.
Source: Author's data analysis.

Path Analysis Miller (1992), it is suggested that an r-square value of 0.10

or higher is necessary to consider the explained variance of
The results on the structural model shown in Table 4 clarify
a specific endogenous construct as satisfactory.The study
the various factors that impact the intention to participate in
yielded r-square values of 0.618 and 0.454 for ESG
ESG investing. This study presents empirical data
Investment Intention and ESG Investment Behaviour,
demonstrating the substantial influence of Investment
respectively. These values can be deemed significant based
Attitude towards ESG (IA), Financial Self-Efficacy (FSE),
on the existing literature. The factors examined in this
ESG concerns , risk perception of ESG investments (RP),
study, with the exception of return expectations,
and return expectations from ESG investments (RE) on
demonstrated a small effect size on ESG investment
individuals' intention to engage in ESG. The results of this
intention as shown by the f-square.The intention to engage
study further illustrated the significant influence of ESG
in ESG investment demonstrated a significant impact on
investment intention on ESG investment behaviour.
individuals' actual ESG investment behaviour, as
However, it was shown that Social Norms (SN) did not have
evidenced by a substantial effect size. According to Cohen
a statistically significant effect on the intention to
(1988), An effect size between 0.02 and 0.14 is considered
participate in ESG investments.
minor, and an effect size between 0.15 and 0.34 is
R-square, quantifies the percentage of variance accounted considered medium. effect size ranging from 0.02 to 0.14 is
for by the endogenous constructs in the model. It functions classified as small, while an effect size ranging from 0.15 to
as a gauge of the model's capacity to elucidate the observed 0.34 is deemed medium. Effect sizes of 0.35 and above are
data, also known as in-sample predictive power. (Shmeuli categorised as big.The concept of Q-square pertains to the
& Koppius, 2011; Rigdon, 2012). According to Falk and assessment of predictive relevance, which serves as an

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indicator of whether a given model possesses the ability to Furthermore, the model demonstrated a high level of
accurately anticipate outcomes. A Q-square value greater predictive significance (0.341) in forecasting ESG
than zero is generally regarded as favourable. The analysis investment behaviour.
conducted using PLS Predict revealed a significant
predictive relevance (0.594) of the model for predicting
ESG investment intention.

Table 4 : Path Coefficients

Hypo Beta CI-Min CI-Max t p r square f square Q square Decision

Factors affecting Intention to invest in ESG investments

H1 IA—>EII 0.248 0.132 0.378 3.916 0.000 0.083 Accept

H2 SN—>EII 0.070 -0.019 0.161 1.518 0.129 0.007 Reject

H3 FSE->EII 0.086 0.008 0.167 2.098 0.036 0.011 Accept

0.618 0.594
H4 ESG->EII 0.132 0.042 0.230 2.748 0.006 0.022 Accept

H5 RP—>EII 0.095 -0.002 0.186 1.968 0.049 0.012 Accept

H6 RE—>EII 0.354 0.227 0.472 5.720 0.000 0.158 Accept

Factors affecting ESG investment behaviour

H7 EII->EIB 0.611 0.518 0.693 13.746 0.000 0.454 0.466 0.341 Accept

Note: IA: Investment attitude towards ESG, SN : Social Norms ; FSE : Financial Self-efficacy;ESG : Environmental , Social and
Governance concerns; RP: Risk Perception; RE: Return Expectations ;; EII : ESG Investment Intention; EIB : ESG Investment Behaviour.
Source: Author's data analysis.

Mediating Effects The statistical analysis reveals that there is a substantial

direct effect of EII on EIB, as indicated by a p-value of
This study discovered data indicating that the Financial-
0.000.Therefore, the process of mediation is characterised
eco-system partially mediates the influence of ESG
by its partiality and complementarity. The presence of
investing intention on ESG investment behaviour. The
informativeness did not have a mediating influence on the
coefficient observed for the correlation between ESG
individual correlations between ESG investment intention
investment intention and ESG investment behaviour, with
and ESG investment behaviour (p-value = 0.488).The
FES serving as the mediator, was determined to be 0.072 (p-
findings on the mediating influence of informativeness and
value = 0.007).This discovery implies that the existence of
financial eco-system on the suggested linkages are
a financial ecosystem greatly influences the connection
presented in Table 5.
between individuals' intention to participate in ESG
investments and their actual behaviour in ESG investments.

