A Conceptual Framework on ESG Investing and Greenwashing: Retail Investors' Perspective

Environmental, Social and Governance (ESG) investing has emerged as a key component of modern financial markets due to rising demand for ethical business practices and sustainable economic growth. Investors depend on ESG disclosures as they have concerns about the completeness, accuracy and consistency of the sustainability reporting to evaluate long-term risks and performance. The accuracy of ESG data is seriously threatened by the practice of greenwashing, which involves exaggerating sustainability accomplishments, and greenhushing, which involves underreporting real ESG initiatives. This paper combines recent research to examine the concept of ESG investing, greenwashing by integrating Theory of Planned Behavior and Goal Setting Theory to develop a conceptual framework, particularly for individual investors. The framework will help in the need for harmonised reporting requirements and regulatory support for the investors for genuine progress towards sustainability goals. In order to prevent greenwashing and channelise capital towards a sustainable change, ESG investing requires a balance between measurement quality, disclosure integrity and enforcement.