Financial literacy, environmental awareness and green investment readiness in renewable energy adoption by SMEs in Ghana

Abstract

The transition to renewable energy is a critical component of global sustainability agendas, yet small and medium-sized enterprises (SMEs) in emerging economies often encounter substantial barriers to adoption. These challenges are typically rooted in low environmental awareness and weak financial capabilities, which limit readiness for green investment. This study investigates how Environmental Awareness (EA) and Financial Literacy (FL) drive Renewable Energy Adoption (REA) among SMEs in Ghana, with Green Investment Readiness (GIR) theorized as a mediating mechanism. Grounded in the resource-based view and the theory of planned behaviour, this study analysed survey data from Ghanaian 850 SMEs using PLS-SEM. Results show significant direct effects of both environmental awareness (β = 0.519, p < 0.001) and financial literacy (β = 0.398, p < 0.001) on renewable energy adoption. Crucially, GIR not only exerts the strongest direct effect on REA (β = 0.749, p < 0.001) but also significantly mediates the relationships between EA and REA (β = 0.459, p < 0.001) and FL and REA (β = 0.252, p < 0.001). Theoretically, this study advances the integration of behavioural and resource-based perspectives. Empirically, it provides robust evidence from relatively large sample of SMEs in Sub-Saharan African context. Practically, it underscores the need for integrated policy interventions that enhance financial literacy, environmental awareness, and investment readiness to accelerate sustainable energy transitions.