Assessing The Role Of ESG And Sustainability In Shaping Investment Trends In The Indian Automobile Sector

Abstract

In recent years, Environmental, Social, and Governance (ESG) factors have gained significant importance among investors seeking ethical and sustainable financial returns. This study examines the influence of awareness of ESG disclosure and awareness of sustainable practices in the automobile sector on investment decisions. The primary objective is to understand whether investor awareness in these areas significantly affects how they perceive and respond to ESG scores while making investment choices. A quantitative research design was adopted, utilizing a structured questionnaire distributed to 250 purposively selected respondents. The study collected data on three major constructs awareness of ESG disclosure, awareness of sustainable practices in the automobile sector, and the impact of ESG scores on investment decisions along with demographic details such as gender, age group, and educational qualification. The results of descriptive statistics revealed a higher level of ESG awareness among respondents with postgraduate and professional qualifications. Inferential analysis using Pearson correlation showed a statistically significant positive relationship between ESG awareness variables and investment decisions, with awareness of sustainable practices showing a stronger influence (r = 0.298, p < 0.001) compared to ESG disclosure (r = 0.162, p = 0.011). ANOVA results confirmed significant differences in awareness based on qualification levels. Regression analysis indicated that the two independent variables jointly explained 9.8% of the variance in investment decisions (R² = 0.098). Structural Equation Modeling (SEM) further validated these findings by confirming the positive path coefficients from both awareness constructs to investment decisions. The study concludes that while ESG awareness especially related to sustainable practices in the automobile sector, influence investment decisions, other factors may also play a significant role. This research highlights the importance of enhancing ESG-related education and transparency to foster responsible and informed investment behavior among retail investors. These insights are valuable for policymakers, financial advisors, and ESG-reporting companies.