Perceived Environmental, Social and Governance (ESG) practices affecting investor behaviour amongst publicly traded companies in Zimbabwe: individual investors’ perspectives

Abstract

ESG considerations are increasingly becoming an important issue in investment decisions,
influencing investor behaviour and long-term financial performance. This paper explores how
environmental, social, and governance (ESG) practices affect investor intentions and behaviour
among publicly traded companies in Zimbabwe. Using Stakeholder Theory, the study focused on
individual investors on the Zimbabwe Stock Exchange, employing an explanatory design and
quantitative approach. A self-administered questionnaire yielded 309 valid responses. Results
reveal that environmental practices (path estimate = 0.296) and social practices (path estimate =
0.304) significantly influence stock purchase intentions, while governance practices (path estimate
= 0.095) do not show a significant impact. Additionally, stock purchase intentions strongly predict
actual stock purchase behaviour (path estimate = 0.716). The study recommends that Zimbabwean
companies should prioritise and communicate their environmental and social practices to attract
investors, as these factors notably influence stock purchase intentions. While governance practices
are important on their own, they are most effective when integrated into a comprehensive ESG
framework that aligns environmental, social, and governance efforts towards sustainable
organisational performance. It is recommended that companies use big data to strengthen ESG
disclosures and drive investor action.