Author(s)

Fangyuan Cai ¹

Affiliation(s)

¹ China Galaxy Securities Co. Ltd., Beijing, China

Corresponding Author

Fangyuan Cai

ABSTRACT

The purpose of this paper is to deeply analyze the relationship between financial environment risk and ESG (Environment, Society and Governance) factors in investment decision-making, and to explore the role of ESG in reducing risks, improving long-term performance and promoting the sustainable development of financial markets. Through literature review and empirical analysis, we reveal the influence of ESG factor on enterprises and its importance in investment decision. This paper elaborates the essence of financial environmental risks, including market instability, political and economic changes and climate-related risks. Subsequently, we introduced three elements of ESG, namely environment, society and governance, and emphasized the comprehensive role of these factors in evaluating enterprise performance and risk. Furthermore, the influence of ESG factors on investment decision is studied. By integrating ESG factors, investors can understand the potential risks and long-term returns of enterprises more comprehensively. Empirical research shows that the investment strategy that pays attention to ESG factors can achieve better returns in the long run, which highlights the positive effects of ESG in building a sustainable investment portfolio. This paper provides an in-depth theoretical and empirical study on the relationship between ESG factors and investment decisions, and emphasizes the positive role of ESG factors in promoting the sustainable development of financial markets. This is of guiding significance for investors, enterprises and regulators to formulate more comprehensive and sustainable strategies in the face of changing financial environment.

KEYWORDS

ESG factors, environment risk, investment decision

CITE THIS PAPER

Fangyuan Cai, Analysis of ESG Factors in Financial Environment Risk and Investment Decision. Financial Engineering and Risk Management (2023) Vol. 6: 162-167. DOI: http://dx.doi.org/10.23977/ferm.2023.061124.

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