The Impact of Environmental, Social, and Governance (ESG) Factors on Investment Decisions Among Young Investors in Medan

Diyanah Fatin; Purnama Ramadani  Silalahi; Muhammad Ikhsan  Harahap

doi:10.47747/ijbme.v7i3.3662

Authors

Diyanah Fatin UNIVERSITAS ISLAM NEGRI SUMATERA UTARA
Purnama Ramadani Silalahi Universitas Islam Negeri Sumatera Utara
Muhammad Ikhsan Harahap Universitas Islam Negeri Sumatera Utara

DOI:

https://doi.org/10.47747/ijbme.v7i3.3662

Keywords:

Environmental, Social, Governance, Investment Decisions, Young Investors

Abstract

This study examined the effects of Environmental (X1), Social (X2), and Governance (X3) factors, representing the ESG dimensions, on Investment Decisions (Y) among young investors in Medan City. The research employed a quantitative, explanatory research design. Data were obtained by distributing a Likert-scale questionnaire to 200 respondents who met the research criteria through purposive sampling. The collected data were then processed using multiple linear regression analysis. Before testing the research hypotheses, the quality of the research instruments was evaluated. The results showed that all questionnaire items met the validity and reliability requirements. In addition, the classical assumption tests indicated that the data were normally distributed and did not exhibit multicollinearity or heteroscedasticity, suggesting that the regression model was appropriate for further analysis. The hypothesis testing results revealed that each ESG dimension had a positive and significant influence on investment decisions. The Environmental variable had a significance value of 0.047, the social variable had a significance value of 0.006, and the Governance variable had a significance value of 0.045. Since all p-values were below 0.05, each variable was considered to have a significant effect on young investors' investment decisions. Furthermore, the simultaneous test (F-test) demonstrated that the Environmental, Social, and Governance variables jointly had a significant influence on investment decisions. This result is reflected by an F-value of 2.858 with a significance value of 0.038. The coefficient of determination (Adjusted R-Square) was 0.608, indicating that 60.8% of the variation in investment decisions can be explained by the three ESG variables included in this study, while the remaining 39.2% is associated with other factors that were not examined in this research

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