Is Divestment of Non-Greener Companies the only Way towards Ensuring Sustainable Finance? A Study among the Individual Market Investors

Abstract

Sustainable finance has assumed greater importance in recent times, thanks to the increasing awareness of environmental concerns. Generally, there are three approaches to sustainable finance: divestment, engagement, and a combination of both. Divestment is the opposite of investment in the sense that it connotes either not investing or withdrawing investment from companies that do not adhere to environmental protocols. Engagement, as an alternative to divestment, has been widely accepted as an approach to sustainable finance. The present study shows that retail individual investors have preferred ‘engagement’ as an important strategy to pursue the companies to adhere to environmental regulations. The study has found that the education of retail individual investors and the years of their market experience has been significantly associated with the right strategy they choose for the policy of sustainable finance.