Theoretical Insights of Environmental, Social, and Governance (ESG) Disclosures and Investment Decision

Abstract

Investors employ a variety of techniques to gain high-quality information while making investment decisions. Traditionally, they made decisions based solely on financial success, but these days they have more expectations than just financial gain. They make investing decisions based on ESG data. People want their investments to expand in tandem with their growing desire to be more sustainable. Moreover, ESG integration has lately evolved from a specialized concept to a standard practice in investment. The study aims to provide light on the intricate growth of environmental, social, and governance (ESG) integration into investment decisions by drawing on theoretical and methodical insights from pertinent literature. The chapter indicates that ESG integration has transformed society. The investment landscape has undergone significant transformation as individuals strive to align their financial objectives with their social and ethical convictions. The shifting in the role of ESG from a niche component to a mainstream consideration implies a fundamental change in the investment process itself.