UNDERSTANDING THE IMPACT OF ESG DISCLOSURES ON INVESTMENT DESICION-MAKING: A STUDY ON MILLENIALS AND GENERATIONS Z IN DELHI (NCR)

Abstract

The specific objective of this study is to investigate how millennials and Generation Z investors utilize Environmental, Social, and Governance (ESG) factors into their investment decisions. The study is based on the Norm Activation Model (NAM) and the Theory of Planned Behavior (TPB). Data was collected through a questionnaire survey completed by 517 investors in Delhi NCR. The analysis of the data and testing of the theories were conducted using the Partial Least Squares (PLS) path modeling approach. Five hypotheses were tested using structural equation modeling, and suitable statistical tests’ in order to identify significant difference between Millennial’s and Generation Z. Importantly, all hypotheses were positive in nature. Additionally, the research endeavors to assess the impact of sub category of ESG variables on investor behavior. Data were collected from millennials and Generation Z to explore how ESG factors can be grouped together to influence investors attitudes and intentions. The findings of the research indicate that millennials and Generation Z investors do consider a company's social, environmental, and governance factors when making investment decisions. Additionally, their intention toward ESG principles on return of investors appears to have an influence on their investment choices. By utilizing empirical evidence on the relationship between ESG factors and investment decisions, this study also contributes to the field of behavioral finance research. The implications of these findings suggest that corporate communication strategies can be aligned with global reporting standards, thereby attracting impact investors and fostering moral and environmental education. SPSS and Smart-PLS Software was utilized to analyze the relationship between environmental, social, and governance factors of these two-age group. Generation Z appears to prioritize social and environmental factors rather than governance, while Millennials place greater emphasis on governance concerns. The study emphasis on the significance of effectively communicating ESG based policies and suggests that organizations should prioritize ESG principles to strengthen their brand image and build investors trust. Furthermore, the study suggests the emphasis of Environmental, Social, and Governance (ESG) considerations in investment related decision-making. It suggests that companies and fund managers should take proactive measures, such as enacting laws, regulations, and upholding ESG directives, to encourage sustainable growth in the capital market and economy. Launching financial products based on ESG principles is one such initiative proposed in the study. These financial products could promote ethical investing practices by incorporating ESG factors into their investment strategies. By doing so, they could incentivize companies to prioritize ESG considerations in their operations. This, in turn, may lead to a reduction in the cost of capital for these companies over time. Overall, the study underscores the importance of ESG considerations in investment decision-making.