Investment decisions through ESG products, analysis of behavioral aspects.

Abstract

ABSTRACT The incorporation of Environmental, Social, and Governance (ESG) aspects into investment decisions has gained substantial traction in recent years, indicating a rising realization of the relevance of sustainability and ethical issues in the financial markets. While previous research has exhaustively examined the financial implications of ESG integration, this thesis focuses on understanding the behavioral aspects of ESG investment.

Using behavioral finance theories and methodology, this study investigates the psychological variables influencing investors' decisions about ESG investments. The study looks into the impact of cognitive biases, socio-psychological factors, and individual preferences on ESG investment behavior using a thorough analysis of empirical data and qualitative research methods. The thesis adds to the existing literature by providing insights into the fundamental drivers of ESG investment decisions, including the impact of emotions, social influences, and cognitive processes in affecting investor behaviour. This study has important implications for investors, asset managers, governments, and other stakeholders interested in promoting sustainable finance practices since it sheds light on the behavioral dynamics of ESG investment.

Key findings emphasize the importance of investor attitudes, risk and return perceptions, societal norms, and ethical beliefs in influencing ESG investment behavior. The study also identifies impediments and challenges to the adoption of ESG investing techniques, as well as recommendations for how to overcome these obstacles and increase participation with sustainable investment practices. Overall, this thesis contributes to a better understanding of the behavioral aspects of ESG investment, enhancing research in both behavioral finance and sustainable investing fields. This study's findings have practical implications for encouraging better educated and sustainable investment decisions, so promoting financial goals that are aligned with broader environmental, social, and governance objectives.