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Building Trust through ESG: A Study on Consumer Behaviour in Sustainable Fashion

Neha Rastogi · Shagun Tyagi · Vasim Ahmad · Rakesh Kumar · Rajesh Singh · Ayushi Sharma +2 more

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Environmental Sustainability in Business Consumer Behavior in Brand Consumption and Identification Consumer Perception and Purchasing Behavior

Abstract

Background This study explores the influence of Environmental, Social, and Governance (ESG) practices on consumer purchasing decisions in the fashion industry. It examines how corporate image and word-of-mouth (WOM) mediate the relationship between ESG practices and consumer trust, impacting purchase intent. Methods A structured questionnaire was distributed online to 393 participants aware of ESG practices, targeting Generation Z consumers. The survey assessed demographics, ESG awareness, brand image, WOM, and purchasing decisions using a Likert scale across five constructs: ESG Practices, Corporate Image, WOM, Trust, and Purchase Intention. Data were analyzed with Structural Equation Modeling (SEM) in IBM AMOS, following a two-step process: Confirmatory Factor Analysis (CFA) for validation and path analysis for hypothesis testing. Results The findings indicate that ESG practices significantly enhance corporate image and positive WOM, which, in turn, foster consumer trust. Corporate image has a substantial impact on consumer trust (p < .001), while WOM also contributes to trust (p < .001). Trust was found to be a strong predictor of purchase intention, demonstrating the mediating role of corporate image and WOM between ESG practices and purchasing behavior. Conclusions ESG practices are critical in shaping consumer perceptions and fostering loyalty in the fashion sector. By building a trustworthy corporate image and encouraging positive WOM, fashion brands can effectively influence consumer purchasing decisions. This study highlights the competitive advantage of implementing ESG practices, particularly in appealing to Generation Z consumers who value sustainability and ethical business practices.

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References

1981Evaluating Structural Equation Models with Unobservable Variables and Measurement Error 1988On the Evaluation of Structural Equation Models 2020The environmental price of fast fashion 2006Corporate social responsibility communication: stakeholder information, response and involvement strategies 2005Being Good or Being Known: An Empirical Examination of the Dimensions, Antecedents, and Consequences of Organizational Reputation 2014Word of mouth and interpersonal communication: A review and directions for future research 2020Greenwashing in environmental, social and governance disclosures 2020Corporate Economic, Environmental, and Social Sustainability Performance Transformation through ESG Disclosure

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