Sentiment and Sustainability

Media Influence on ESG Investing in Different Markets

Abstract

This study examines whether media sentiment around ESG issues influences investor behaviour, asset flows, and stock performance, comparing an emerging market (India) with a developed market (the United States). Analyzing media sentiment and ESG market data from 2015–2024, we find notable cross-market differences. In the developed market, upbeat ESG news and favourable media sentiment are associated with increased ESG fund inflows and short-term outperformance of ESGfocused stocks, suggesting that media narratives can quickly sway investor sentiment and asset prices. By contrast, the emerging market shows only a weak or delayed linkage—investors there are less responsive to ESG media coverage, consistent with evidence that ESG investing is not yet deeply embedded in their preferences. This study contributes to the literature by highlighting that the impact of ESG-related news is highly contextdependent. These findings have practical implications for policymakers, investors, and companies: tailoring ESG communication to local investor sentiment and improving transparency could enhance the effectiveness of sustainability initiatives. The study also underscores the need for further research on the media’s role in sustainable finance as global markets continue to evolve in embracing ESG principles.