Effect of enviromental, social and governance factors on investment decision of investor in nepal

Abstract

This study investigates the impact of Environmental, Social, and Governance (ESG) factors on investment decisions among Nepalese investors. As global attention toward sustainable investing grows, limited research exists on ESG's role in Nepal's investment behavior. A descriptive and causal-comparative research design was adopted, focusing on 385 investors in Nepal, selected through convenience sampling. Quantitative data was collected via a structured questionnaire using a five-point Likert scale to assess investor perceptions. Descriptive statistics, correlation, and multivariate regression analyses were employed to examine the relationship between ESG factors (independent variables) and investment decisions (dependent variable). Findings indicate a statistically significant positive influence of all three ESG components on investment decisions, with governance showing the strongest impact, followed by social and environmental factors. This underscores the importance of ESG considerations in shaping investor behavior in Nepal. The study offers practical insights for investors, policymakers, and financial institutions, advocating for the integration of ESG factors into investment strategies. It also recommends future research into the long-term effects of ESG and the promotion of responsible investing practices in Nepal.

Keywords: Environmental factors, Social factors, Governance factors, Investment decisions, Sustainable finance.