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.

Social responsibility has gained popularity during the past few years, and one aspect of it is what benefits and costs it brings to a socially responsible investor. The purpose of this study is to examine whether different SRI strategies used by mutual funds are related to financial performance. By using multiple regression analysis and a sample of 88 Swedish SRI mutual funds over the period from 2014 to 2018, we find that using SRI screens first reduces the financial performance, but then gains a slight rebound as the screening intensity increases, indicating a U-shaped relationship. Further, we find that environmental screens impact the financial performance positively, and engagement and voting in sustainability matters is also positively related to performance.

This thesis contributes to the currently still sprawling literature on the force of sustainable investing together with the “Big Five” personality structure (Openness to Experience, Conscientiousness, Extraversion, Agreeableness and Neuroticism). By investigating which personality trait, based on the Big Five personality taxonomy, that was willing to exchange revenue for a higher ESG rating in a hypothetical investment fund, we were able to determine when private investors were willing to pay more for a more sustainable investment. We use new data from our own questionnaire where the respondents are adult individuals residing in Sweden who has invested in the stock market. The data was analyzed with an econometric approach and for the regression ordinary least square and tobit was used. The results revealed that two personality traits (conscientiousness and agreeableness) tended to be less interested in sustainable investments, as they were not willing to pay for a fund with a higher ESG rating, unlike Openness to Experience, where the willingness to pay was high. The other two traits also showed a positive relationship and thus willingness to trade revenue for sustainability. This thesis contributes to the knowledge on how the personality of the private investors can motivate investment decisions and the preference of companies they invest in.

Responsible investing is a growing concept as sustainability is becoming a much more apparent problem. Thus, the EU implemented a new regulation in 2021, the SFDR 2019/2088, to decrease information asymmetry between institutional investors and end investors regarding sustainable risks associated with funds’ investments. This thesis aims to study whether Swedish mutual funds are greenwashing in terms of funds that are classified as Article 9 funds and invest in firms with low ESG scores. I find that greenwashing occurs among some Swedish mutual funds classified as Article 9 funds, urging further actions to be taken by scholars, practitioners, and regulators given the complexity of the studied research field.

This thesis investigates if Environmental, Social and Governance (ESG) investments can be considered as an independent asset class. As ESG and responsible investing has increased substantially in recent years, responsible investments have entered the portfolios with other asset classes too. Therefore, there is a need in studying ESG investment properties with other financial asset classes. By collecting daily price data from October 2007 to December 2018, we research the directionalities between ESG, ethical, conventional, commodities and currency. Initially, we employed a MODWT, multiscale investment horizon wavelet analysis transformation of the data. The decomposed wavelet data is then applied in pairwise linear and non-linear Granger causality estimations to study the directionality relationships dependent on investment horizon. Additionally, econometric filtering processes have been employed to study the effects of volatility on directionality relationships. The results mainly suggest significant directionality relationships between ESG and the other asset classes. On the medium-term investment horizon, almost all estimations indicate strict bidirectionality. Thus, on the medium-term, ESG can be said to be integrated with the other asset classes. For the long-term horizon, most relationships are still predominantly bidirectional between ESG and all other asset classes. The biggest differences are found on the short-term horizon, with no directionality found between ESG and commodities that cannot be explained by volatility. Furthermore, most directionality relationships also disappear when controlling for the volatility transmission between ESG and currency on the short-term horizon. Thus, our findings suggest significantly more integration between ESG and ethical and conventional as bidirectionality overwhelmingly prevails regardless of investment horizon. As previous research has found similarities between ethical and conventional as well as ESG having similar characteristics to commodities as conventional and ethical, we suggest that ESG should be considered as being integrated and having strong similarities with other equities. Thus, it should be treated as being part of the conventional equity asset class. Deviations from bidirectionality could be caused by ESG variable specific heterogeneity. However, despite our rejection of ESG as an independent asset class, it still carries significant potential as it excludes firms with climate-harming practices, thereby helping in combating climate-related as well as social and governance issues the world is facing.

