We are currently in the golden age of sustainable investing much thanks to the increasedimportance of companies acting responsibly and sustainably. ESG reporting practices aredrastically improving globally. However, emerging market equities remain remarkablyunderrepresented compared to developed market equities in institutional investors’sustainability portfolios. One of the most popular sustainable investing practices is ESG investing. Over the years, institutional investors have developed several ESG investingstrategies. A relatively new and upcoming strategy which is expected to growtremendously over the coming years is thematic ESG investing which differentiates itselfcompared to more traditional strategies. To the author’s knowledge, very few studies havebeen conducted comparing the performance of ESG investment strategies against eachother, especially comparing thematic ESG versus more traditional ESG investingstrategies in emerging markets. This study found that emerging market based thematic ESG portfolios built around thetheme of clean energy perform better financially compared to more traditional emergingmarket-based non-thematic ESG portfolios. Hence, answering our stated researchquestion “How do Clean Energy focused thematic ESG investment portfolios performcompared to non-thematic ESG portfolios in emerging markets?”. Thematic clean energyportfolios rebalanced annually and quarterly performed better in almost every aspect(return, risk and risk/return) compared to broader non-thematic ESG portfolios during ourselected 5-year period, indicating that thematic investing may be the better strategy toadopt if investing sustainably in emerging markets. This study also found evidenceindicating that emerging market-based thematic clean energy portfolios may performbetter than their developed market counterpart. These findings should persuade investorsto finally break the norm and allocate more capital towards emerging market equities,unlocking the potential for previously hidden diversification opportunities. By analyzingthe performance differences through the lens of existing financial theories, this studymanages to also break new ground within the field of sustainable investing literatureadding new valuable insights while also challenging already existing financial theoriessuch as the efficient market hypothesis. This is a quantitative comparative study utilizing a deductive approach, where the authorshave created and compared the performance of sustainable equity portfolios in emergingmarkets. The Carhart four-factor model was applied through OLS regression to explainthe excess returns of the portfolios, Monte Carlo simulations were conducted to predictfuture movements of the portfolios while multiple performance metrics such as Sharpe,Sortino, and Treynor were calculated and compared.

Traditional investing is mainly concerned with creating a financial return on investment for the investor and hence disregards other non-financial issues such as adverse environmental and societal impacts. This negligence of negative impacts in the investment process is beginning to be addressed with the emergence of environmental, social, and governance (ESG) investing, socially responsible investing (SRI), and other sustainable investing types. Therefore, this thesis aims to establish if and how large Nordic institutional asset owners integrate sustainability and ESG concerns into their respective investment processes. Moreover, a secondary goal is to determine what type of investing the current investment processes of the seasset owners resembles most. The thesis utilizes a qualitative methodology in order to gather the necessary data-points. All the information in this thesis comes from publicly available sources such as annual reports and sustainability reports. The study found that the asset owners analyzed utilize ESG integration in their investment processes. The asset owners have specific guidelines that pertain to ESG issues, and screen for non-compliance to ensure that investments with potentially detrimental effects on society are excluded from their respective portfolios. Aminority of the asset owners also utilizes best-in-class screening to identify investments with the strongest ESG performance. Hence, the asset owners, in general, are located between SRI and ESG investing on the motivation spectrum.

Emerging ESG studies have established a negative equilibrium correlation between ESG factors and stock returns in an economy predominately influenced by investors with nonpecuniary preference over high ESG credentials. However, little research has delved into a potential systematic liquidity risk phenomenon associated with aggregate trading activities of ESG-motivated investors who share a common nonzero ESG preference component in their utility function. Focusing on the carbon footprint metric of ESG factors, this thesis aims to investigate the potential existence of an ESG-specific component in liquidity commonality among equities listed on Nasdaq Stockholm, with a key assumption being that the average investor active on the Swedish equity market is cognizant of emission data and willing to forgo financial returns for positive externalities. Using a calibrated portfolio sorting technique and a set of time series regression models, the thesis uncovers novel evidence of liquidity synchronicity among ESG-unfavorable stocks. Additionally, the results indicate that liquidity dynamics of ESG frontrunners tend to be reflective of firm level characteristics. These findings remain robust even after controlling for market-wide driving forces, industry effects, and nonsynchronous liquidity co-movements etc. Investors prioritizing climate efforts may have tilted their capital away from emission laggards which give rise to a “flight to climate” effect on stock liquidity synchronicity among brown equities. Their resultant constrained investor base may lead to simultaneous liquidity oscillation as observed. Notwithstanding, the thesis does not measure explicit mechanisms through which ESG factors impact stock liquidity commonality, leaving this as a topic for future research.

