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<p>Despite growing interest in sustainable finance, retail investor participation in Environmental, Social and Governance (ESG) Investments remains limited in emerging markets like India, emphasizing the need to understand the factors influencing their investment intention. The study aims to investigate ethical and motivational factors that influence their intention by using Self Determination Theory (SDT) and how Green Investment Efficacy moderates the relationship between intention and investment behavior. Using data collected from 356 retail investors with active market participation from North India through purposive and snowball sampling, the study applies a two-stage Partial Least Squares Structural Equation Modeling (PLS-SEM) and Importance-Performance Map Analysis (IPMA) approach. The findings reveal that key intrinsic motivational factors (Green Altruism, Willingness to pay greenium, Openness to Change, ESG Literacy and Perceived ESG Investment Performance) are significant determinants of ESG Investment Intention. The study also finds that ESG Investment Intention positively leads to ESG Investment behavior. However, this relationship becomes stronger when investors have higher confidence in the positive impact of their green investments, highlighting the moderating role of Green Investment Efficacy. The study contributes to the <i>sustainable finance</i> literature by integrating SDT into ESG Investment decisions, highlighting how intrinsic moral commitments and competence-based responsibility strengthen the ethical legitimacy of financial systems while balancing financial returns. The findings can help policymakers, financial institutions and fund managers through focused awareness programs, improve ESG literacy and build investor confidence through clear communication about the real impact of ESG Investments.</p>

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Unveiling the motivational drivers of ESG Investment: evidence from Indian retail investors

  • 期刊论文

  • 发表日期：

    2026年7月14日

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  • Ritu Rani,
  • Rajesh Bhatia,
  • Prihana Vasishta,
  • Nidhi Tanwar

摘要

Despite growing interest in sustainable finance, retail investor participation in Environmental, Social and Governance (ESG) Investments remains limited in emerging markets like India, emphasizing the need to understand the factors influencing their investment intention. The study aims to investigate ethical and motivational factors that influence their intention by using Self Determination Theory (SDT) and how Green Investment Efficacy moderates the relationship between intention and investment behavior. Using data collected from 356 retail investors with active market participation from North India through purposive and snowball sampling, the study applies a two-stage Partial Least Squares Structural Equation Modeling (PLS-SEM) and Importance-Performance Map Analysis (IPMA) approach. The findings reveal that key intrinsic motivational factors (Green Altruism, Willingness to pay greenium, Openness to Change, ESG Literacy and Perceived ESG Investment Performance) are significant determinants of ESG Investment Intention. The study also finds that ESG Investment Intention positively leads to ESG Investment behavior. However, this relationship becomes stronger when investors have higher confidence in the positive impact of their green investments, highlighting the moderating role of Green Investment Efficacy. The study contributes to the sustainable finance literature by integrating SDT into ESG Investment decisions, highlighting how intrinsic moral commitments and competence-based responsibility strengthen the ethical legitimacy of financial systems while balancing financial returns. The findings can help policymakers, financial institutions and fund managers through focused awareness programs, improve ESG literacy and build investor confidence through clear communication about the real impact of ESG Investments.