Integration of ESG Information Into Individual Investors’ Corporate Investment Decisions: Utilizing the UTAUT Framework

Abstract

Environmental, Social, and Governance (ESG) criteria are now considered significant, global non-financial evaluating factors of corporate value. However, no attention is given to what influences the integration of ESG information by individual investors in their investment decisions. This study first identifies different types of information investors use to make investment decisions. Risks identified in information integration in investment decision making is reviewed. Next, the Unified Theory of Acceptance and Use of Technology (UTAUT) model is used to identify individual investors’ investment tendencies and the factors affecting integration of ESG information into investment decisions. Each of four categories for UTAUT innovation adoption factors (performance expectancy, effort expectancy, social influences, and facilitating conditions) are discussed in relation to how they affect individual investors’ integration of ESG information. Standardization of ESG reporting and evaluation frameworks would reduce efforts to adopt ESG information and could build a strong foundation for facilitating ESG information integration. Corporates’ efforts to further communicate their ESG management through their investor relations and active governmental well as non-governmental organizations’ participation are recommended.

ESG Consciousness in Mutual Fund Advisory: Examining Attitudes, Intentions, and Moderating role of Fund Fundamentals and Herding Bias

“…The genesis of this hypothesis lies in the contemporary evolution of the investment landscape, characterized by the burgeoning prominence of ESG considerations. In recent years, there has been a palpable surge in societal awareness regarding ESG concerns, encompassing dimensions of environmental sustainability, social responsibility, and ethical governance (Park & Oh, 2022). This heightened awareness has wrought profound transformations in the approach individuals adopt towards investment decision-making.…”

Examine the Influence of Non-Economic Factors on Enterprise Performance in Photovoltaic Enterprises by Implementing ESG Practices

“…Mechanism analysis shows that corporate transparency plays a positive mediating role in the process of ESG influencing government subsidies [2]. High-rated ESG companies have lower cost of capital, which can be interpreted as investors' preference for more sustainable assets, thus contributing to corporate financing and market value management [3].While there have been numerous studies on the relationship between ESG and enterprise performance, most fail to clearly describe their impact on performance. Improving ESG performance requires significant financial investment and resource allocation; Also, the better the ESG performance, the greater the inhibition on the level of inefficient investment [4].…”

Higher expected returns for investors in the energy sector in Europe using an ESG strategy

“…When making investing decisions, investors employ a variety of ways to get reliable data. Investors used to make judgments only on the basis of financial performance, whereas they now have more objectives than just profit (Park and Oh, 2022). Furthermore, they are making investing decisions based on factors other than just financial data (including ESG data) (Sultana et al, 2018).…”

“…These preferences for return, risk, and social responsibility can be implemented in a variety of ways, and numerous multicriteria portfolio optimization models have been developed to fill this gap over time (Amon et al, 2021). Park and Oh (2022), state that individual investors are becoming more interested in ESG investing for two reasons.…”