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<p>Despite the rapid global expansion of sustainable finance, existing literature predominantly focuses on institutional investors in developed economies, offering limited evidence on how retail investors in emerging markets interpret ESG disclosure quality. This study examines how perceived ESG disclosure quality influences investment decisions among Millennial and Gen-Z retail investors in India. It further investigates the mediating role of investor trust and the moderating effects of financial literacy and sustainability orientation. A quantitative cross-sectional survey design was adopted, and data were collected from 426 Millennial and Gen-Z retail investors in India using purposive and snowball sampling techniques. Measurement validity was established through Confirmatory Factor Analysis (CFA). Structural Equation Modeling (SEM) using AMOS tested direct and mediating relationships, while bootstrapping (5,000 resamples) assessed mediation analysis. Hierarchical regression was used to examine moderation effects. The results indicate that ESG disclosure quality significantly influences investor trust (β = 0.721, <i>p</i> &lt; 0.001) and investment decisions (β = 0.482, <i>p</i> &lt; 0.001). Investor trust partially mediates the relationship between disclosure quality and investment decision-making (indirect effect β = 0.312, 95% CI [0.224, 0.408]). The structural model explains 52% of the variance in investment decisions. Furthermore, financial literacy (β = 0.147, <i>p</i> = 0.003) and sustainability orientation (β = 0.184, <i>p</i> &lt; 0.001) significantly strengthen these relationships. The findings suggest that firms in emerging markets should enhance the transparency, credibility, and comparability of ESG disclosures to attract young retail investors. Policymakers should strengthen disclosure standards, BRSR reporting quality, and financial literacy initiatives to reduce information asymmetry and promote sustainable investment behavior. This study contributes to the behavioral finance and sustainability literature by identifying trust as a psychological mechanism linking ESG disclosure quality to retail investment behavior in an emerging economy context, thereby extending ESG research beyond institutional and developed-market settings.</p>

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Beyond greenwashing: the quality of ESG disclosure on Millennial and Gen-Z investor investment decisions

  • 期刊论文

  • 发表日期：

    2026年7月2日

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  • Bijin Philip,
  • Lakshmi Shetty

摘要

Despite the rapid global expansion of sustainable finance, existing literature predominantly focuses on institutional investors in developed economies, offering limited evidence on how retail investors in emerging markets interpret ESG disclosure quality. This study examines how perceived ESG disclosure quality influences investment decisions among Millennial and Gen-Z retail investors in India. It further investigates the mediating role of investor trust and the moderating effects of financial literacy and sustainability orientation. A quantitative cross-sectional survey design was adopted, and data were collected from 426 Millennial and Gen-Z retail investors in India using purposive and snowball sampling techniques. Measurement validity was established through Confirmatory Factor Analysis (CFA). Structural Equation Modeling (SEM) using AMOS tested direct and mediating relationships, while bootstrapping (5,000 resamples) assessed mediation analysis. Hierarchical regression was used to examine moderation effects. The results indicate that ESG disclosure quality significantly influences investor trust (β = 0.721, p < 0.001) and investment decisions (β = 0.482, p < 0.001). Investor trust partially mediates the relationship between disclosure quality and investment decision-making (indirect effect β = 0.312, 95% CI [0.224, 0.408]). The structural model explains 52% of the variance in investment decisions. Furthermore, financial literacy (β = 0.147, p = 0.003) and sustainability orientation (β = 0.184, p < 0.001) significantly strengthen these relationships. The findings suggest that firms in emerging markets should enhance the transparency, credibility, and comparability of ESG disclosures to attract young retail investors. Policymakers should strengthen disclosure standards, BRSR reporting quality, and financial literacy initiatives to reduce information asymmetry and promote sustainable investment behavior. This study contributes to the behavioral finance and sustainability literature by identifying trust as a psychological mechanism linking ESG disclosure quality to retail investment behavior in an emerging economy context, thereby extending ESG research beyond institutional and developed-market settings.