MBA Journals Peer-reviewed management research from Consortium e-Learning Network

NOLEGEIN Journal of Financial Planning And Management

Green Minds, Smart Investments: Impact of Sustainability Cognition on Investment Behavior Among Emerging Indian Investors

  1. LATHIKA JAIN M
  2. ANUPAMA K MALAGI

Abstract

Does the level of sustainability consciousness of an investor influence their investment decisions? This is the question we address in this paper. We test the impact of sustainability cognition - the combination of knowledge, attitudes and information-seeking that investors bring to ESG investment decisions - on the investment choices of retail investors in India. We test four hypotheses in our original survey of 300 retail investors, using a moderated mediation approach based on the Theory of Planned behaviour. Specifically, we find that sustainability cognition is the strong predictor of ESG investment behaviour (β = 0.480, t = 9.179, p < .001, R² = 0.220). We also find that this effect is partially mediated by risk perception - investors who understand sustainability tend to recalibrate the risk of environmental change such that they view green portfolios as less risky, and that change influences some of their subsequent investment behaviour (indirect effect = 0.056). Financial literacy and social influence both independently moderate investment behaviour as additive predictors, but neither has a significant effect on the slope of sustainability cognition. AMOS-compatible statistics show the five-construct structural model is a good fit (CFI = 0.961, RMSEA = 0.059). The article concludes with implications for SEBI, investment managers and investor education initiatives.

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