Submitted by Julien Midoux (julien.midoux@sciencespo.fr) on 2017-12-22T07:51:46Z No. of bitstreams: 1 Julien MIDOUX_Master Thesis.pdf: 1907108 bytes, checksum: 8ea9374a4ae0967cec2ae29f516b08e8 (MD5) / Approved for entry into archive by Josineide da Silva Santos Locatelli (josineide.locatelli@fgv.br) on 2017-12-22T10:07:12Z (GMT) No. of bitstreams: 1 Julien MIDOUX_Master Thesis.pdf: 1907108 bytes, checksum: 8ea9374a4ae0967cec2ae29f516b08e8 (MD5) / Made available in DSpace on 2017-12-22T12:10:46Z (GMT). No. of bitstreams: 1 Julien MIDOUX_Master Thesis.pdf: 1907108 bytes, checksum: 8ea9374a4ae0967cec2ae29f516b08e8 (MD5) Previous issue date: 2017-11-21 / This research aims to study private equity impact investments based on a comparative analysis of different private equity funds practices. In particular, it examines how the requirements of impact investing are encompassed in private equity investment processes. First, a literature review was conducted to better define impact investing and assess the complementarity of private equity with impact investing. Secondly, a qualitative study was pursued based on a panel of interviews. Interviewees are investment professionals working for private equity firms with interests in impact investing. The analysis of the interviews indicates a certain commonality of the investment methods between the funds paneled whether they are pure player private equity impact investors or traditional private equity firms investing for impact. Beyond the proximity between investment strategies, the research also shows a strong focus on in-house impact targeting and measurement, with little resort to external tools. Such flexibility negatively affects the readability of impact performance from a market perspective. The research concludes impact investing still has to go through a standardization process to gain global recognition as a private equity segment. / Esta pesquisa tem como objetivo de estudar os investimentos de impacto de private equity com a base de uma análise comparativa de diferentes práticas de fundos de private equity. Em particular, examina como os requisitos de investimento de impacto estão abrangidos nos processos de investimento em private equity. Em primeiro lugar, uma revisão da literatura foi feita para melhor definir o investimento de impacto e avaliar a complementaridade do private equity com os investimentos de impacto. Em segundo lugar, um estudo qualitativo foi realizado com base de um painel de entrevistas. Os entrevistados são profissionais de investimento que trabalham para empresas de private equity com interesses em investimentos de impacto. A análise das entrevistas indica uma certa semelhança dos métodos de investimento entre os fundos estudados que eles sejam unicamente investidos em impacto o que sejam fundos de private equity que fazem investimentos de impacto além de investimentos tradicionais. Além da proximidade entre as estratégias de investimento, a pesquisa também mostra um forte foco em processos de segmentação e de medida do impacto internos, com pouco recurso para ferramentas externas. Essa flexibilidade afeta negativamente a legibilidade da realização do impacto por parte do mercado. A pesquisa conclui que os investimentos em impacto ainda precisam passar por um processo de padronização para obter reconhecimento global como um segmento de private equity.

Institutional Investors own a large share of publicly traded companies, controlling a significant amount of the economy‟s working capital. These investors currently use little or no sustainability-related information to make their decisions, reinforcing a loop of increasingly unsustainable growth. This paper puts forward a new investment strategy that recognizes true movement towards sustainability and its link with bottom line benefits for investors: Strategic Sustainable Investing (SSI). To achieve this desired future, Institutional Investors must be able to recognize corporations that are strategically leading the transition towards sustainability. An Analysis Tool was developed to help address this need by identifying sectoral Emerging Sustainability Issues (ESI) using a consensus-based scientific definition of sustainability. Once ESIs are identified, companies‟ strategies regarding each issue are assessed. This Tool was scrutinized by a panel of experts in the financial and sustainable development industries, and was tested on three companies within the Unconventional Oil & Gas Sector in Canada. Results confirmed the usefulness of a tool that can recognize which companies are leading the sustainable development agenda, and identified the need for future research on the financial materiality of sustainability-oriented actions.

This thesis investigates the two investment strategies Dogs of Dow and The Magic Formula. We test how the strategies perform when getting weighted to ESG scores and also if they outperform OMXSPI during the years 2012-2022. What we find in our study is that when returns are risk adjusted, both Dogs of Dow and The Magic Formula and their ESG weighted portfolios outperform the benchmark during the period. We also conclude that ESG weighted portfolios yield lower returns than equally weighted Dogs of Dow and The Magic Formula portfolios. The portfolio that produce the highest return was the equally weighted Dogs of Dow portfolio. For the value at risk we find that on a five percent significant level, the portfolios observe values from -1,55% to -1,69%.

