Green Financial Literacy and ESG Awareness to Sustainable Investment Intention: The Mediating Role of Green Trust

Abstract

This study aims to analyze the influence of Green Financial Literacy and ESG Awareness on Sustainable Investment Intention and to examine the role of Green Trust as a mediating variable among young investors in Indonesia. The study employs a quantitative approach with a cross-sectional survey design. Data were obtained through an online survey of 327 investors aged 18–40 years holding a Single Investor Identification (SID). Data were analyzed using Partial Least Squares-Structural Equation Modeling (PLS-SEM) with SmartPLS 4. Results indicate that Green Financial Literacy positively and significantly influences Green Trust (β = 0.348; p < 0.001), as does ESG Awareness on Green Trust (β = 0.326; p < 0.001). Green Trust emerges as the strongest direct predictor of Sustainable Investment Intention (β = 0.438; p < 0.001). Furthermore, Green Financial Literacy (β = 0.154; p = 0.004) and ESG Awareness (β = 0.142; p = 0.008) positively and significantly influence Sustainable Investment Intention directly. Green Trust also mediates the relationship between Green Financial Literacy and Sustainable Investment Intention (indirect effect = 0.152; p < 0.001) and between ESG Awareness and Sustainable Investment Intention (indirect effect = 0.143; p < 0.001). The model explains 41.2% of the variance in Green Trust and 52.7% of the variance in Sustainable Investment Intention. This study contributes to the literature by examining Green Financial Literacy as a sustainability-specific construct, identifying Green Trust as a mechanism connecting cognitive factors with sustainable investment intention, and providing empirical evidence from the context of young Indonesian investors. Findings suggest that knowledge and ESG awareness are not fully translated into investment intention without trust in the credibility of the sustainable financial ecosystem. These findings indicate that increasing sustainable investment requires a combination of strengthening green financial literacy and building trust. Financial institutions need to enhance education regarding sustainable financial products and ESG information transparency, while regulators need to strengthen ESG disclosure standardization and oversight of greenwashing practices. These efforts can strengthen investor trust and support the growth of sustainable investment in Indonesia.