The influence of ESG on local consumer behaviour

Abstract

The notion of Environmental, Social and Governance (ESG) has emerged as a fundamental component of modern business strategy. This research study seeks to examine how ESG factors impact consumer behaviour, shedding light on the shifting paradigms of commerce and consumption. The literature reviewed, particularly in respect to the consumer behaviour theory, was useful in understanding consumer behaviour from a theoretical perspective and outlined the different components that drive consumer decision-making. A quantitative approach was implemented to gain a better understanding of the links between key variables. Using a self-administered online questionnaire, the author collected primary data from Maltese individuals over 18 years of age. Data collected was analysed through statistical analysis, which led to a number of observations. The study found that when making decisions for everyday products, not all ESG factors are considered equally important. Environmental variables are regarded as the most influential, followed by social factors, while governance aspects are considered as the least effective. It was also established that the majority of the demographic characteristics have no influence on how much an individual is prepared to pay for ESG transparency since the tests produced statistically insignificant results. Lastly, the findings revealed that while consumers value ESG transparency from the companies they purchase from, they are not always willing to pay more for it. Consequently, these results have addressed a gap in the literature, which companies may use to gain a competitive advantage over their rivals, while also laying the groundwork for future researchers.