Investing with Purpose: The Relationship between Sustainable Investment and Psychological Well-being

Description

Page: 560-563

Monika Arora (Department of Business Administration, Government College for Girls Ludhiana, Punjab)

The growing intersection between sustainable investment and psychological well-being represents a significant development in both behavioral finance and positive psychology. This paper examines how sustainable investment strategies-including environmental, social, and governance (ESG) investing and impact investing-influence investors’ psychological well-being and mental health, with particular attention to developments in the Indian market. Through analysis of recent empirical research and psychological theory, we demonstrate that alignment between personal values and investment choices creates measurable improvements in psychological well-being, including reduced anxiety, increased sense of purpose, and greater life satisfaction. Recent 2024 research confirms that ESG investing is primarily a psychological phenomenon, while 2025 studies highlight the interconnection between sustainability goals and mental health outcomes. The Indian context provides unique insights, with sustainable investing assets growing from ₹5.2 trillion in 2020 to over ₹12 trillion by 2024, reflecting increasing values-based investment preferences among Indian investors. Our findings suggest that sustainable investing offers a pathway to achieving both financial returns and psychological benefits, challenging traditional assumptions about trade-offs between profit and purpose.