Swedish SRI Funds after Fukushima Incident

Sammanfattning:

Socially Responsible Investment is a vehicle that has been designed in order to facilitate those investors whose objectives go beyond return maximization. Essentially, this investment class is comprised of constituents that promote social, ethical and environmental concerns. It is a matter of question whether these concerns are translated into investment actions, especially after large-scale incidents with immense consequences. An incident as such is the 2011 Fukushima event, which has affected the public perception about nuclear power and has led to global discourses regarding the planet’s sustainable future.

ResearchQuestion: Has the Fukushima Incident Impacted the SRI Fund Flow in Sweden?

This thesis’ purpose is to examine whether there has been a significant change in the SRI fund flows after the Fukushima incident, by comparing them to the flows before the incident. The investigation is taking the investors’ perspective, since what is examined is the money flows toward the SRIF, as a proxy of the investors’ behavior. Correspondingly, the SRIF flows are compared to the conventional funds’ or CF flows before and after the incident. The authors stress to investigate whether the reported growth in the SRIFs’ Assets under Management is substantial, or if it is following the general economic trend throughout periods. Therefore the goal is to assess the movement of the SRIF flows in a context that depicts possible changes between periods. Furthermore, the associations between the SRIF and CF classes are evaluated accordingly, as well as the associations among the different fund types that are part of the investment universe in Sweden.

In order to answer the research question, the design of the study follows the objectivist point of view, by performing a quantitative longitudinal study based on the deductive approach. The theoretical background consists of the foundational theories in Finance and it expands into the relevant framework this thesis belongs to. As such, studies regarding the SRI industry are presented alongside their findings and they are separated both into the individual as well as the aggregate level. The findings are scrutinized at these levels, with respect to three different timeframes that encompass the incident. Moreover, the behavioral theories concerning the SRI are exhibited, as well as the theories, studies and reports that link the subject of the SRI to the investors’ reaction to large-scale and affecting incidents and therefore to the purpose of this investigation.

The findings and the analysis suggest that there is not any substantial indication that the Swedish SRIF flows have been affected in the examined periods after the Fukushima incident, when compared to the CFs or the energy indexes. The related inference attributed to the findings of this study and their successive analysis, stresses that the SRIFs have followed the general economic conditions and trends the universe of the Swedish investments has been subject to. In other words, SRIFs did not grow, as one would expect after a large-scale event. Subsequently, by investing in the rapidly growing SRIFs, Swedish investors are following a trend. The remark is important in that it suggests reviewing the role of SRI as a forward-looking investment.

Keywords: Fund Flows, Socially Responsible Investments, Fukushima Incident and Investors