Sustainability has become a pressing global issue due to environmental and social challenges caused by human activity which has led to a rise in sustainable investing, including ESG investing. Research on financial performance and sustainable investing have not only showed mixed results, but they are also generally conducted in greater markets such as the US, Europe, and Asia-pacific markets. Currently, there is a lack of research on performance of sustainable investment strategies in the Nordic Region. The purpose of this paper is to examine the performance of portfolios constructed with an ESG investment strategy, which involves creating two portfolios consisting of top and bottom ESG scored companies. The portfolios are measured against each other and a market index benchmark, in the context of various theories, including the efficient market hypothesis, adaptive market hypothesis, shareholder theory, and stakeholder theory. The theoretical framework includes asset-pricing models and portfolio theory. A quantitative study with a deductive approach is utilized to construct the portfolios, focusing on mid-cap companies in the Nordics with data collected from Refinitiv Eikon’s database. The portfolio construction process yields financial metrics such as returns, volatility, and risk-adjusted returns. To test for outperformance in returns, the unpaired t-test is utilized. The Carhart four-factor model is also used to explain variations in returns related to risk factors and investigate the presence of positive and significant abnormal returns. The results demonstrate that the bottom ESG portfolio exhibits superior portfolio characteristics compared to the top ESG portfolio and the index benchmark, including annual returns and risk-adjusted returns. Furthermore, this study identifies significant positive abnormal returns when using the Carhart four-factor model, and evidence of outperformance in mean cumulative returns for the bottom ESG portfolio relative to the top ESG portfolio and index benchmark. On the other hand, the performance of the top ESG portfolio and index benchmark is inconclusive, with mixed results across different performance metrics and years. Although the top ESG portfolio outperforms in two out of three years in terms of annual returns, volatility, and risk-adjusted returns, no evidence of positive abnormal returns is found. Meanwhile, the index benchmark demonstrates evidence of outperformance in terms of cumulative returns. Overall, the findings suggest that the bottom ESG investment strategy is more effective in generating superior performance, while the mixed results of the top ESG portfolio make it difficult to draw definitive conclusions about its performance characteristics.

Sustainability and finance should go hand in hand. A financial system that supports sustainablegrowth is necessary for the transition to a carbon-free society. Environmental, Social andGovernance (ESG) is a sustainability performance measurement used worldwide. Previousresearch within the ESG area has mainly focused on ESG score and financial performance.Environmental performance gets more attention from investors, and the Nordic countries areall in the top five when it comes to sustainability ranking. This research examines the relationbetween sustainability ratings (E score and ESG score) in the Nordic countries as well as if therelation differs between different rating agencies. To study the relationships, a regressionanalysis was performed, and we could not draw any concrete conclusions whether low CO2emissions are associated with a higher E- or ESG score in the Nordic countries. The resultindicates that a high E- or ESG score does not seem to be associated with lower CO2 emissions.A significant result was found on the fact that the E- and ESG scores relation to CO2 aredifferent between rating agencies. However, full access to one of the rating agencies has notbeen granted, which entails some limitations and further research on the questions isrecommended.

