Evaluating the Real Impact of ESG Disclosures on Investor’s Trust in India

Author(s): Mayank Tomar

Abstract:

In the evolving landscape of global finance, Environmental, Social, and Governance (ESG) disclosures have emerged as a pivotal determinant of investor decision-making and corporate credibility. This study critically evaluates the real impact of ESG disclosures on investor trust within the Indian capital market, particularly in light of increasing regulatory emphasis and stakeholder awareness. The research investigates whether ESG reporting serves merely as a compliance mechanism or as a substantive driver of transparency, risk mitigation, and long-term value creation. Adopting a descriptive and analytical research design, the study integrates both primary data-collected through structured questionnaires targeting investors-and secondary data from corporate sustainability reports, annual disclosures, and regulatory frameworks. Special focus is given to the Business Responsibility and Sustainability Reporting (BRSR) framework introduced by the Securities and Exchange Board of India (SEBI), which aims to standardize ESG disclosures and enhance their reliability. The findings reveal a strong positive correlation between ESG disclosures and investor trust, with governance factors exerting the most significant influence due to their direct impact on transparency, accountability, and ethical business conduct. Institutional investors demonstrate a higher degree of ESG integration in investment decisions, whereas retail investors, though comparatively less aware, are increasingly recognizing the relevance of ESG metrics. Environmental and social dimensions are also gaining prominence, particularly in the context of sustainability risks and corporate reputation. However, the study also identifies critical challenges, including lack of uniform ESG standards, inconsistencies in reporting practices, and the growing concern of greenwashing, which may undermine investor confidence. The research concludes that ESG disclosures are not merely informational tools but strategic instruments that enhance market efficiency, reduce information asymmetry, and strengthen long-term investor relationships. The study underscores the need for improved standardization, regulatory oversight, and investor education to fully realize the potential of ESG in India.

keywords:
ESG Disclosures, Investor Trust, Corporate Governance, Sustainable Investing, BRSR, SEBI, Indian Capital Market, Transparency, Greenwashing, Responsible Investing

Pages: 56-61     |    13 View     |    1 Download