Drivers of Institutional ESG Investing

Sammanfattning: This study analyzes the factors that influence environmental, social, and governance (ESG) investments in the Nordic region from the perspectives of institutional investors. The study aims to understand key drivers of ESG investments for institutional investors. It proposes a theoretical framework and a diagram showing the relationships between investors, banks, and the EU towards ESG. The study involves 18 interviews with representatives from a medium-sized European bank and institutional investors in the Nordic region. The key drivers identified in the research are reputational risk, which depends on the public opinion of investors, and the age and gender of institutional capital managers. The study also found that positive ESG signals are often associated with long-term financial performance and that institutional investors tend to allocate capital for long-term returns. Banks use ESG methods and models to attract clients and improve their ratings in third-party rankings. The EU's regulations on ESG, including the EU taxonomy and the Sustainable Finance Disclosure Regulation (SFDR), aim to standardize the financial industry and improve the quality of ESG data and reporting. However, bankers have raised concerns about the clarity and consistency of these regulations and the need for guidance on how to implement them. Overall, the results of this study align with previous research on ESG investments from an institutional perspective. However, the identification of reputational risk as a primary driver is a new contribution. The study's regional and sample size limitations suggest that further research is needed to confirm and expand upon these findings.