Abstract

We investigated investors awareness of their investment decisions on the new index called ESG Leaders in the Indonesian stock exchange. We used structural equation model (SEM) to analyze the data from a survey with 103 respondents. We also used qualitative method with semi-structured interviews (SSI) from 10 industry players as respondents. We used a triangulation method to better interpret the results from SEM and SSI. We found that investment decisions were related to environmental and governance issues. The social issues, the environmental horizon, the purpose of investment and the moderating investment horizon consisting of short-term, mid-term and long term did not relate to investment decisions. The results from SSI were rather different from the survey. The investment decisions were related to environment, governance, and social issues as well, while the investment horizon was for the long term. The purpose of investment was to have a return that was higher than the market. The findings provide valuable insight for the ESG index issuer to create more awareness to attract more investors. This research was the first to explore the determinants of investment decisions on ESG Index equities. This research presents empirical evidence from retail and institution investors that they have faith in investing in the ESG Index and they are waiting for more active socialization from regulators.

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