Companies play an important role in the process of sustainable development, and thus investors have increased their focus on companies' sustainability-related activities. These activities are often measured through ESG scores, which mostly are based on biased documents reported by the companies themselves. A company can be considered ESG-compliant when looking at the ESG scores, but its underlying sustainability profile is not entirely investigated. Thus, there is a lack of transparency in ESG scores as well as in the process of evaluating companies' sustainability performance. Therefore, this thesis aims to explore the possibilities of incorporating automatic text analysis, specifically sentiment analysis, to analyze news articles. In that way, a broader part of a company's sustainability profile is covered, and potential controversies or other involvements could be detected. To investigate whether sentiment analysis would be useful to increase the transparency an explorative approach was used. Specifically, companies' ESG scores and sentiment scores from news articles were analyzed and compared. A lower sentiment score would reasonably indicate a lower ESG score, and thus indicate transparency in the evaluation method. The study finds a mixed result of positive and negative sentiment scores for each company, within each industry. A lower sentiment score does not necessarily indicate a lower ESG score, and no clear correlation between the scores was found. Interestingly, the study also identifies previous studies which indicate a correlation between the sentiment scores from biased company documents and the ESG scores.The findings strengthen the problem of lack of transparency in ESG scores, and further conclude that sentiment analysis would be useful in the context of identifying negative and positive articles and thus increase the transparency. However, it is also concluded that sentiment analysis cannot ensure that the calculated sentiment score is of relevance to a specific company and its' sustainability-related activities. Therefore, it can only be used as a complementing tool in the evaluation of companies' sustainability performance. / Företag har en viktig roll i processen av hållbar utveckling, och därför har investerare riktat ett större fokus på företags hållbarhetsrelaterade aktiviteter. Dessa aktiviteter mäts ofta genom ESG-poäng, vilka för det mesta baseras på partiska dokument som rapporteras av företagen själva. Ett företag kan anses vara ESG-kompatibel när man tittar på deras ESG-poäng, men deras underliggande hållbarhetsprofil undersöks inte helt. Således finns det en brist på transparens i ESG-poäng och även i bedömningsprocessen av ett företags hållbarhetsarbete. Därför syftar den här forskningsuppsatsen till att undersöka möjligheterna med att använda automatisk textanalys, specifikt sentimentanalys, för att analysera nyhetsartiklar. På så sätt kan en större del av ett företags hållbarhetsprofil undersökas, och potentiella kontroverser eller annan inblandning kan upptäckas. För att undersöka om sentimentanalys är lämpligt för att öka transparensen användes en utforskande metod. Specifikt, så analyserades och jämfördes företags ESG-poäng och sentimentpoäng från nyhetsartiklar. Ett lägre sentimentpoäng borde rimligtvis indikera ett lägre ESG-poäng, och därigenom indikera på en transparens i bedömningsprocessen. Studien hittar ett blandat resultat med både positiva och negativa artiklar för varje företag inom varje industri. Ett lägre sentimentpoäng indikerar nödvändigtvis inte ett lägre ESG-poäng, och ingen korrelation mellan poängen hittades. Intressant nog, identifierar studien tidigare studier som har hittat en korrelation mellan sentimentpoäng från partiska dokument och ESG-poäng. Resultaten förstärker problemet med bristen på transparens i ESG-poäng, och kan vidare dra slutsatsen om att sentimentanalys är användbart i kontexten att identifiera positiva and negativa artiklar, och således öka transparensen. Dock dras också slutsatsen att sentimentanalys inte kan säkerställa att det beräknade sentimentpoänget är relaterat till det specifika företaget och dess hållbarhetsrelaterade aktiviteter. Därför kan det bara användas som ett kompletterande verktyg i bedömningsprocessen av företags hållbarhetsarbete.

The theoretical and practical importance of working capital management (Sharma & Kumar, 2011) and its strong link with the firm’s financial stability (Wang et al., 2020, p. 2; Kamel 2015, p. 35) make it one of the most important functional areas of corporate finance. Although literature and the corporate world recognize corporate sustainability mainly through corporate social responsibility (CSR), ESG emerged in the recent past and quickly made its strong footfall as an indicator of corporate sustainability. Literature is evident that studies have mainly focused on studying both working capital management (WCM) and corporate sustainability in relation to firm financial performance (FFP), while scant research has assessed the relationship between WCM and corporate sustainability (Barros et al., 2022, p. 1). The primary purpose of this study is to examine the relationship between corporate sustainability and WCM in the Swedish market to fill this gap in the literature and contribute to the existing body of knowledge on the subject matter through its findings, especially with reference to the use of ESG rating scores.  The relationship was examined through the quantitative approach. Sample data was comprised of 418 firm-year observations retrieved from Refinitiv Eikon on 38 firms listed on Nasdaq Stockholm between 2010-2020. ESG rating scores were used to measure corporate sustainability, while two proxy measures; cash conversion cycle (CCC) and working capital requirements (WCR) were for WCM. Stata software was used to find the results of the study by running the pertinent regression models using robust standard errors. Various statistical tests were performed to satisfy all the OLS classical assumptions. The empirical results of our study revealed mixed findings. The findings connected to CCC indicated no statistically significant relationship between ESG scores and CCC which allowed us to conclude that sustainable firms in Sweden do not operate with a shorter CCC (or cash cycle). The findings connected to WCR indicated a significant negative relationship of WCR with the environmental and social score, however no relationship with ESG and governance scores. These results allowed us to conclude that sustainable firms in Sweden are able to operate with WCR (or cash requirements), however, these effects entirely come from the environmental and social pillars, which indirectly implies more sustainable firms can operate with lower levels of debt than their counterparts. Since we found no significant effect from the ESG scores for both CCC and WCR, our findings were partially in line with the shareholder theory, the stakeholders’ theory, and the legitimacy theory we used as theoretical references in our study. The overall findings of our study allow us to suggest sustainable firms in Sweden reconsider their working capital policy decisions to achieve working capital efficiency (a shorter cash cycle) while staying aligned with their sustainability goals.

