AN ANALYTICAL EXAMINATION OF THE IMPACT OF ESG-BASED INVESTMENT INSTRUMENTS ON INVESTORS’ PORTFOLIO DECISION-MAKING PROCESS

Abstract

Environmental, Social, and Governance (ESG) investing has emerged as a significant investment approach that integrates sustainability principles with monetary decision-making. The increasing awareness of responsible investing has encouraged investors to consider environmental protection, social responsibility, and corporate governance while making investment decisions. The current research, with the title "Investor Perception towards ESG-Based Investment Instruments and Their Influencing Portfolio Decision Making", analyses investors awareness, perception, attitude towards ethical and sustainability aspects of life as well as the impact of ESG investment instruments on portfolio decision making. A descriptive research design using enabling primary data from a structured questionnaire of 275 respondents in the study. A convenience sampling technique was used to select the respondents. The collected data were analysed using Percentage Analysis, Independent Sample t-test, One-Way ANOVA, Kruskal–Wallis Test, and other appropriate statistical tools with the help of SPSS software. The findings reveal that investors possess a moderate to high level of awareness regarding ESG investment concepts and generally exhibit a favourable perception towards ESG-based investment instruments. The findings of the research indicate that the positive influence of ESG on investors does exist, especially in terms of long-term financial impact and investment ethics or sustainability. The implications of data analysis hypotheses testing indicates that the ‘age’ and the ‘occupation’ has positive significant effect on some dimensions of ESG awareness and portfolio decision-making, while other demographic variables age, gender, income level & area of residence had no significant effect on most dimensions of investors perception and attitude towards ESG investments. BofA noted in the study that investors are becoming increasingly aware of the significance of environmental responsibility, corporate governance and social responsibility when choosing how to invest.  The study concludes that ESG-based investment instruments have a positive impact on investors' portfolio decision-making and are becoming an integral part of modern investment strategies. Enhancing investor awareness, strengthening ESG disclosure practices, promoting financial literacy, and improving regulatory support can further accelerate the adoption of sustainable investment practices. The findings provide valuable implications for investors, financial institutions, policymakers, asset management companies, and researchers in promoting responsible and sustainable investment behaviour while contributing to long-term economic, environmental, and social development.