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Table 5: Mediation Analysis Results

Significance at
Beta CI-Min CI-Max T-value P-value
5%
1. Direct Effect
0.611 0.518 0.693 13.746 0.000 Significant
EII —-> EIB
2a. Indirect Effect
-0.014 -0.052 0.027 0.694 0.488 Insignificant
EII—>INF—>EIB
2b. Indirect Effect
0.072 0.025 0.131 2.676 0.007 Significant
EII—> FES—>EIB
3. Total Effect
0.669 0.603 0.733 20.110 0.000 Significant

Direct Effect : Significant ; Indirect effect: EII—>INF—>EIB: Insignificant ; Mediation effect of Informativeness : No mediation ;
Indirect Effect : EII—> FES—>EIB : Significant; Mediation effect of Financial Eco-system : : Partial complementary Mediation
Source: Author's data analysis.

Discussion and Conclusion significant association was seen between individuals'

investment attitude towards ESG factors and their intention
The aim of this study was to investigate an individual's
to engage in ESG investments.This specific observation
intention and behaviour towards participating in ESG
aligns with the results obtained in previous research
investments in the Indian setting, by expanding upon the
endeavours. Lewis (2001), McLachlan and Gardner,
fundamental components of the Theory of Planned
Gladish et al. (2012), Berry and Yeung (2012), Wins and
Behaviour (TPB) and other identified antecedents that
Zwergel (2014), and Beal, Goyen, and Phillips (2005) are
influence such behaviour. The study found that return
the authors referenced in the text. Furthermore, it was noted
expectations from ESG investing had the strongest
that there is a significant influence of environmental, social,
correlation with ESG investment intention (beta = 0.354).
and governance issues on the inclination to invest in ESG.
This suggests that potential Indian ESG investors prioritise
This specific finding corroborates the conclusions drawn in
financial returns when considering whether to invest in
other research conducted by Gladish et al. (2012), Berry
ESG investments. This study has also confirmed the
and Junkus (2013), and Vyas, Mehta, and Sharma (2020).
significant impact of risk perception on the intention to
However, the findings diverge with the research work by
invest in ESG, aligning with the conclusions drawn in
Raut et al. (2021), which reported a lack of statistically
previous research conducted by Fauzi, Husniyah, and
significant association between environmental concern and
Amim (2009), Iyer and Kashyap (2009), Gregor and Utz
investors' socially responsible investment (SRI) intention.
(2014), and Vyas, Mehta, and Sharma (2020). The study
Other unique finding of this research is that social norms
explicitly indicated that those who are inclined to take risks
have a statistically insignificant association with ESG
are more likely to engage in investments related to ESG
investing intention (p=0.129). This finding suggests that
factors.The results of this study indicate a statistically
individuals who invest in ESG do not consistently conform
significant correlation between Financial self-efficacy and
to the behaviours of their peers. Individuals may encounter
both ESG investing intention (p-value = 0.036) and ESG
varying levels of apprehension from those around them
investment behaviour (p-value = 0.037).This indicates the
when considering the concept of ESG investing. The
significance of an individual's confidence in their ability to
support or lack thereof from their religious communities
make ESG investments. Additionally, a statistically
and the potential impact on their social status may not

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significantly factor into their decision-making process. aim to understand the decision-making process utilised by
Nevertheless, they persist in pursuing ESG investing. retail investors that emphasise environmental, social, and
Jownall, Gupta, and Pahuja (2022) as well as Pasework and governance (ESG) factors. Therefore, this comprehension
Riley (2010) have also observed notable disparities can provide insights for the creation of innovative ESG
between conventional investors and socially responsible mutual fund strategies designed to cater to the requirements
investors. of socially responsible investors.The facts moreover
This study discovered evidence indicating that the indicate that there should be a greater quantity of ESG
Financial-eco-system somewhat mediates the connection mutual funds within our nation.Additionally, it serves as a
between ESG investment intention and ESG investment prompt for financial advisors to offer a greater range of
conduct, with a p-value of 0.007.The findings suggest that services centred around ESG considerations to their
the presence of a financial eco-system has a substantial clientele. Additionally, it offers valuable insights to rating
impact on the connection between individuals' intention to agencies, enabling them to deliver comprehensive and
engage in ESG investments and their actual behaviour in standardised ESG ratings to the stakeholders . Furthermore,
this regard.This suggests that investors would be more this phenomenon also carries significant implications for
inclined to wards ESG investing if a country's financial stock exchanges in terms of enhancing the
ecosystem is more ESG conscious.This would entail conceptualization of ESG indices. In summary, it can be
offering of appropriate ESG guidance by financial advisors inferred that public entities actively encourage an
or consultants, refining ESG ratings by rating agencies, atmosphere conducive to the advancement and facilitation
developing more comprehensive ESG indices, and of sustainable investments.
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APPENDIX
Questionnaire/Measurement Model

C.R. C.R.
Construct Item description C.A. AVE VIF
(rho_a) (Rho_c)

IA1.I believe that ESG investing is a profitable decision.