The construction and real estate sector accounts for a significant part of Sweden's total greenhouse gas emissions. Swedish real estate companies play a leading role in the climate transition and represent more than half of the Swedish market for green corporate bonds. International initiatives such as the UN's Agenda 2030, the Paris Agreement, and the EU's Green Taxonomy Regulation promote sustainable development and the identification of sustainable investments. The taxonomy regulation directs investments towards sustainability, which, along with growing global demand, impacts the market for sustainability linked loans.  The thesis aims to investigate the motives and driving forces behind Swedish property companies and banks' participation in sustainability linked loans, their application and impact on their sustainability work, and potential challenges and future prospects for these loans in Sweden. This thesis is based on a qualitative research method and includes seven interviews with respondents from two different stakeholder groups; lenders (banks) and borrowers (property companies). A literature study has been prepared to provide insight into sustainability linked loans and the market's characteristics. The collected empirical material has then been analyzed based on Corporate Social Responsibility (CSR) and Signaling theory. The conclusions are based on the study's empirical data and discussion. The conclusions drawn are that sustainability linked loans play a significant role in Swedish real estate companies' sustainability work by offering financial incentives, strengthening the companies' strategies, and increasing transparency. Banks and property companies see advantages in the form of better conditions and a stronger link between sustainability efforts and financial benefits. Challenges for the future include transparency and the risk of greenwashing. The implementation of the EU's CSRD and ESRS is expected to address these challenges. Despite this, sustainability linked loans are expected to continue to grow and be demanded by more industries. / Bygg- och fastighetssektorn står för en betydande del av Sveriges totala utsläpp av växthusgaser. Svenska fastighetsbolag spelar en ledande roll i klimatomställningen och dominerar mer än hälften av den svenska marknaden för gröna företagsobligationer. Internationella initiativ som FN:s Agenda 2030, Parisavtalet och EU:s gröna taxonomiförordning, främjar hållbar utveckling och identifiering av hållbara investeringar. Taxonomiförordningen styr investeringar mot hållbarhet, vilket tillsammans med växande global efterfrågan påverkar marknaden för hållbarhetslänkade lån.  Uppsatsen syftar i att undersöka motiv och drivkrafter bakom svenska fastighetsbolags och bankers deltagande i hållbarhetslänkade lån, deras tillämpning och inverkan på deras hållbarhetsarbete, samt eventuella utmaningar och framtidsutsikter för dessa lån i Sverige. Denna uppsats baseras på en kvalitativ forskningsmetod och inkluderar sju intervjuer med respondenter från två olika intressentgrupper; långivare (banker) och låntagare (fastighetsbolag). En litteraturstudie har utarbetats för att ge insikt i hållbarhetslänkade lån och marknadens karaktärsdrag. Det insamlade empiriska materialet har sedan analyserats utifrån Företagens sociala ansvar (CSR) och signaleringsteori. Slutsatserna baseras på studiens empiri och diskussion. Slutsatserna som dras är att hållbarhetslänkade lån spelar en betydande roll för svenska fastighetsbolags hållbarhetsarbete genom att erbjuda ekonomiska incitament, stärka företagens strategier och öka transparensen. Banker och fastighetsbolag ser fördelar i form av bättre villkor och en starkare koppling mellan hållbarhetsinsatser och ekonomiska fördelar. Utmaningar för framtiden inkluderar transparens och risk för greenwashing. Implementeringen av EU:s CSRD och ESRS förväntas adressera dessa utmaningar. Trots detta förväntas hållbarhetslänkade lån fortsätta växa och efterfrågas av fler branscher.