ESG Awareness and Sustainable Investment Decisions: The Moderating Role of Financial Literacy

Abstract

This study examines the relationship between ESG Awareness and Sustainable Investment Decisions and investigates the moderating role of Financial Literacy among individual investors. A quantitative, cross-sectional research design was adopted, and 442 responses were initially collected through a structured questionnaire in Bangalore using a five-point Likert scale. Following data screening, 374 valid responses were retained for analysis. ESG Awareness was examined through Environmental, Social and Governance Awareness, while Financial Literacy incorporated Financial Knowledge, Financial Skills, Financial Attitude and Financial Behaviour. Sustainable Investment Decisions captured investors' preference and intention towards sustainable and ESG-oriented investment alternatives. The data were analysed using SPSS and AMOS-based Structural Equation Modelling. The findings demonstrate that ESG Awareness has a positive and significant effect on Sustainable Investment Decisions (β = 0.46, p < 0.001), while Financial Literacy also has a significant positive effect (β = 0.29, p < 0.001). Its confirming the moderating role of Financial Literacy. The model explains 48% of the variance in Sustainable Investment Decisions. The findings highlight that financial capability strengthens investors' ability to translate ESG awareness into sustainable investment behaviour.