The Influence of ESG Ratings on Financing Decisions in Ghana’s PropTech Sector

Abstract

Although ESG metrics have been increasingly influencing investment decisions in global real estate sectors, its impact in emerging PropTech spheres has remained understudied. In Ghana, where PropTech adoption has been rising amid weak institutional frameworks, the effect of ESG ratings on financing decisions has not been properly investigated. Therefore, this quantitative cross-sectional study evaluates the impact of ESG on financing volume and access among PropTech firms in Ghana. Data was obtained from 120 PropTech firms operating in smart construction, energy monitoring, and digital real estate platforms. ESG performance was evaluated in its environmental, social and governance dimensions, as well as in terms of financing volume and access indicators. Multiple linear and binary logistic regression equations were used, controlling for firm attributes. The findings indicate that ESG ratings have a considerable impact on financing outcomes. The strongest positive impact on financing volume and access was observed in environmental performance, whereas a positive but less significant relationship was observed in the social and governance dimensions. The results show that ESG activity is an important indicator for investors in Ghana’s capital-constrained PropTech market to rely on. The study provides policy and investment insights for improving sustainable PropTech financing in emerging economies.