The Cost of Feeling Good attempts to quantify the optimum portfolio returns of Socially Responsible Investment Funds and Dual-Purpose Portfolios. In order to meet the demands of investors who want to create a social impact and generate financial returns, investors can choose two methods. For the purpose of this study, the social returns were quantified and the financial returns were quantified using net present value. In every scenario, the socially responsible investment decision generated higher financial returns. Because of the immediate loss to an investor after choosing the DPP strategy, financially, the SRI fund appears to be the better approach for a financially driver investor. In terms of social returns, the DPP has a more clear impact on society. Measured as the charitable contribution given on an $1,000 investment, the socially responsible fund contributes far less to society on a per investor basis. Therefore, if an investor is interested in generating higher social returns and wants to be selective in terms of their charitable donation, they should choose the DPP model. In terms of tax brackets, investors in higher tax brackets have to generate higher financial returns on socially responsible investments in order to match the returns of a DPP. This is also true with investors who invest less in charity. Therefore, the investors that are in the highest tax bracket and contribute little to charity will need to generate far higher SRI returns according to the constructed theory. This finding is important to the growing millennial trend in sustainable investing.

In the context of the Sustainable Development Goals and the Paris Agreement, the European Union has devised a sustainable finance strategy that relies on the engagement of both institutional and private investors in responsible investing to deliver on those goals. Several studies have found high interest in responsible investing among retail investors, but a relatively low engagement therein. Research up to this point on the responsible investing experience of retails investors has not established a clear cause for the gap between interest and engagement and has particularly neglected the increasingly popular investment type of exchange-traded funds (ETFs). This thesis therefore aims to shed light on the obstacles that prevent retail investors from investing in responsible ETFs. The research is organized by a five-stage framework for the responsible ETF investing process that identifies potential obstacles in the first three process stages problem recognition, information search, and evaluation of alternatives. An empirical analysis was performed by means of an online survey of European retail ETF investors and non-ETF investors (n = 101). The results indicate that the majority of retail investors experience a gap between their interest and engagement in responsible ETF investing. The most difficult stage of the responsible ETF investing process appears to be the evaluation of alternatives. Incomparability of information on responsible ETFs and a lack of labels and standardization present obstacles that impair investors’ ability to evaluate different options for responsible ETFs. The incomparability of information can be ascribed to the divergence of environmental, social and governance (ESG) ratings. The survey further found a high support among ETF investors for the planned standardizations and regulations by the EU and increased willingness to invest in responsible ETFs if these measures are implemented. These findings emphasize the role of regulations in facilitating responsible investing and pave the way for more comprehensive studies on the information needs and obstacles of European retail ETF investors. / Inom ramen för målen för hållbar utveckling och Parisavtalet har Europeiska unionen utformat en hållbar finansstrategi som bygger på att både institutionella och privata investerare engagerar sig i ansvarsfulla investeringar för att uppnå dessa mål. Flera studier har visat stort intresse för att göra ansvarsfulla investeringar bland privatinvesterare, men ett relativt lågt engagemang däri. Forskning som är aktuell om privatinvesterare erfarenheter har inte visat någon tydlig orsak till klyftan mellan intresse och engagemang och har särskilt försummat den alltmer populära investeringstypen av börshandlade fonder (ETF). Avhandlingen syftar därför till att belysa de hinder som hindrar privatinvesterare från att investera i ansvarsfulla ETF:er. Forskningen är organiserad av ett femstegsramverk för den ansvarsfulla ETF-investeringsprocessen som identifierar potentiella hinder i de tre första processtegen för problemigenkänning, informationssökning och utvärdering av alternativ. En empirisk analys utfördes med hjälp av en online-undersökning av europeiska ETF-investerare och icke-ETFinvesterare (n = 101). Resultaten visar att majoriteten av privatinvesterare upplever ett gap mellan deras intresse och engagemang för ansvarsfull ETF-investering. Det svåraste steget i den ansvariga ETF-investeringsprocessen verkar vara utvärderingen av alternativ. Ojämförbarheten mellan information om ansvarsfulla ETF:er och brist på klassificering och standardisering utgör betydande hinder som försämrar investerarnas förmåga att utvärdera olika alternativ för ansvariga ETF:er. Informationens ojämförbarhet kan tillskrivas skillnaderna mellan miljömässiga, sociala och styresmässiga (ESG) betyg. Undersökningen fann vidare ett stort stöd bland ETF-investerare för EU:s planerade standardiseringar och regler och ökad vilja att investera i ansvarsfulla ETF om dessa åtgärder genomförs. Dessa resultat  betonar regelverkets roll för att underlätta ansvarsfulla investeringar och banar väg för mer omfattande studier om informationsbehov och hinder för europeiska ETF-privatinvesterare.