IA2.I believe that ESG investing is a wise decision and
helps in creating wealth for future.
IA3.ESG investments are more reliable than conventional
Investment
investments.
Attitude
IA44. I believe that the term ESG investing is used as a 0.742 0.710 0.813 0.505 1.937
towards
selling argument by the mutual funds /companies and it is
ESG (IA)
only systematic greenwashing (deception) ) (reverse
coded)
IA5.I believe that ESG investing is ethical and this gives
me a lot of psychological satisfaction.

SN1.People close to me support ESG investing.

Social SN2.ESG investing enhances my social status.
0.711 0.678 0.821 0.607 1.715
Norms(SN) SN3.My religious beliefs are the foundation of my ESG
based investments

FSE1.I know how to invest in ESG based investments

FSE2.I know how to distinguish between ESG and non-
Financial
ESG investments
Self-
FSE3.I can comfortably evaluate ESG information about 0.844 0.813 0.875 0.636 1.691
efficacy(FS
the company
E)
FSE4.I understand whether the ESG based investment
will be good for me

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 Pacific Business Review (International)

C.R.
C.R.
Construct Item description (rho_a C.A. AVE VIF
(Rho_c)
)

ESG1.Social concerns (e.g. social upliftment , community development,

Environme
customer satisfaction ) motivate me for ESG investing.
ntal , social
ESG2.Environmental concerns and sustainable development motivate me
and
for ESG investing. 0.859 0.845 0.895 0.681 2.055
governance
ESG3.Governance concerns motivate me for ESG investing.
concerns(E
ESG4.Ethical concerns (e.g. honesty ,integrity ,fairness in dealing with
SG)
the stakeholders )motivate me for ESG investments

RP1.ESG investments are more risky.

Risk
RP2.ESG investing will prove to be pandemic resilient in future.
perception/
RP3.As an ESG investor, I will remain calm and rational when a sudden
Risk 0.701 0.646 0.787 0.515 1.925
and unexpected negative change would occur in the market.
tolerance
RP4.I will prefer to invest in known companies/MFs whether ESG or no-
(RP)
ESG

RE1.I feel attracted towards ESG investing when I hear the good news of
its financial performance during recent times.
RE2.I would not sell ESG investments even when prices break out to
Return
new heights
Expectation
RE3.Rate of return from ESG investing is equal to or higher than the 0.820 0.794 0.858 0.551 2.096
from
average return rate of the market.
ESG(RE)
RE4.A company with good ESG ratings and consistently high profit is
my safest bet.
RE5.I would go for ESG investing, if it gets tax exemption.

INF1.My main fear about ESG investing is “ lack of knowledge.”

(reverse coded)
INF2.I will go for ESG investing if ESG related information is easily
available.
Informative INF3.I will go for ESG investing if companies disclose more ESG
0.817 0.790 0.856 0.551 1.288
ness(INF) information.
INF4.I will choose ESG investments if I know which companies or
mutual funds classify under it
INF5.Fund reputation/Company reputation is important for ESG
investing

FES1.Availability of more number of ESG based investments will

prompt me to buy it
Financial FES2.To invest in ESG based investments, adequate financial advice is
eco- available.
0.702 0.691 0.811 0.518 1.458
system(FES FES3.To invest in ESG based investments, adequate infrastructure
) support (like banks, broking houses etc.) is available to me
FES4.Stock market will automatically adjust ESG advantage in share
price

EII1.I will save a portion of my income to invest in ESG based

investments .
ESG
EII2.I will frequently make ESG based investments.
Investment
EII3.I will encourage my friends and family to do ESG investments. 0.874 0.871 0.908 0.664 1.431
Intention(E
EII4.I will make every effort to invest in ESG based investments in near
II)
future.
EII5.I believe that ESG investing is an attractive investment channel.

EIB1.I invest in mutual funds/stocks that have social concerns.

EIB2.I invest in mutual funds/stocks that have environmental concerns.
ESG
EIB3.I invest in mutual funds/stocks that have follow good governance
Investment
norms. 0.808 0.759 0.842 0.581 —
behaviour(
EIB4.I invest only for earning maximum financial return on my
EIB)
investments than considering the environmental ,social and governance
criteria.

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