Financial Literacy, ESG Awareness, and Sustainable Investment Participation: Evidence from Individual Investors in Mumbai

Abstract This study examines whether financial literacy is associated with environmental, social, and governance (ESG) awareness and self-reported participation in ESG-themed investments among retail investors in Mumbai. A structured questionnaire was administered to 224 individual investors with an active demat or trading account and at least one year of investing experience during FY 2025-26. Financial literacy and ESG awareness were measured on 0-20 scales. The analysis used descriptive statistics, correlations, Chi-square tests, t-tests, ANOVA, and supplementary binary logistic regression. Scale reliability was satisfactory (alpha = 0.84 and 0.81, respectively). Financial literacy was strongly associated with ESG awareness (r = 0.62, p < 0.001) but more modestly with ESG participation (r_pb = 0.28, p < 0.001). Financial-literacy category and participation were associated, chi-square(2, N = 224) = 15.64, p < 0.001, Cramer's V = 0.26. In the adjusted model, ESG awareness (OR = 1.23, p < 0.001), financial literacy (OR = 1.15, p = 0.005), and income band (OR = 1.36, p = 0.027) were statistically significant; age and gender were not. Among highly ESG-aware respondents, 43.0 per cent reported no ESG holding. The study links conventional financial literacy with ESG-specific knowledge and behaviour in an emerging-market retail-investor setting. It identifies an awareness-to-action gap and supports clearer ESG disclosures and evidence-based investor education. Because the design is cross-sectional and uses convenience sampling, the findings indicate association, not causation.